By Stefanos Gregoriou, The Sports Financial Literacy Academy
With numerous sports teams now accepting Bitcoin as a form of payment as well as professional athletes accepting it as part of their salary or sponsorship; crypto investment interest has increased significantly among the sports industry. The first team to accept Bitcoin were the Sacramento Kings, whilst the Dallas Mavericks accept Bitcoin as game tickets payment. Furthermore, crypto firms are steadily becoming major sponsors in the sports field with examples such as BitPay being an ESPN sponsor in 2014, and Cashbet being Arsenal Soccer Club’s official partner. Some of the most high-profile athletes are openly joining cryptocurrency sponsorships such as Tom Brady and Aaron Rodgers. Russel Okung, of the Carolina Panthers, is paid half of his salary in Bitcoin, whilst Kansas City Chief’s Sean Culkin chose to convert his entire salary to Bitcoin.
Blockchain is essentially a distributed database that is shared among the members of the network. Blockchain databases or so-called digital ledgers, store information in electronic form. The technology offers a secure way for individuals to deal directly with each other, without an intermediary. Blockchain technology is widely used for transactions with cryptocurrencies. A cryptocurrency is a virtual medium of exchange such US dollar in digital form. Cryptocurrency transactions are recorded in a public digital ledger where network members can verify the transactions.
During the past few years, we have seen a notable pivot to blockchain technology across the sports industry. Teams offering fans the chance to get non-fungible tokens (NFT’s), cryptocurrency companies taking over naming rights of sports Arenas, sponsorships and partnerships with clubs and crypto-related projects, teams and athletes accepting payment in cryptocurrencies and selling fractional ownership in their contracts. With so much usage across the industry, from sports teams to individual athletes, blockchain is in its way to transform and evolve the whole industry of sports.
In this article we will take a brief look at how blockchain technology can be utilized in the sports industry and increase time and resource efficiency. Furthermore, we will look at the advantages of new crowdfunding blockchain methods and how athletes sell their future earnings through blockchain technology in exchange for cash.
There are many different uses for blockchain technology, but the most common use so far has been as a ledger for transactions. This is one of the main uses of blockchain technology in the sports industry as well. Already, numerous athletes started accepting their salary in cryptocurrency with the latest example, Golden State Warriors star Klay Thompson who partnered with a platform in early 2022 to get paid a portion of his salary in Bitcoin. As cryptocurrencies keep becoming a more widely accepted form of payment, we will surely see other athletes also requesting their salaries in cryptocurrency.
One of the advantages that the use of blockchain technology can bring to the sports industry are more transparency and accountability. The technology of blockchain enable sensitive medical and performance data to be stored in “blocks” either in centralized (private) or decentralized (public) blockchains. This protects an athlete’s personal data, but additionally, guarantees the integrity of the data including any medical tests. This reduces to a great extent the chance to lie, cheat or manipulate results. By providing such insights to their respective clubs, both can benefit from the transparency that blockchain-based “identities” offer. Also, such information about the performance and medical status of a player could be a game changer in the player transfer market.
It’s been a few years that pro athletes started selling small pieces of their future earnings for liquid cash. Some of those agreements include salary, royalty rights for a players’ image and brand name. If for example, an athlete makes $20,000 per month now but expects to be making three times that in 5 years, then they can sell a percentage of their future earnings in exchange for cash now. Now, all these agreements came up in the form of smart contacts, thanks to blockchain and cryptocurrencies. Decentralized crowdfunding and tokenized sales of shares almost eliminate intermediary fees compared to those in the traditional sector. In addition, blockchain loyalty programs allow fans to become actual voting members of sports clubs and franchises. Fans with digital tokens of the club/franchise have the right to vote on key decisions almost about everything, from player contracts to uniforms and branding. However, as the fans get stronger, they will demand more control, which in turn can turn against the owners of the club/franchise.
While technology is at an early stage, it is still truly incredible how blockchain invades and disrupts every industry, trying to solve existing problems as well as finding new problems to solve.
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