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Intro Notes, Plugs & Amendments 🔌🔧

The breadth of news at the moment is pretty amazing. This week I could have written a deep dive about Lebron James partnering with Crypto.com to create a more inclusive web3, Breaking the Lines creating a DAO for their newsroom or FTX sending all attendees at the Golden State Warriors 75th-anniversary game an NFT.

When I started this newsletter I was lucky if there was one big story that was worth writing about. Fast forward to present day, and there are a plethora of things I can write about on a weekly basis. Before we get into it, I just wanted to say I’m really grateful to everyone that’s been reading up until this point. The newsletter has seen great growth in 2022 so far and hopefully will continue to do so. A special thanks to everyone that has been sharing it on social media!

🔌I was on Ana Paula Picasso’s blockchain bit podcast to talk about Blockchain and football!

🔌 Episode 3 of the Floorcast is ready for your eardrums

🔌 Early days, but if you're interested in getting ahead of the curve and sponsoring the newsletter - feel free to reach out to me on Twitter or LinkedIn. I've had some people reach out already, but I'll only accept those who I think will be genuinely engaging and benefit readers :)

Stories of the week

Fan engagement platform IQONIQ liquidate

As per Philippe Auclair’s great article above, fan engagement platform IQONIQ - “vowed to become the Number One Fan Engagement Platform for the Sport and Entertainment Industry within the next 3 – 5 years and signed deals with multiple football clubs. Then they disappeared.”

The idea behind ICONIQ is no different to the market leader in the 'fan token’ space; Socios.

Before buying fan tokens of clubs that ICONIQ had agreed to deals with - fans had to buy the platform’s native token - IQQ. Again, no different to a number of fan token offerings out there.

IQONIC had signed deals with Olympique de Marseille, Zenit St Petersburg, Crystal Palace, Euroleague Basketball, McLaren F1 - and a number of other sports organisations & brands.

IQONIC launched their token, IQQ, on the 14th April 2021 - and was quoted at $0.23 at the time. Fast forward to today, the token, once tradeable on Bitcoin.com and Bittrex, is worth $0.00.

Their token is worthless.

Their app is no longer available.

And it appears as though the entity behind this all has been wound up, or is in the process of being wound up.

As per Phillipe’s great article though, there were red flags everywhere even before it went bust…

• Kazim Atilla, their CEO, was named in a case brought forward by the SEC against a con artist named Rodney Tringham

• The company that IQONIC raised $100m from was a Luxembourg-based company named Lux Media Investments. A company that only has one person associated with it (Piet Sarloos, a Greek resident) - no employees, and no income.

• Atilla was formerly CEO of a real estate company names InfinAgora, which burned millions worth of investor cash within two months of its launch in 2015. 

From a few people I’ve talked to, IQONIC actually didn’t give many, if any of their partners any capital. Many of the sports brands above will have been left empty handed.Money aside, however, you have to question the due diligence that is being done by these brands internally.

I’ve written frameworks in the past for how sports brands should be approaching some of these deals - and honestly - a lot of it is common sense. The sad truth is that the over commercialisation of sports has meant that often enough if there’s a large sum of cash available, most of these franchises don’t care.And there are bad actors everywhere, but as I’ve written before when you’re at the bleeding edge - people tend to take advantage. When online banking first became a thing, there was a lot of fraud. A lot. As crypto and blockchain-enabled applications become more mainstream, I think we will level off in terms of bad actors.

Why has this become the fan token model?

The reason I chose this story as the deep dive for the week was that I’ve been thinking about the fan token model - a lot. These models revolve around ‘fan engagement’ - or so, that’s the pitch.

But fan engagement is something that traditionally for sports franchises - falls under the marketing department. And usually, it’s a cost to the franchise - not something that makes a lot of money.

These fan token models have become more akin to sponsorships. But instead of the brand giving franchise money, it’s coming out fan pockets.

• A traditional sponsorship usually works when a brand gives a sports franchise money for reach and brand positioning

• With fan tokens, the way it works is the fan token creator and franchise split the profits made by the sale of the token. The tokens are sold to fans (or anyone, for that matter, so you don’t even need to be fan) and then the profits are shared, presumably. 

