UK football teams were happy to take crypto money, and crypto money was happy to invest in football. The results are in.
(Bloomberg) — It was a mouthwatering match for sports enthusiasts and City of London traders alike: football and cryptocurrency, together at last! One was an all-consuming passion that only fans could understand, and the other was football.
With their huge overhead, including the wage bills of players, football clubs are always looking for new streams of revenue. Back in the heady days of early 2021, crypto in all its forms (sponsorships, NFTs) was an attractive new source of funds, especially as the pandemic threatened traditional sources of income. Newly rich crypto evangelists, for their part, seemed to relish the opportunity to raise their profile via sports with mass appeal.
Football history was made in January 2021, when the Spanish striker David Barral, an otherwise overlooked journeyman, was transferred from Real Madrid’s B team to DUX International de Madrid in a deal funded entirely with Bitcoin. At roughly the same time, seven English Premier League clubs, including Brighton & Hove Albion and Tottenham Hotspur, joined forces with an investment trading site called eToro.
The crypto boom peaked in November 2021, when Bitcoin achieved its highest value to date. Now it’s hovering around $18,000, and many crypto companies have gone bankrupt. Against this uncertain background, a group of American businessmen are gamely trying to realize their vision of bringing new online investors into football at a club they’ve bought themselves in West Sussex.
Last April, Crawley Town’s Red Devils were purchased for a reported $20 million by a consortium of investors including the American Preston Johnson and his cryptocurrency sports company, Wagmi United. (The name is an acronym of “We’re All Going to Make It,” a boosterish mantra of the kind you may encounter in the world of crypto bros.)
The Red Devils have been having a pretty torrid time of it lately, languishing in the lower reaches of League Two, the fourth tier of English football. Results have been mixed, managers have come and gone like fresh towels in the dressing room and Crawley fans have been exposed to the ultimate solecism: the owner himself, immediately recognizable thanks to his Old Testament beard, sitting in the dugout and barking instructions at the players. (A club’s Mr. Moneybags might be tolerated at a safe distance—in the directors’ box—provided the team is winning.)
What’s especially interesting about the Crawley Town story is Johnson’s vision for the club. He wants to expand its loyal but modest audience to a global online fanbase. Remote supporters can purchase NFTs that will enable them to attend board meetings virtually and take part in decision-making, says Johnson. In July, Bloomberg reported that the club sold more than 10,000 NFTs worth a total of $4.8 million to more than 5,400 buyers. Since then the volume of trades and the average price of the token have been in steep decline.
A company called Socios.com has already introduced something similar at a number of European clubs. Chief Executive Officer Alexandre Dreyfus says that “Fan tokens are a kind of digital membership that give fans a right to be recognized.” Supporters have input on matters including “the music in the stadium when the team scores a goal or the design of the jersey for the next season.”
View this post on Instagram
A post shared by WAGMI United (@wagmiunited)
So far, the fortunes of these football NFTs have the same arc as a goalie’s clearance: soaring at first, then dropping away sharply into a headwind. Fans of Premier League leaders Arsenal have seen their NFTs decline by more than 80% since their peak, meaning that supporters who’ve sold have lost potentially significant sums.
Last spring, Liverpool attracted derision with plans to sell cartoonlike digital artwork of its first-team squad and manager, Jurgen Klopp. The mockery only intensified after the sale flopped. If the Merseyside club had sold all 171,072 “unique images” on offer, it would have made £8.5 million (about $11.2 million at the time). But only around 6% of the tokens found takers. The Liverpool NFTs are traded on the marketplace OpenSea. They achieved a top price of £57 each, but their value has slipped to less than £9.
To hear Crawley Town’s Johnson talk, you’d think football fans were impatient to make the decisions at their clubs. But is he right? Yes, they might fancy a new midfield, a marquee signing up front, even a clear-out of the board and chairman. But one of the most blissful aspects of watching football is abandoning all responsibilities at the turnstile. Fans know they’re milk cows who will shell out for tickets and merchandise every season. This buys them the right to moan and protest. “No one likes us, we don’t care,” sing fans of Millwall, traditionally a club of hard nuts from Southeast London. This is the anthem of people who are nowhere near the boardroom and like it that way.
In Fever Pitch (1992), a groundbreaking work of nonfiction about the experiences of a football fan, Nick Hornby captured the resigned fatalism of the supporter who has the same relationship with their club as a Sicilian peasant farmer has with the elements. “Few of us have chosen our clubs, they have simply been presented to us; and so as they slip from Second Division to the Third, or sell their best players, or buy players who you know can’t play … we simply curse, go home, worry for a fortnight and then come back to suffer all over again.”
Football financing may become ever more esoteric, but the essential verities of life as a fan are unchanging. As if to confirm supporters’ worst fears about owners, Johnson has divulged that the diehards in the stands aren’t really his target market at all. He is more interested in what he calls the “Web 3.0 crypto audience,” who understand his vision that blockchain technology can be used to change the way we use the internet, decentralizing power from tech giants.
Johnson isn’t selling crypto to football supporters, he admits, he’s selling soccer to NFT collectors, a rare breed. For the increasingly international supporters of the Red Devils, it really is a game of two halves.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.