Sports clubs, Formula-1 racing teams, and football (or soccer, depending where you are) clubs, in particular, are finding new ways to engage with fans and provide exclusive content and experiences for those who buy Fan Tokens.
Fan Tokens are cryptocurrency tokens that give fans access to a range of exclusive membership perks, such as voting on club decisions, alongside rewards, merchandise, and unique experiences.
Is this a sign of a trend that will encourage other sectors to dive into crypto-based loyalty schemes, and if so, what does this mean for the whole crypto space?
What are Fan Tokens?
Sports clubs and associations have millions of loyal fans. Clubs at higher levels often have fans worldwide, regardless of the country a team is based. Club loyalty is no longer tied to a specific geography and location.
Club loyalty is intertwined with the brand value itself, with high-profile teams pulling in millions of fans from across the world. Examples of this include Manchester United, FC Barcelona, Manchester City, Juventus Turin, and Paris Saint-Germain, even Alpine Formula 1 Racing Team. Right now there are 59 different fan tokens according to CoinMarketCap.
Naturally, sports clubs are geared towards generating more revenue. As cryptocurrencies and tokens have become more popular, many saw these as a potential way to tap into new fans, and a growing body of current fans who are passionate about both: the success of the team, and cryptocurrency.
In many ways, fan tokens are simply a modern version of a loyalty scheme. Put money in, gain access to exclusive content, products, promotions, discounts, rewards, and other bonuses for being an engaged fan.
So far, teams that have launched fan tokens include Manchester City, AC Milan, Juventus, Barcelona, Arsenal, Lazio, Porto and others. Chiliz is a Malta-based FinTech provider that’s made much of this possible, leveraging their experience creating crypto-based tokens for football clubs, managing the infrastructure, and handling the “Fan Token Offerings” (FTOs).
How do Fan Tokens work?
Fan Tokens aren’t like common NFTs. Fan tokens are “fungible”, just like other cryptocurrencies. Fan tokens are designed to be exchanged for products, services, and experiences, e.g. exclusive merchandise only available to those who invested/bought the fan tokens.
Fan tokens aren’t affected by the value of Bitcoin or Ethereum, even though the underlying technology is usually on the Ethereum blockchain. Instead, fan tokens are influenced by the overall value of the club itself, and how much fans want to engage with them this way.
It’s a remarkable new use case of cryptocurrency and blockchain-based technology. Taking sports team engagement in a new direction, and potentially opening the door for those who’ve not thought about crypto to take an active interest.
Clubs are using fan tokens to build a new hyper-engaged audience of loyal supporters. Not only does owning tokens give these fans access to exclusive experiences, merchandise, and other promotional events, it can also give them a say in certain club decisions. Such as:
- Merchandise design
- Ticketing and pricing
- Match locations
- Designs on tour buses
- And other team decisions that fans can/should influence.
Naturally, the more tokens a fan owns, the more of a say they have. Plus, the greater value of experiences and merchandise they can access. Similar to the difference between a fan who buys a ticket on the day of a game, compared to season ticket holders, and those who pay to have an exclusive box for themselves.
How can you buy Fan Tokens?
At the moment, there are several ways fans can buy tokens.
In several cases, clubs sell their own tokens through portals on their own websites and social media platforms. Customers buy tokens using credit or debit cards, with the clubs handling the blockchain-based platform, and managing the infrastructure and loyalty schemes on the back-end.
The other way is through the purchase of Chiliz tokens (CHZ). Chiliz, based in Matla, a FinTech company, founded by CEO Alexandre Dreyfus, was established to “work harder than ever on our mission to fully establish Fan Tokens as the ultimate fan engagement tool and as a powerful new revenue generator for the sports industry.”
As a result of this ambition, Chiliz worked with several sports clubs to create Chiliz tokens, derivatives of which are then allocated to specific clubs, clients of the company. CHZ are the native tokens of this network, and are ERC20 utility tokens. Fans can buy CHZ tokens on cryptocurrency exchanges (with a current market cap of $0.9 billion, trading at $0.1), or through the blockchain-based entertainment platform, Socios.
This platform partners with more than 130 of the world's largest sports teams, including famous football clubs, UFC, Formula 1 teams and eSports stars.
Once fans have bought CHZ tokens, these can be converted into the tokens of specific clubs, such as FC Barcelona, Manchester City, Juventus Turin, and Paris Saint-Germain.
Ultimately, fans can buy tokens of their favorite teams through major crypto exchanges like Binance, FTX, Gate.io, etc.
What do Fan Tokens mean for the crypto sector?
Whether fans go through Socios, or purchase them directly for clubs that prefer that approach, they are usually only attractive to passionate fans.
However, thinking beyond the needs for sports teams (and other entertainment brands) to increase loyalty, generate more revenue, and engage fans, this is a positive sign for the crypto sector. It’s a sign that businesses that haven’t previously considered using crypto are now seeing tokens as a viable way of engaging their fans/customers.
And this is happening regardless of the price of Bitcoin or any other cryptocurrencies. Moreover, Fan Tokens are even closer (alongside with NFT technology) to common people, who would not like to deep dive into crypto space and blockchain technologies. So, I see further mass adoption and new people using crypto with the spread of fan tokens.
Ultimately, crypto tokens are now being seen as variable solutions to existing business challenges, such as generating more revenue, increasing customer loyalty, and providing an enhanced fan/customer experience.
Disclaimer: Nothing in this article constitutes professional investment advice. Please do your own thorough research before making any investment decisions.