Sport in blockchain: a new era.

Intro

In our previous article at this link, we opened the topic “sport in blockchain”. In this one, we continue the discussion by highlighting some key elements useful to understand together how blockchain (described in this link) can have a positive impact on sports in general, examining some evidence in the most followed and practiced sport nationally and internationally, especially at the European level: football.

• Teams face great difficulties in finding new methodologies to improve and increase revenue: the big ones are getting bigger, while smaller ones struggle to emerge consistently.
• There is a strong search for introducing new technologies into a system that needs innovation: UEFA itself pushes for introductions and tests of new technologies (example: VAR).
• Football club presidents are not the same as they were before: they don’t have infinite pockets and the team’s funding is not continuous. Financial fair play is now law. Financial accounts must comply with certain parameters today. We could open an entire chapter on the effectiveness of Financial Fair Play: does it really work? Can it be improved? Could sport on the blockchain give it an extra step of development?
• Difficulty in interacting in a tangible and profitable way with fans far from the place of origin of the team in question, especially if they are in another country or continent.
• We often witness problems in fan management, both internally at the stadium and externally, such as ticket scalping. All of this is compounded by the exceptional situation caused by Covid-19: it is now evident to everyone that the sport that was once constantly followed “live” and physically by fans, supporters, and professionals in the sector, has now moved significantly into the digital world, by necessity.

This is why those that were previously only studies on new approaches to the digital field, have had to forcibly transform quickly towards the digital, to favor viewers, sponsors, professionals in the sector, but above all the survival of the “circus” of football (and/or sports in general) and of all the thousands of people who work within sports.

Examples can even be found in the fight against piracy: Denmark, Great Britain, Italy. We could go on, but it is clear how especially in this period, the search to limit losses and find new sources of income has increased.

Why sport on the blockchain

As we have learned in previous articles (link here), the blockchain can be synthetically defined as a decentralized, distributed, immutable, programmable digital register (smart contracts) that mathematically tracks every transaction, “geolocating” the temporal values (Time Stamping), allowing an effective and distinct value to be given to the subject of the transaction itself (type of token chosen, analyzed at this link). Therefore, it does not have a single application value, but can be approached independently from the chosen side (sport, public administration, finance, supply chain, etc.) in relation to the purpose to be pursued.

Sponsors

The sport of today has evolved greatly compared to the past: it’s no longer just sport, it has become business applied to sport. In Europe, the clear example is soccer, where especially the most successful teams have rapidly and inevitably turned into companies.

Revenue is on the lips of all experts, who describe the differences in value between teams often focusing on the argument “team A has a larger budget available than team B, therefore it has greater chances of winning.”

This is certainly true, except for rare exceptions: teams like Leicester in England or Napoli and Atalanta in Italy, Borussia Dortmund in Germany, Atletico Madrid in Spain have become protagonists in winning sports events, even though they are not equipped with budgets comparable to the major teams.

Top teams like Bayern Munich (Germany), Real Madrid and Barcelona (Spain), Manchester City and Liverpool (England), Paris Saint Germain (France), Juventus and Inter (Italy), have had to quickly develop a broad and diverse marketing strategy to secure sponsorships from all over the world: sponsors = revenue = greater investment = greater chances of winning trophies. It’s a virtuous circle that feeds itself.

Sponsors seek visibility in order to increase their customer base: sponsoring a team becomes an investment. That’s why both top teams and sponsors often filter each other, using the best of each other (more quality than quantity generates more advantages and profit for both parties). The sponsorship market, especially for small teams, is not evolving.

In Italy, we are witnessing an attempt to open new paths to restore quality to a market inflated by quantity. Teams like Juventus, Atalanta, Inter, are focusing heavily on increasing and improving their fan base, in order to create stable flows of capital on the sponsorship side.

Construction of new sports facilities owned by the team, modernization of their own facilities, heavier use of “Social” media based on numbers, and aggressive targeting of foreign markets considered similar to their own “colors,” are just some of the paths pursued by the most forward-thinking clubs.

Rankings: usable numbers from sports in blockchain.

