LIGHTING A FIRE

A simple tweet extolling the virtues of fan involvement, tech and blockchain set my timeline alight.?Few topics I’ve discussed have had that impact and its fun and intriguing to see.?The catalyst this time, being the use of a Socios.com graphic, burned as brightly as the magnesium my son is experimenting with in school.

Back in 2017 I wrote an article on ‘Building Sport Block by Block’ which garnered less than 100 views.?That tells you how uninteresting the blockchain was to sports back then but today it’s the latest gravy train in sports and I am in equal parts enthusiastic and nervous.?

So, let’s start at first principles because where else could you start…?

1.??????Fan Involvement is sports

I designed the fan flywheel and believe very strongly that the fan must be at the core of everything we do in sports.?It drives me crazy to see the fan so rarely considered except as an afterthought.?Sports organisations have all too often made it difficult for the fan to interact and for the past decade have made it a KPI to drive the fan to other businesses where they can be monetised externally.?Technology is core to finding a way to have that direct, two-way involvement with your fans (both the near and far versions!)

Whilst the industry has made great strides in what it calls fan engagement, I believe it has got a long way still to go.

2.??????Blockchain is inevitable.

I believe that this is a foundational technology.?I’ll probably forget one but the others to me include: AI, Big Data, IOT, Internet, Cloud, 5G and XR.?We are at the beginning still of most of these, but they are increasingly everywhere and mostly impacting our lives invisibly.?Without AI, Cloud and Big Data though we would probably not yet have a first vaccine for coronavirus so it’s playing a key role in our lives.?

As its inevitable we need a plan for it in sports. And yes, I’m stealing from Kevin Kelly!

3.??????Data is critical to our success

Long ignored it’s been exciting to watch as our sector has been ramping up in this space.?Much progress has been made but again we are still very much at the beginning.?However, securing this data, enabling trust with out consumers and fans and perhaps down the line rewarding them directly is where I instinctively head.?Until proven otherwise the blockchain looks like the best technology long term to achieve this.

4.??????Transparency, relevance and immediacy

On a macro level I worry about the lack of trust in the world.?As a student of politics and history this widespread distrust is troubling.?Finding ways to increase therefore the relevance and transparency of what we do in sports is important to me.?Again, whilst imperfect the ability of a decentralised system to be transparent offers some exciting future opportunities to repair the distrust between sports teams and their fans.?We are a LONG way off from there today but on this one I choose to be idealistic!

I spent the summer of 2017 reading up on blockchain and learning about how it worked and as my original article stated I saw opportunities for sports.?I admit that the most obvious ways to me to achieve its breakthrough in sport have been disappointing – as a ticketing, security and database tool.?

Perhaps I was too na?ve four years ago and allowed my excitement to get the better of me.?Whilst I believe those should be where most sports organisations are spending their energy in looking at how to use this technology it is unsurprising to see it’s been picked up primarily where there is a direct payment involved.?The short-term revenue impact having a bigger say on sports embracing a new technology than the understanding of the true value that a foundational tech can provide.

Its therefore unsurprising to see sports organisations hiring a Head of NFT rather than Head of Blockchain…the two are linked but not the same.

So where are we today?

In a gold rush.?

Cyrpto Boom…

Sports, hammered by Covid, have seen the latest sponsorship category emerge. Blockchain or Crypto companies, with lofty valuations from a sometimes irrational market have cash to burn.?Sport, as it did with tobacco, alcohol, finance, betting and telcos has rushed to grab this this gold.

We are going to see a significant amount of sponsorship transactions take place in the next 12-24 months. ?The true positive about this is that it reminds us of the power of sports.?In order for Crypto.com or Binance amongst others to move beyond the innovators and early adopters and to build into the majority of the populace they are investing heavily into sports as their marketing vehicle.

Only 3.9% of the planet owns a cryptocurrency (barely out of the innovators category in our econ 101 class).?That still equates to almost 300m people but tells us that we are still in its infancy.

The opportunity for crypto companies is therefore enormous.?Sport, along with music and gaming, are going to be able to cash in on this on the sponsorship front and I would whole heartedly tell them to embrace it.?Clearly, they should do their homework on the companies in this space (only last week we saw Man City and Barcelona have to effectively admit they hadn’t), get to know the crypto industry, learn the difference between the various currencies, their capabilities and what they are used for.?But sponsorship is a valid commercial model and sports should continue to embrace.

