The Ultimate Web3 Glossary
Cryptocurrency in sports is no fad. Since the earliest mainstream crypto partnerships in the mid-2010s, the two markets have grown increasingly intertwined, and for good reason. Cryptocurrency’s rising profile has made it especially popular among fans left out by traditional sports engagement tactics. Here’s how some of the most recognizable franchises have broken into cryptocurrency.
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Want to learn more about the intersection of sports and blockchain, or maybe you're ready to turn this technology to your advantage? Read our guide, How to Win With Blockchain Technology in Sports.
Cryptocurrency offers significant tactical value for sports franchises looking to keep their fans deeply engaged. Perhaps the greatest value comes in the form of potential audience. It’s no secret sports have struggled to bring in the youngest generation of potential fans, with only 23% of Generation Z identifying as passionate sports fans. (That’s down from 42% of Millennials, 33% of Gen X, and 31% of Baby Boomers.) On the other hand, 94% of crypto buyers are in the Gen Z and Millennial cohort, making these platforms the ideal place for franchises to connect with potential new fans.
These engagement and revenue opportunities are especially useful in an era in which many fans will never attend a game in person. Gen Z in particular is less likely to attend games in person than Millennials. Leagues such as the MLB have seen in-person attendance drop steadily for the past few years. COVID-19 has affected the number of fans comfortable crowding the stadium, driving attendance down for the NBA and the NFL, and although the NFL at least appears to be recovering, the need for more diverse, digital methods of fan engagement has grown increasingly clear.
Finally, cryptocurrency plays a role in the overall boom of sports betting. Global sports betting eclipsed $76.75 billion in 2021 and is projected to hit $181.12 billion by 2030. Financial privacy, low fees on wins, big bonuses for playing, and the ability to play anywhere unencumbered by regulation make crypto betting attractive for sports fans. From 2015-2017, over 24.5 billion bets were placed using Bitcoin. As cryptocurrency in sports continues to gain prominence, those numbers are likely to keep going up, and sports franchises have the chance to tap into that engagement.
French soccer club Paris Saint-Germain became one of the earliest innovators in cryptocurrency-based fan engagement when it partnered with the rewards app Socios to create its own crypto-based Fan Token, $PSG. Minted on the Chiliz blockchain and limited in number, these tokens provide their owners with enhanced loyalty perks.
These perks are far from ceremonial: Fan Token holders have voted on the new roof ridge visual at PSG’s Parc des Princes and on the cover design for the limited edition PSG version of soccer simulator FIFA 22. They’ve also had the chance to meet and interview players or take part in other VIP experiences. The more tokens a fan has, the greater their voting power, and they can even receive exclusive NFTs through holding tokens. All told, tokens give fans more ways to engage and show their stake in a team than was previously possible.
Beyond engagement, franchises stand to generate significant revenue from fan tokens. Initial sales of the tokens can be quite lucrative — when FC Barcelona launched its Fan Token in June 2020, it raked in $1.3 million from sales — but reselling and trades on the secondary market also contribute to revenue. As of August 2021, Socios had made its partnered clubs around $180 million.
The NBA became one of the first major American sports leagues to dip its toes into cryptocurrency when it partnered with Dapper Labs to create Top Shot. Minted on the FLOW blockchain and backed by the corresponding cryptocurrency, Top Shot takes highlight plays from the NBA and turns them into individual NFTs. These NFTs vary in rarity and can be collected, traded, and sold by fans, allowing them to own a little slice of NBA history, usually represented by a short clip of the moment in question.
Top Shot passed the one-million-user mark in September 2021, and total sales eclipsed $1 billion in May 2022. Fans continue to collect and trade on the platform, with more than 600,000 trades made in the last 30 days, according to NFT marketplace tracker DappRadar. That represents tens of thousands of fans engaging with the NBA's brand in a manner that, just a few short years ago, didn't exist at all.
Volatile though it may be, cryptocurrency appears here to stay. Teams and individual currencies or exchanges are already inking sponsorship deals, and that trend will likely continue to grow over time. Fan Tokens will provide spectators with new and exciting opportunities to pledge loyalty to their teams, and NFT collectibles will allow them a chance to own history like never before.
But cryptocurrency isn’t the only way into Web3 for sports brands, and NFTs don’t need to be entirely digital. With physically backed NFTs, the NFT itself represents ownership of a physical object, be it a game ball, a ticket stub, or something else entirely. With the corresponding NFT in their digital wallet, fans can keep their prized possession in a safe and secure vault, then trade or sell it by transferring ownership of its NFT. This is where Dibbs shines. If you’re interested in deepening engagement through physically backed NFTs, drop us a line.