Stadium Financing and Tokenization as a Viable Alternative

Tokenization creates countless innovative opportunities for professional sport teams, leagues and athletes to interact with their Fandom.

And this is not about the sport itself - for instance I love watching rugby which is not big in the US - but it is about the ability that Americans have to put up an outstanding show, a great entertainment. 

How Stadiums are financed in the USA - The Personal Seat Licenses

This is usually done in the form of municipal bonds, tax exemptions or below market interest rate loans.

The consequence is that even if the share of public funding is not entirely gone, at least it is likely to be reduced and the owners will have to make up for the difference in some other ways.

This is 73% of the total cost.  Of that portion, the Falcons were able to generate more than US$ 250 million with PSL sales. That´s an important 22% contribution towards all the private funding.

How stadiums are financed in Europe

Therefore, considering that local governments have generally tight budgets, issues always arise whenever restructuring works or entirely new construction projects are necessary.

Which advantages can bring the tokenization

The term “tokenization" indicates the "creation of a crypto-token which is a digital representation of an asset, right, claim, data or monetary value which is stored and transferred using public-key cryptographic encryption on a DLT/blockchain infrastructure. This is done by deploying so called "smart contracts", which consist in transposing the terms and conditions of the underlying agreement for such rights and assets into lines of computer code which will be automatically executed by the software upon certain pre-programmed conditions. The key here is automated trustless execution".

TPSLs are the natural evolution of PSLs

• existing secondary markets will have to evolve and become more efficient. The liquidity will increase allowing peer to peer direct transfer of TPSLs and corresponding payment options with cryptocurrencies and stablecoins.
•  transfer restrictions, which are today difficult for the teams to enforce, can be easily programmed into the tokens and automatically enforced (smart contract encoding). In particular objective criteria such as a cap on the sale price of the TPSL or on the underlying match ticket (to stop expensive resellers) can be easily enforced by monitoring the transaction on the blockchain.  
• it will also address counterfeit issues.       
• easy and straightforward automatic enforcement of any applicable transfer-fees which can be deducted as "gas-fees" from the transaction price.       
• in case the buyer has financed the purchase of the PSL with a loan from the team, the very same loan could be packed into the token and, at the moment of the sale of the PSL, it could be transferred automatically to the wallet of the new owner without need of any paper shuffling between the team, the buyer and the seller. Moreover, any interest
  payments could be automatically deducted from the buyer wallet and any sum due could be also locked into a crypto-escrow to guarantee future interest payments to
  the team by the buyer.

Is there potential for TPSLs in Europe?

Token-economy and Sport business

But tokenization can bring much more to this complex ecosystem than solely tokenised PSLs. Tokenization enables countless new opportunities for the franchises to interact and engage with investors, fans, sponsors and the media. This applies to both the whole sport ecosystem and generally, the entertainment business. More likely the stakeholder´s creativity will be the real limit:   

•  profit participation rights can be tokenized to let investors or lenders have more skin in the game and thereby allow franchise owners to share with them some of the venture risk. This can be done by issuing so called security tokens, which for all purposes are securities and are subject to applicable securities´ regulations for their issuance and transfer. Fans might also want to have some skin in the game and own more than a seat at the stadium. They might want to own a small piece of their beloved team. The team´s creativity is the limit as to what the content
  of such a token can be for its fandom.       
  
• local governments might also benefit from more skin in the game. Take for instance the above mentioned Tottenham Hotspur land purchase from local city council for GBP 340 million. The club owner could have instead offered the local council say GBP 240 million and a number of newly issued security tokens representing a profit participation to the venture. The team owner would have lowered its risk exposure to the venture
  and the local council could have shared in the venture´s economical potential upside
  
•  tokens can offer unlimited opportunities to engage fans with special events, access to hospitalities and VIP areas, merchandising and sport-star memorabilia, fantasy games,
  participation to decisions/voting on team issues such as adopting a new jersey,
  uniform, etc.
• team could sell exclusive media content directly to its fans which can be paid in tokens thereby avoiding traditional media broadcasts or its own expensive and now obsolete TV channel
• tokens can enable in-time micro-sponsorships during a match or an event. Imagine if a sponsor could target directly the fan-token-owner few seconds after a score with something like: "Congrats buddy we´ve SCORED!!! you´ve just won a free drink!! Come celebrate with us". Blip, the fans personal wallet has just been credited with a token to
  get the free drink from the stadium drink stand.  Or a discount for team merchandise or just anything else.  Again, creativity is the only limit here.

Conclusion