The vast majority of those users 300m current owners of crypto are of course speculators.?They were the innovators who jumped in on Bitcoin when it was almost worthless, saw the potential of Ethereum and now acquiring the host of other currencies out there.?Its not a bad macro investment thesis.?As more people open crypto wallets the overall value of the currencies should increase, and you should end up with a gain.?But buyer beware…speculation has its ups and downs.

Given the vast majority are speculators, and the currencies are advertising to sports fans to attract users to change that scenarios it’s a bit bizarre to hear the warnings that the current users of crypto currencies are speculators!?

Fan Tokens

I’m intrigued by this space.?To me its incredibly exciting but not without potentially significant pitfalls ahead.?

I’m on record stating that the current product we see today is not where it will end up in the future.?I said it on stage at World Football Summit and have said it in writing here and on twitter and LinkedIn.?

The model will evolve, and I think clubs and token providers will continue to improve as they begin to learn what the fans want.?As stated above, its inevitable that in the early days the owners of these tokens are currency speculators.?Its quite literally unavoidable as they are the ones in the cyrpto world.?The offering of tokens to the fan bases at a low initial price helps build a broader base but I can see how this model might change over time.

What excites me though is that there is now an opportunity for a club to build a more direct relationship with a fan.?Twitter polls have been better than what we had before but this is the next step forward.?

Don’t get me wrong – we have a long way to go – but driving engagement to Facebook, Instagram and Twitter whilst serving a purpose must be improved upon and the tokenisation of this process feels inherently better.

NFTs

Watching people discombobulate themselves over the rise of NFTs astounds me.?It just feels so obvious, and it’s like a replay of conversations dispelling the rise of esports.

This is a digital version of what we have done for generations in the physical world.?It also enables new ways of interacting, digital storage, moving images etc.?People have spent a fortune on trading cards so why not NFTs?

Sometimes we must remind ourselves that our personal wealth is almost entirely digital.?We have long ago had to accept that the ‘money’ you have is a number in bank server, not physical cash or gold but a 1 or a 0 in electronic form.

Are the valuations of NFT companies like Dapper Labs and Sorare reasonable??That I have a harder time with and I would not have invested at this current valuation (and I might be an idiot for that).?However, we shouldn’t forget that some of the reasons for those valuations is the broader market scenarios we live in withlow interest rates, the glut of money from central banks and the need to find a place to put it. Is Tesla really worth $1Trillion? I doubt it but it that is the top of the market the NFT prices almost feel reasonable.

Smart Contracts

The less sexy bit, and perhaps the part that I love the most.?I am not a crypto currency speculator, rather a blockchain enthusiast.?It’s in the tokenisation of the world and the creation of smart contracts that I see real value being built – and not just in sports.

This can come in terms of memberships, loyalty programs, ticketing and so many other forms.?This would enable sports organisations to build over time a true relationship with their fans and followers the world over in a permission based, trust system.?If the fan is at the core of what we want to do in sports then blockchain and smart contracts should be in your masterplan.

If you need a bigger reason for this then realise that any form of media can be tokenised.?Given that is the case the solution to broadcast piracy may well be blockchain based (this might well be a case of burying the lead).

What I’m driving at

The Fan is King.?Blockchain, used correctly, enables a much deeper and more direct relationship with fans near and wide.?

The end product of that is hopefully a deeper level of interaction and involvement and of course ‘monetisation’.?Sports to me have barely touched the surface of what they can do with a fan focused business model.?Blockchain is merely a foundational tech to make what was once impossible, possible.

As an industry we should not be scared to say that we want both a deeper engagement with our fanbases and to keep more of the money within the direct industry.?I am the definition of a fanatical fan but this is a business and I want fans, clubs, governing bodies, agencies and the like to do materially better from sports growth.

This is not a zero-sum game.?Indeed, if sports can embrace tech (not just blockchain) in the right way then all facets of the industry should benefit.?There is a symbiotic relationship between sports, media, broadcast, sponsors/advertisers, gaming and gambling.?I’ve worked across the spectrum and want all to do well.`

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Want to know more about the Fan Flywheel, Blockchain in sport or my Playbook for commercial success feel free to DM me on Linkedin or Twitter.