By Tariq Saleh
English soccer’s Premier League has opened an investigation into the growing relationship between cryptocurrency firms and its clubs, with concerns by fans over the lack of regulation in the industry, it has been reported.
Crypto firms have been partnering with top-flight English clubs at a rapid rate and this season. More than half of the 20 clubs have sponsors in this space, with those partners having invested over £20 million ($26.6 million) in deals cumulatively.
There has been a 285 per cent increase in crypto deals between 2020 and 2021, from 27 to 104.
Platforms such as eToro, Crypto.com, Socios and Sorare have developed a footing in the market by partnering with many teams in England and across Europe’s major leagues.
Premier League outfits Watford and Southampton have crypto companies as shirt sponsors in deals with Stake.com and Sportsbet.io, respectively. Watford also have the Dogecoin logo as their sleeve sponsor for this season.
Due to the Covid-19 pandemic, clubs have lost substantial income and have been forced to seek ways to make up for this, such as by developing new revenue streams.
Many have looked to the crypto and NFT market to supplement income due to the growing prevalence of blockchain technology, which has made sponsorships so common in this space.
Cryptocurrency sponsorships are being viewed as an alternative to deals with betting brands as the UK government prepares a widespread ban on gambling advertising in sports.
However, the Premier League is growing wary of the impact such deals are having on fans, with supporters’ groups worried that fans are being tempted to buy products (such as ‘fan tokens’) using cryptocurrency in the hope that its value may increase.
In a recent meeting with the league, fan groups argued that the unregulated industry lacks consumer protection and could harm supporters who invest in digital currencies.
The league’s probe into the market comes after Manchester City suspended their contract with 3Key, a supposed decentralised finance firm, just days after it became an official partner of the club last month.
With no information regarding 3Key’s structure, ownership or products available anywhere online (at least publicly), the contract is understood to have been cancelled with hours left until 3Key faced a deadline of providing UK authorities with proof of its identity.
In the days following the partnership announcement, 3Key was repeatedly unable to prove its existence as a legitimate firm to UK-based media.
The Premier League has now taken it upon itself to explore the links between crypto firms and clubs to protect the interest of fans, with chief executive Richard Masters “committed to looking into the issue.”
Most partnerships in this space involve the creation of a fan token in exchange for playing a part in influencing club matters.
Conrad Wiacek, GlobalData’s head of sport analysis, said: “While we have seen an explosion of cryptocurrency deals across soccer, and specifically in England and in the Premier League, there are doubts as to the fan-friendly nature of many of these deals.
“Fan tokens are being ‘sold’ promising fans a greater say in the way clubs are run. However, many of these fan tokens are nothing more than a means of generating revenue for the crypto firms providing little to no impact on the actual running of the club.
“While those selling these fan tokens argue that this allows fans a greater say in how clubs are run, scenes like those at the Bayern Munich annual general meeting suggest that clubs have little interest in providing fans a greater say, instead using the promise of fan tokens as a means of generating new revenue streams in the face of losses from the pandemic.”
Last week, German giants Bayern Munich were granted a court order to block a vote among its members at their AGM over the possible renewal of their sponsorship deal with Qatar Airways.
With cryptocurrency now firmly in the mainstream, sponsorship deals in this space are likely to become heavily scrutinised, mainly due to the market’s unregulated nature.
However, despite the Premier League’s probe, the Times reports that it is considering a partnership of its own with a cryptocurrency platform that provides non-fungible tokens (NFTs).
The league’s approach will reportedly be “slow and cautious” and different from the fan engagement model provided by a platform such as Socios.
The Premier League is more likely to follow in the footsteps of Spain’s LaLiga, which recently partnered with French digital soccer collectibles platform Sorare to offer NFTs of all players in the league for fans to trade and play in fantasy tournaments.
In the US, the basketball’s NBA and American football’s NFL both have deals to create officially licensed NFTs through Dapper Labs, while Major League Baseball has partnered with Topps.
Copa90's head of cryptomedia Petrit Berisha recently discussed the rise in crypto sponsorships in soccer in an interview with GlobalData Sport.