When the pandemic halted games in 2020, football clubs across Europe introduced fan tokens, digital assets that allow fans to interact with and have a say in their favorite teams’ decisions. The opportunity to digitally engage fans and add a new sponsorship category, at a time when traditional revenue streams were suppressed, was irresistible to sports organizations.
NFT mania followed in 2021, and fan tokens were lumped into that news cycle, according to Max Rabinovitch (Chief strategy officer, Socios). In many cases, the value of team tokens skyrocketed.
Since then, crypto winter has arrived, token prices have plummeted and negative fan sentiment has mounted in the UK, leading some clubs to pull back on the promotion of their fan-token programs. But if history is an indication, digital subscription membership programs are likely to rebound. “When something emerges as a new category, as a way to make money and grow the brand, teams are going to give that sector a lot of latitude to figure it out,” one senior MLS club consultant said.
Rabinovitch believes delivering token-holders a rich membership experience, one that provides residual value and utility, is the key to making a subscription membership program a success. To do it he said clubs will need to trust Socios, a fan-token platform, with more decisions of consequence, take a larger role in their experiential activations and expand the program’s benefits beyond the organization.
JWS’ Take: Fan tokens serve as the entry mechanism to a given team or league’s digital membership program. There is a distinct difference between Socios’ fan tokens, which are fungible, and non-fungible token projects tied to sports IP, such as NBA Topshot.
Token-holders can vote on club-related decisions, check-in at home games and play prediction and trivia games within the team branded environment. All of the activity conducted on the digital platform is filtered through a gamification engine that rewards users for their loyalty to and engagement with the organization.
Socios never touted its product as a moneymaking investment opportunity, but teams still bought up fan tokens in 2020 and 2021 looking to make an easy profit. And some did—at least for a time. Paris Saint Germain’s $PSG token rose from $2 at launch to over $56 when the club signed Lionel Messi in April 2021.
But when crypto and NFTs fell out of favor, fan token values fell with them. $PSG is worth $6.59 at the time of print. FWIW, $CHZ (-9.5%) has not crashed as hard as many other cryptocurrencies, including Bitcoin (-50%), over the last six months.
For many fans, investing in fan tokens hasn’t been fruitful. “The biggest benefit communicated to fans upon signing up [for the fan token program] is access to enhanced fan engagement or some form of input into decision-making. For any decision of note, this is input the vast majority of clubs are collating already,” said Mark Thompson (chief operating officer, Burnley FC), whose club is one of the few among European football teams without a fan-token program. “The idea that these platforms alone create value for fans is a big reach. All it does is shift the [perceived] value to a platform where fans need to pay to access.”
Similarly, many of the rewards token-holders have been able to earn are things the club has historically given away to fans for free (think: team merchandise).
There are plenty of UK fans upset with the declining value of their tokens, but no team has elected to terminate the relationship with Socios. The MLS club consultant said there is no reason for a club to write the partnership off now. “These [crypto] things are still shifting. Let’s see if [fan tokens] work out. If it does, [the clubs] will make a bunch of money off it. If it doesn’t, they didn’t really lose too much.”
While the clubs may not lose much, there will be fans who do. But from an ownership and operating management perspective, most teams cannot afford to get bogged down worrying about what their fans elect to spend money on. “If a sponsor is willing to pay a club for its name and likeness, the deal is worth exploring because it is expensive to own and operate pro sports teams,” the MLS club consultant said.
Clubs with current Socios deals are likely to enhance the fan engagement elements of their offering and see if the revenue line can figure itself out. To maximize the program’s value, Rabinovitch said clubs will need to embrace Socios as more than just a sponsor. The more access and authority they give the platform to make decisions of consequence, the more value it can deliver to token-holders. “Our smaller partners do needle-moving stuff. They let people pick lineups for friendlies and actual kit designs that they can then go buy in the store.”
Clubs also need to take a larger role in their experiential activations. “Organizations tend to be fairly reliant on us in terms of being a turnkey solution,” Rabinovitch said. But it is hard for Socios to create meaningful experiences, such as localized viewing parties in multiple languages, on a consistent basis without their support. Remember, the company works with more than 100 clubs.
Expanding membership perks beyond the club should help too. Rabinovitch envisions companies such as Uber or DoorDash offering exclusive benefits to members.
Ultimately, the goal will be to create different types of benefits so fans of all demographics can find value in membership. If the perceived value of membership grows, in theory, the value of the clubs’ fan tokens should increase too.