Blockchain to the rescue of professional sport?

At a time when the COVID-19 pandemic has had a major economic impact on the sports industry, blockchain-based solutions are providing professional clubs and organisations with new ways of generating revenue whilst retaining fan loyalty.

“For the clubs, FTOs are profitable as they enable them to obtain new funds quickly, all the while developing long-term fan commitment.”

Since the creation of the Bitcoin cryptocurrency, many sectors have become interested in blockchain, such as agri-food, healthcare or energy. This distributed and decentralised data storage and transmission technology is also spreading into the world of sport. Beyond the hype, it could help build technical solutions to problems that the industry has had for a long time: diversification of funding and sources of income, the fight against ticket price speculation and fraud, or the implementation of anti-doping programmes.

Fan Tokens and crypto collectibles

Fan Tokens are one of the biggest trends to emerge from the alliance between sport and blockchain. These digital assets are issued by a sports organisation or club during a Fan Token Offering (FTO) which, just like the Initial Coin Offering (ICO), does not enable buyers to obtain stocks and shares but instead the tokens give them the opportunity to play a part in the life of a team and to obtain advantages. These tokens, known as “utility tokens”, can then increase in value and be exchanged on the secondary market.

On, fans can thus buy Fan Tokens based on the platform’s cryptocurrency, called Chiliz ($CHZ), which give them the right to take part in some of their favourite club’s decision-making, such as choice of strip colours, name of the training grounds, or where the next friendly is to take place. They can also access exclusive rewards (VIP seats, guided tours, meet and greets, signed merchandise, etc.).

For the clubs, this method of fundraising is highly profitable as it enables them to obtain new funds quickly all the while developing long-term fan commitment. In 2020, FC Barcelona raised 1.3 million dollars in less than two hours during the sale of its $BAR on Socios.

Collecting cards is another way of indulging in one’s passion for a particular sport or team. Particularly popular in the ‘80s and ‘90s, sports cards are currently experiencing a major evolution thanks to blockchain and non-fungible tokens (NFTs).

As opposed to ordinary digital collectibles, those that come with an NFT (called “crypto collectibles”) are unique as they are given a serial number. They are not reproducible, and their owner’s identity, their authenticity and their rarity can all be verified.

In 2019, the NBA launched Top Shot, an app developed by Dapper Labs (the creators of CryptoKitties), which makes it possible to purchase sealed packets of digital cards. Called “Moments”, these are in fact short video excerpts showing highlights of NBA stars. The platform also includes a marketplace for swapping cards, which are ranked according to their rarity (the NBA and Dapper Labs take a percentage on each transaction).

Bitcoin ticketing

Blockchain technology is also used to make the purchasing of e-tickets more secure. The illegal reselling of tickets is a major problem for organisers of sporting events. Some people use computer programs to buy a large number of tickets as soon as they go on sale, then sell them on at extortionate prices. Others simply sell fakes. The result is that attending the most prestigious sporting events has become inaccessible for many fans.

Faced with this two-sided problem, the sports industry must rethink electronic ticketing, and blockchain appears to be a solution for regulating resale prices as well as preventing fraud. In particular, it makes it possible to ensure that the transactions recorded are valid, that they come from authorised persons (authorised sellers, ticket owners), and that the data has not been altered. Via the smart contract, it is possible to integrate predefined exchange rules. Artificial intelligence building blocks enabling the detection of suspicious behaviour can be added so as to reinforce security and to limit speculation.

In practice, when somebody buys a ticket online, a unique identifier is created. Each ticket is linked to a virtual wallet and is totally traceable. The owner is then free to resell their ticket or tickets, respecting the conditions and price limits set by the event organiser.

Today, many startups offer blockchain-based ticketing solutions, like the Aventus Protocol used for tickets sales at the 2018 World Cup in Russia, or TIXnGO who signed a partnership with AFC Ajax in November 2020.

Securing sport and medical data

A distributed and decentralised register, blockchain could make it possible to set up a digital file bringing together data relating to an athlete’s performance and/or their medical data.

Such a file would be an excellent tool for the fight against doping, enabling various organisations to produce, store, access and share data linked to doping, and this in full transparency.

The idea of compiling medical data in digital format is not novel in the world of sport. In France, the “athlete’s biological profile” (or “athlete biological passport”) was introduced into the French sports code in 2012. It includes the athlete’s blood and urine samples taken for anti-doping tests and, thanks to the monitoring of biological markers of doping over time, it should enable the detection of any abnormal variations of these markers.

Again, what blockchain brings is its capacity to guarantee the integrity of the traceable and unalterable data contained in this passport. The verification and validation prior to the recording of new data prevent certain users (corrupt national federations, unscrupulous laboratories) from falsifying data, all the while reinforcing trust in anti-doping test procedures, which have been tainted by many scandals.

The security brought by blockchain, which is based on advanced cryptography techniques, is also an asset in the area of sport analytics – of athlete’s performances in particular -, which play an ever more important role in sport. In Moneyball, published in 2003 and adapted for the big screen in 2011, American author Michael Lewis shows how the Oakland Athletics manager used this tool to assemble a good baseball team on a low budget. In 2016, the case of the hacking of the Houston Astros’ internal database by the St. Louis Cardinals revealed just how precious sports data had become.

Here, blockchain technology offers a secure infrastructure for the storage of data and “homemade” models that are generated and used within clubs, but also for sharing them amongst coaches, recruiters, managers, etc.

Such an infrastructure can also be used in the areas of talent spotting and career management so as to share data relating to young athletes’ abilities and results. TokenStars and Sporty, both of which are blockchain-based crowdfunding platforms, thus offer fans, investors and sponsors the chance to help athletes fund their career in exchange for exclusive merchandise or a percentage of their future income. However, should this type of use take off, it will be necessary to have in-depth discussions about its ethical issues.

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