As Soccer Embraces Cryptocurrencies, Regulatory Attention Looms

Recent months have seen a series of partnership deals involving soccer, the world’s most popular sport, and various organisations in the cryptocurrency industry. A number of top clubs clubs, including Arsenal, Tottenham and Paris Saint-Germain, have agreed sponsorship deals with cryptocurrency companies or announced plans to launch ‘fan tokens’ in order to raise money and improve their fan engagement and participation experience.

From PSG Fan Token to ‘Ronaldinho Soccer Coin’

At the start of the soccer season in August, seven English Premier League clubs including 2016 champions Leicester City agreed a marketing partnership with eToro, a crypto trading platform. During the same period, Wolverhampton Wanderers announced a sleeve sponsorship deal with Cyprus-based crypto exchange Coindeal, while Paris Saint Germain and Juventus, two of Europe’s biggest and most valuable soccer clubs announced plans to launch their own fan tokens, using frameworks that are to all intents and purposes, ICOs.

Meanwhile former world Player of the Year Ronaldinho presented his Ronaldinho Soccer Coin to his 18m followers via his Twitter platform. The RSC project was developed by the Malta-based company, World Soccer Coin and it will issue as many as 1bn digital tokens for about 25 US cents each. The funds raised from investors will go towards projects such as developing an esports gambling business and donating football merchandise to underprivileged children, its website says.

In September, Brazilian Serie A club Avai announced its own plans to launch a cryptocurrency in a proposed $20 million ICO in partnership with blockchain firm Sporty Co., while Cardiff City and Newcastle United in England also announced plans to raise much-needed funds via ICOs through partnerships with Sporty Co.

Regulators Take Note

While regulators have noticed the flurry of crypto-related activity within soccer circles -  particularly in Europe -thus far there has not been any public statement indicating an official position on the trend. This does not however mean that they are not taking note of the situation.

According to the Financial Times, despite silence from watch dogs around the world, concerns have been expressed within influential circles about the potential impact of increased ICO popularity within the sport, particularly with regard to corporate governance, and the morality of marketing investments to typically low-information investors.

Quoted by FT, Prof Simon Chadwick of the University of Salford said:

The same 18- to 45-year-old affluent or emerging affluent individuals who attend sporting events are the same people with interest or curiosity . . . for novel forms of investment. [...] It does raise an issue of governance in football, as well as issues of due diligence, ethics, morality and integrity. The industry is so focused on signing talent . . . that there is a tendency to bypass what might otherwise be deemed acceptable governance standards.

Butressing this point, Javier Paz, managing director of research company Forex Datasource said: “Unfortunately, this demographic group also tends to lack in sophistication to tell fact from fiction in both investment or crypto matters,”

According to the FT, the EU markets regulator has stated that it will not single out the soccer industry for its involvement in ICOs, but it will continue to highlight general ICO-related investment risks to consumers.

Meanwhile, a few soccer clubs have voluntarily chosen to sit out the cryptocurrency partnership rush for reputational risk reasons.Speaking to the FT, an unnamed senior executive at one of England’s leading clubs said:

The danger is that a [football club] endorses an ICO, lots of unsophisticated investors lose a lot of money when it dies and the only reason people have invested in that is because their sports team has promoted it,” the executive said. “We don’t want to wake up tomorrow and see loads of our fans losing money on a product that we have been endorsing.