Sponsor brings millions to Chelsea: How football jumps on the crypto bandwagon

Cryptocurrencies have been shaking up the financial world for some time.

Sponsor brings millions to Chelsea: How football jumps on the crypto bandwagon

Cryptocurrencies have been shaking up the financial world for some time. Despite their volatility, these products, which are still quite unregulated, are experiencing a great deal of hype, which is now also spreading to the football scene. Clubs and players advertise, fans should buy.

The news doesn't stop: The English top club Chelsea signs a shirt sponsorship deal with "WhaleFin"; Lionel Messi is promoting Socios for three years for a sum of 20 million US dollars; former top striker Michael Owen promises lossless Non-Fungible Tokens (NFTs). Even in this country, the crypto hype has now arrived in football. Most recently, Kaiserslautern striker Terrence Boyd shared advertising for an NFT after the derby win against Saarbrücken, but later deleted the tweet.

Football fans, for whom all these names and terms are Bohemian villages, can expect that in the coming years many things will be brought closer to them, whether intentionally or not. Because the crypto scene wants to open up viewers and followers as a buyer's market. It can be heard from the scene that some crypto entrepreneurs are stepping on the gas pedal in negotiations and are not paying that much attention to the specific expenses for sponsorship. Before the expected consolidation phase occurs and some protagonists disappear again as quickly as they came, there is a big boom.

That had been foreseeable for some time. For example, a press release from "NFTFootballMarket" about the World Cup in Qatar appeared on the "Crypto Trendings" website in August 2021. "Football is a sport with billions of fans; blockchain is steadily growing and reaching more and more people around the world. So there is a potential opportunity to combine passion with technology to quench fans' 'thirst for ownership' to breastfeed the globe," it said.

This is exactly what NFTs are all about. These are a type of digital asset that resides on a blockchain. It serves to verify the value and authenticity of a digital medium. Such a medium can be, for example, a JPG file, i.e. a graphic of a football club. Some buyers of NFTs may believe they own the graphic, but this is incorrect. But when trying to quench the "thirst for ownership", fans may be led to believe that. They purchase an NFT of their favorite team and believe they own a piece of that team, much like a pennant from a game.

"Whether you spend $5 or $40 million on an auctioned or traded NFT, it does not give you ownership of the media product associated with the token. What you own when you purchase an NFT is not the key to you -interchangeable - possibly even unique - tokens," says Daniel Kuhn of CoinDesk. "But the digital file associated with the NFT can be copied and downloaded just as easily as anything else."

Those who invest in NFTs should be aware of what they are acquiring. There is nothing wrong with trading these tokens if you ignore the advertising language of some NFT companies or advertisers such as Michael Owen, Lionel Messi and Co. However, it has only recently become apparent that the NFT market is very volatile. Since September, trading in the tokens has fallen by 92 percent. "The NFT market is collapsing," was the conclusion of the "Wall Street Journal".

Nevertheless, money continues to flow into football, as a recent announcement by the German Football League (DFL) showed. The Bundesliga and Bundesliga 2 will receive over 170 million euros for the license rights for stickers and trading cards including NFTs, mostly for the period from 2023 to 2025. This includes, for example, the exclusive rights for so-called "NFT Moments", i.e. NFT-based videos the federal leagues and for the use of NFTs as digital player images in fantasy football.

While the DFL is expanding partnerships with established companies such as "Topps", football is currently being flooded with more and more new crypto brands that want to get on board as soon as possible. In England and Spain, this has already made itself felt with the top addresses.

Besides the mentioned deal between Chelsea and 'WhaleFin', which will henceforth be visible on the shirt sleeve, Atlético Madrid also signed a shirt sponsorship deal with the same company. Chelsea earns around 23.5 million euros for this and the Madrilenians almost double that per season. "WhaleFin" belongs to the Amber Group, which is based in Singapore and specializes in digital assets.

In addition, Manchester United entered into a partnership with the blockchain company "Tezos" a few months ago. Liverpool have also recently been in talks with crypto companies as the Champions League finalists negotiated a new shirt sponsorship deal. However, Jürgen Klopp's club refrained from signing a contract. There have previously been fan protests against Liverpool's decision to launch their own NFTs.

The trend towards crypto and NFTs in football comes as no surprise in itself. In the past decade, it was mainly betting providers who wanted to win fans as customers with large-scale advertising campaigns. The link between betting and football seemed almost natural. Crypto is a little different, but at the end of the day, businesses are all about reach.

The already thoroughly commercialized professional football, especially in the big leagues, can look forward to a new rain of money. However, the dangers associated with an imminent consolidation phase remain. Because many a deal could burst at some point because the other side of the contract has disappeared. In any case, the crypto industry is subject to great dynamism. TerraUSD's plunge in May dragged the entire crypto market lower. It will not be the last rejection. Those responsible in football should also be aware of this.

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