Thanks to the 3590 readers who are exploring where Sports meets Web3. If you're reading this and still haven't signed up, click the subscribe button below!

👋 Welcome back to another edition of Sporting Crypto!

I think we are going to see an avalanche of Web3 propositions from sports rights holders and large brands in H2 2024. There is usually a 6-12 month lag between crypto markets rising and the euphoria we’ve seen since October 2023, and large enterprise activations. So I expect, in the next 6 months, to see many eye-catching headlines.

If you’re interested in attending our event, RSVP below! 👇

Visit the Sporting Crypto Job Board today to explore new career opportunities, or to find the perfect fit for your organisation.

Discussed in this edition of Sporting Crypto:

Watford Football Club, a football team in the second division of English football (The Championship), are selling ~10% of the club in an equity sale via investment platform Republic’s European platform Seedrs. Anyone can participate, meaning fans will able to buy equity in the team they support. Those who invest will have the option to receive tokens, which may have specific perks offered to them.

Watford FC’s valuation is £175m and they are raising £17.5m in funding, with shares set at £12.44 each. The minimum investment is four shares on Seedrs (£49.76) and eight shares on Republic (£99.52). So far over £3.6m has been raised from 2,245 investors, meaning investors have spent ~£1600 each on average. The shares will have no voting rights and the capital raised will be used to fund recruitment in the off-season, as well as training and coaching to improve the team’s performance on the pitch.

Watford FC’s chairman and CEO Scott Duxbury said:

Republic claims "the sale is, to date, the largest digital equity offering to unlock true ownership shares in an English football club."

Seedrs, acquired by Republic in 2021, have previously helped AFC Wimbledon, South Shields FC and Altrincham FC to raise over £8.4m — but Watford FC is by far their biggest foray into football club investments.

Seedrs say that they “expect the number of clubs opting for this type of ownership to increase over the next few years and eventually for a form of fan-ownership to be featured on the cap table of the majority of British clubs.”

Although the wording around token optionality for those who invest is vague, many outlets have reported that the equity itself will be tokenised, which is fascinating.

But why would you tokenise equity?

Let’s put aside the football aspect for a moment to better explain this.

Tokenising real-world things is hot right now.

Real-time settlement, no need for middlemen, increased efficiency in a globalised market that is transparent, secure and verifiable — that all sounds pretty good.

But, more simply put, making real-world things like putting equity on a blockchain is not a new paradigm, but a huge unlock.

As a friend put it to me when we were discussing this: “There's nothing the internet does that couldn't be done before. We had TV, radio, newspapers. It just wasn't instant, 24/7 and global”

Similarly, equity doesn’t necessarily need to be onchain, but it modernises a quite archaic and old system.

Now let’s discuss why this might be useful for fans, and for the issuer — aka Watford FC.

Equity or share certificates are precious.

If they’re physical you frame them and they’re on your wall. If they’re digital they usually sit in an account you don’t look at often, but hope is secure.

This is where the portability of digital assets can offer something unique for both buyer and issuer.

For Watford FC, they can directly connect with fans who own tokens in a global, frictionless, digitally native way.

For fans, it allows them to log in to portals proving they are equity owners of the club, which may prove more difficult and annoying through APIs, redirects and such. A wallet, or abstraction of a wallet-to-portal user experience is much cleaner.

The wheel isn’t being reinvented here, it’s just being made much smoother and all-terrain.

The way teams are owned in football is changing, and so is the way they globalise their brands.

If you look at Wrexham FC for example, who have made a name for themselves with Ryan Reynolds and Rob McElhenney at the helm, they used a media-first approach to globalise their fanbase, following and reach.

In Germany, there is the 50+1 rule, which essentially guards against investors making decisions without the vote of the members (fans). This has kept ticket prices low compared to many of their European football counterparts.

But fan ownership itself has become a bit of a buzzword in sports, especially when attached to blockchain technologies.

Many have used DAOs (Decentralised Autonomous Organisations) to try to pool capital and buy teams, and then use the DAO structure to run the club. 99.99% of these have failed to get off the ground in any significant way.

Fan tokens by many providers promised some significant voting rights when they were first introduced to the market, but so far have had very little influence in matters that fans care about deeply.

So what does the buzzword fan ownership mean?

In Episode 4 of the Sporting Crypto Podcast, Flex Chapman, Co-Founder of Krause House discussed how they had broken it down into three buckets:

The quote succinctly distils ‘Fan Ownership’ into something more actionable and understandable. The unbundling broadens the definition but also means you can attack one or all of these facets at once. Like ‘Fan Engagement’ it’s become a phrase said far too liberally which has watered down the meaning over time, but this unbundling was a great way to frame what this means.