A lot of people have complained about the fact that this is not fan engagement. And truthfully, paying to own tokens that grant you a vote in what celebration a footballer does next or what the colour of an armband is to me is not what I imagine when somebody says the word ‘fan token’.At the same time, this is just another way that big sports franchises are trying to profit from their consumers. Mugs, jerseys, memorabilia and more - but now we’re moving to the digital version of these, right?

Well…maybe not. These tokens can also be traded on secondary markets and can have great volatility meaning fans or buyers can lose (or gain) lots of money by trading them. Again, you can of course do this with sporting memorabilia - but not with the same liquidity.

So is this all fan tokens will ever be?

I’m not convinced by the current state of fan tokens.

The models that are currently in front of us do not make sense to me. This is an overly financialised model that has made A LOT of money for sports franchises, particularly football clubs.

Some football clubs have booked yearly revenues through Socios for example that can buy you a twenty goal-a-season striker. Make no mistake about it, this has become a big money business. 

Now in an ideal scenario, what I think of when someone says fan token to me:

• A reward or loyalty scheme on steroids & tokenised

• A cost centre to the sports franchise, which is put under marketing, in order to engage a large, global audience in a digitally native way

• A tokenised system that prioritises actual fans, either game-attending or global

• A tokenised system that enhances the experience of a fan on game days

I don’t have all the answers, but I imagine a system that allows an Arsenal FC fan the ability to scan a QR code on their living room TV in Australia to prove that they were up incredibly early (or late!) to watch the game.

A system that distributes fan tokens that can then be used to get discounts from a number of vendors, or merchandise from the official store. The good thing about tokens, or NFTs, or anything that is helped in a crypto wallet is that you can also incentivise an entire network to do something or use your product or service. For example, Starbucks could drop all Arsenal fans who hold a token in their wallet - a starbucks NFT. And that NFT might give you a free coffee once a month for the next three months. That’s a pretty base example, probably a poor one.What I’m getting at is that fan engagement in my opinion as first and foremost a sports fan, shouldn’t be commercialised to this extent. 

Someone has to come up with something better that actually does engage fans, that actually does add value to their relationship with the sports franchise they follow.

The issue is, convincing some of these sports franchises that have these huge revenue-generating deals in place to part ways with the platform they’re working with - won’t be easy by any stretch of the imagination.

Fan tokens don’t feel very engaging to fans right now. The fan tokens of tomorrow, hopefully, move toward a less financialised model. 

More big stories & things to put on your radar

• The Winklevoss twins are sponsors of Real Bedford. How many $7bn+ companies sponsor 10th tier British football teams?

• Lebron James has partnered up with Crypto.com to help create more inclusive opportunities for people in web3. 

• Luke Shaw was greeted with a lot of backlash for his new NFT collectables. Not many celebrities are doing NFTs well, and footballers, in particular, need better advice.

• GOALS article about a more inclusive future for the beautiful game

• Polkadot, one of the largest crypto currencies by market cap, are going to be Barcelona’s new sponsors

• US Sports franchises are so, so far ahead of their European counterparts when it comes to Web3. Crypto companies have a superpower. FTX are sending all fans in attendance a 75th anniversary NFT.

• Erling Haaland smashes records on Sorare - becoming the most expensive Sorare card to ever be bought on the platform.

• Breaking the lines are seeking to develop a DAO focused on creating a web3 enabled newsroom. Watch this space on this one.

Great reads, great tweeting and more general ‘stuff

• Great tweet by Packy McCormick, the most prolific writer in the world at the moment

• We’re very early

• Most NFT collections will be worthless

• DAOs this, DAOs that

• Centralisation is becoming a bottleneck 

• This is what the metaverse means…

• FTX raise again…crypto is not going anywhere, anytime soon

Thanks!

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m really happy to see so many people enjoying it and sharing it with their networks. If you enjoyed this, please tell your friends who might be interested - and share it on social :)