Sponsorships around the world

Here are the top 10 clubs (updated to the pre-Covid 19 situation) that have invested the most in euros over the years in the “sponsorship” category “technical sponsor” (source 90min.com):

• Barcelona: Nike sponsor bringing in 110 million per season;
• Real Madrid: Adidas sponsor bringing in 108 million per season;
• Manchester United: Adidas sponsor bringing in 108 million per season;
• Manchester City: Puma sponsor bringing in 72 million per season;
• Arsenal: Adidas sponsor bringing in 66 million per season;
• Chelsea: Nike sponsor bringing in 66 million per season;
• Juventus: Adidas sponsor bringing in 51 million per season;
• Liverpool: New Balance sponsor bringing in 50 million per season;
• Bayern Munich: Adidas sponsor bringing in 47 million per season;
• Tottenham: Nike sponsor bringing in 33 million per season.

Sponsorships in Italy

Here is a breakdown of the top 10 in Italy with the respective earnings in euros from the main shirt sponsors (source calciomercato.com):

• Juventus: Jeep – 23 million
• Inter: Pirelli, Driver – 19 million.
• Sassuolo: Mapei – 18 million.
• Milan: Fly Emirates – 18 million.
• Roma: Qatar Airways, Hyundai – 17.5 million.
• Napoli: Acqua Lete, Msc crociere, Kimbo – 11 million.
• Fiorentina: Mediacom, ValdiFassaTrentino, Prima.it, Estra – 4.25 million.
• Torino: Suzuki, Beretta salumi, Ediliza Acrobatica, n.38 Wuber – 4.2 million.
• Atalanta: Radici Group, U-Power, Gewiss, Automha – 3.45 million.
• Cagliari: Artigianato di Sardegna, Ichnusa, Nieddittas – 3.35 million.

The above numbers have an impact on the user base of the top 10 Italian clubs (source calcioefinanza.it):

• Juventus: 7.7 million fans.
• Inter: 3.9 million fans.
• Milan: 3.8 million fans.
• Napoli: 2.7 million fans
• Roma: 1.8 million fans
• Fiorentina: 670,000 fans.
• Lazio: 606,000 fans.
• Lecce: 98,000 fans.
• Brescia: 91,000 fans.
• Sassuolo: 72,000 fans.

This user base is closely related to sponsorships. If we also consider the social media audience, things become even clearer. Let’s take a look at Facebook and Instagram only, here’s what happens (source leggo.it):

Facebook

• Real Madrid: 109 million followers.
• Barcelona: 103 million followers.
• Manchester United: 73 million followers.
• Bayern Munich: 50 million followers.
• Chelsea: 47 million followers.
• Juventus: 38 million followers.
• Manchester City: 37 million followers.
• Arsenal: 37 million followers.
• Paris Saint-Germain: 37 million followers.
• Liverpool: 33 million followers.

Other Italian teams: Milan (24 million), Inter (13 million), Roma (9.5 million), Napoli (4 million), Lazio (1 million).

Instagram

• Real Madrid: 71 million followers.
• Barcelona: 70 million followers.
• Manchester United: 28 million followers.
• Juventus: 26 million followers.
• Paris Saint-Germain: 21 million followers.
• Chelsea: 16 million followers.
• Bayern Munich: 16 million followers.
• Liverpool: 15 million followers.
• Arsenal: 14 million followers.
• Manchester City: 12 million followers.

Other Italian teams: Milan (6 million), Inter (3 million), Roma (2.5 million), Napoli (1.5 million), Lazio (0.5 million).

The numbers shown here speak for themselves in terms of the relationship between sports teams and their sponsors and how one team may have more value to a sponsor than another, given the number of fans and followers they have on various platforms.

How can sports impact blockchain?

GDPR compliant

There are various directions: the use of data by the team, in relation to its own goals and in compliance with GDPR, can quickly become a new asset, monetizable through the development of sports in blockchain and the tools closely related to it.

Tickets could become deliverable in digital format through peer-to-peer systems via sports platforms in blockchain (saving on paper costs and direct analysis of various analytics), facilitating the resale of unsold tickets or spectators who cannot attend the game and who would therefore like to resell their ticket quickly and securely.

• More profits for the club.
• Greater security and speed for the fan.
• Greater interaction between the parties.
• Football stadiums would become more populated, externally there would be greater order because fans would already have tickets.
• Access and use of stadium facilities would become more fluid, orderly, and quickly monitored.
• Communications between the stadium and fans would be more direct and immediate thanks, for example, to the now-developed communication systems with notifications in bacon or push style or similar, increasing the interaction of fans with the team, in a “smartphone app” ecosystem based/relies on blockchain technology.
• By developing sports in blockchain, fully automatic smart contracts can even be set up to generate rewards for the most active fans, both during a sports event and during the days leading up to the event, both inside the stadium and comfortably from home (or elsewhere): for example, tickets or other credits to be spent within the team’s network system.