Ultimately, football is for fans.

Fans are a huge part of the product and therefore a huge part of why football clubs have exceptional value. They are the biggest and only revenue driver. They pay the subscriptions that pay for broadcast deals. They buy merchandise and they pay for tickets. They are the reason sponsors are willing to pay big money to put their logo on the front of jerseys.

The value of football can be directly attributed to fans.

And many would argue that the sport has veered way too far down a commercial path, and lost a lot of its grassroots values and community feel. Football needs to find a way to find a semblance of that once more.

What Watford have done here may not be perfect, but I think it’s a small step in the right direction.

One mistake they have made here in my opinion, however, is not giving any voting rights to the fans, and perhaps a proxy vote to an elected president or supporters’ trust would have been appropriate. In tandem with this, there is also some concern from fans that the money raised could be used to cover owner debts, which is of course a possibility considering the lack of voting rights in the shares being sold.

Where I think there hasn’t been much furore, surprisingly, is the fact that these could be issued as tokens.

Tokens in sports have had a bad reputation since they came onto the scene a few years ago, and for good reason. The tokens issued so far by sports teams, particularly in football, have had no underlying value. They've gone up and down purely based on supply, demand, and trading volume, rather than actual real-world reasons. But this example by Watford FC and Republic is tokenising real-world value.

With that in mind, I like the fact that Watford FC haven’t made everyone claim tokens. It’s not something being forced on buyers. Some of the target audience here won't want to interact with wallets and tokens, and that's understandable. If you are of an older generation, and you've been supporting Watford your entire life, you might want a share certificate on your wall.

We shouldn’t underestimate how difficult tokenising something like a football club’s equity in a globally compliant way is. It’s a real trailblazer moment, and I think many will follow it. Creating a framework for doing this legally, requires a lot of resources and effort, which is commendable in itself.

From a marketing perspective, this has created what I think of as a bottom-of-funnel approach to digital fan engagement, through digital fan ownership. They are targeting the ~1% globally who have the funds available to buy into the club. This is an interesting approach, especially when most sports teams are thinking about how to activate the 99% globally who don't come to the stadium or live nearby. What is particularly fascinating here is that many sports teams, especially in football, know very little about their fans. An example we have used frequently on Sporting Crypto is the Barcelona and Spotify partnership. Barcelona claimed to Spotify and the world that they have 300 million fans, but reportedly, when Spotify wanted to activate that fanbase, they were only able to access data on 3 million of them. If you can only access 1% of your fan base. This first step in Watford FC’s case in tokenising equity and selling it to fans doesn't solve this, but they will have far more granular detail on that portion of their fanbase than most football clubs do. They may potentially use this 1% they've targeted as a hub or sandbox for quickly iterating digital products and experiences that they might then scale to a larger audience.

There is a huge disparity between what sports clubs need to know about their fans to activate them in a way that drives revenue long-term, globally, and digitally, and what they currently have.

How they cross that canyon will be fascinating over the next few years, and I think blockchain technology could play a key part.

Thanks for reading the latest edition of the Sporting Crypto newsletter!

If you enjoyed this, please tell your friends who might be interested - and share it on socials.

This newsletter is for informational purposes only and is not financial, business or legal advice.These are the author’s thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies or projects mentioned are for illustrative purposes unless specified.

The contents of this newsletter should not be used in any public or private domain without the express permission of the author.

The contents of this newsletter should not be used for any commercial activity, for example - research report, consultancy activity, or paywalled article without the express permission of the author.

Please note, the services and products advertised by our sponsors (by use of terminology such as but not limited to; supported by, sponsored by or brought to you by) in this newsletter carry inherent risks and should not be regarded as completely safe or risk-free. Third-party entities provide these services and products, and we do not control, endorse, or guarantee the accuracy, efficacy, or safety of their offerings.

It's crucial to provide our readers with clear information regarding the inherent nature of services and products that might be covered in this newsletter, including those advertised by our sponsors from time to time. When you buy cryptoassets (including NFTs) your capital is at risk. Risks associated with cryptoassets include price volatility, loss of capital (the value of your cryptoassets could drop to zero), complexity, lack of regulation and lack of protection. Most service providers operating in the cryptoasset industry do not currently operate in a regulated industry. Therefore, please be aware that when you buy cryptoassets, you are not protected under financial compensation schemes and protections typically afforded to investors when dealing with regulated and authorised entities to operate as financial services firms.