All of this clearly also impacts emergency situations that cause the non-use of a stadium, such as the current Covid-19 emergency. Sports in blockchain, through the use of amalgamable technologies, can indeed maximize interaction with the fan digitally (no longer directly at the stadium), various types of assets can be created that, correctly rendered into tokens, help both teams and fans, not to mention sponsors.

Internal and external network interactions

Such an automated system by blockchain allows for advantages not only for teams and fans, but also for the sponsors themselves: the networks generated by sports in blockchain generate team-fan interactions (internal network) of various types. True numbers, saved in blockchain and therefore immutable, analyzable, and usable by sponsors themselves to maximize their investments in various clubs.

Sponsors, in fact, by entering these networks amplified by sports in blockchain, would cascade into team-fan interactions, thus being able to enjoy team-fan-sponsor interactions (external network), all clearly in blockchain networks that comply with GDPR regulations and built with an agile UX for the fan user, but also and above all for the administrator user.

By entering this type of network in blockchain, the sponsor would guarantee the possibility of being able to work live on user data in compliance with GDPR, in order to be able to offer them special products, exclusive prices, various types of events in addition to other assets that we will analyze together.

All from the personalized platform in the network, capillary from sports in blockchain. It should be emphasized that often a sponsor is present in various teams, so they would have the possibility of uniting users from multiple teams that use a network in blockchain, even if from different teams.

A similar reasoning can be developed from the fan’s perspective: since they are already part of a defined network, they could benefit from various advantages. Discounts for stadium tickets or for watching their team’s matches on TV or through streaming; interactions with instant prizes, advantages for purchasing accessories of their favorite team, both online and offline.

Even traditional physical offline stores could take advantage of this: the store could be a point of access to a specific network that enjoys special discounts through the use of specific tokens, allowing fans to purchase products at advantageous prices.

This reasoning could easily be developed in a dedicated article, given the high importance of the existence of offline physical stores, as well as online e-commerce.

Super-targeted marketing

This translates (for sponsors) into a more targeted marketing approach, which can be executed in a softer, non-aggressive way, since it is aimed at a target audience that is more sensitive to the sponsor.

Let’s think about sponsor interactions during a match or simply analyzing the system of fan groups that interact with the sponsor (online and/or offline) during an event, demonstrating interest. In this way, the sponsor could then consider such a group of fans as “warmed-up” target users, interacting with them (as previously mentioned) even outside of events, in the following days and weeks.

The sponsor could also create their own assets, to be placed online within blockchain sports networks, led by specific tokens, in order to interact with the team-fan-sponsor environment or, possibly, act alone, animated by distinct purposes and objectives.

Small realities, lower sports leagues

In this article, we have focused on the numbers generated by the big players of the football system, in order to provide a broad view of blockchain applications for these numbers. Paradoxically, this technology could be even more effective when applied to smaller, more geographically contained realities.

Let’s take a look at lower football leagues: unlike the equal English teams that generate huge revenues compared to ours (Italy, from Serie B League downwards), in Italy there is a lot of difficulty in finding the necessary funds to compete constantly at high levels, even in Serie A.

A technology like this would allow for more widespread and constant involvement in the local fan base and sponsorship. A medium to low football reality could, in fact, succeed in involving their fans not only on match day, but also (and above all) during the other days and weeks leading up to it. This would generate measurable, real interactions that sponsors could directly benefit from by entering the blockchain network of the reality in question.

This is without considering the assets that could be created and monetized by medium to small clubs themselves, through tokens.

Conclusion

The applications of networks generated by sports in blockchain certainly do not stop here. In this article, we wanted to examine some numbers on which blockchain-based token assets could be created, managed systematically through smart contracts, secured and traceable through cryptography, timestamping and other blockchain elements, and finally analyzed with tools designed to maximize the generated numbers.

Thanks to these numbers, we have been able to highlight how this technology can be applied to both large and small realities, resulting in a disruptive impact both for fans and sponsors, not to mention the impact it could have for athletes themselves who could finally have a tool on which to monetize themselves constantly.