Crypto is Revolutionizing the Global Sports Industry: Here’s How
One of the most significant sporting events in the world, the FIFA World Cup, is just around the corner. Uniting football fans globally, FIFA World Cup 2022 is headed to the Middle East for the first time in history. But this World Cup will also be a first for several other reasons, especially the prominent way crypto features in it.
Since the last major bull run in the crypto market, we have seen the sports industry adopt cryptocurrencies and blockchain-based solutions with open arms! The love for crypto in sports remains strong even when the global market goes through periods of bearishness.
According to a February 2022 report from analytics firm Nielsen, sports sponsorship by blockchain and crypto firms could exceed $5 billion by 2026. While sponsorship from traditional industries for sports could witness single-digit growth during this period, sponsorship from firms in the blockchain industry could surge by nearly 800%.
Crypto and Sports - the Common Ground
Sports and crypto have several features in common - they’re fun, foster a sense of community, and unite people across regions and generations. The global traditional sports industry offers a ripe avenue for cryptocurrencies to spread awareness and spur adoption among key markets beyond Gen Z and millennials. Tied to sports, the crypto market has the potential to reach out to Gen X, Gen Y, and even baby boomers - cash-rich retail investors and sports enthusiasts.
For future sports market development, crypto represents the next big thing in tech. Cryptocurrencies, blockchain technology, smart contracts, and decentralized applications (dApps) are helping sporting bodies and athletes discover new ways to monetize their success and go beyond traditional brand partnerships. The crypto market’s innovative solutions powered by blockchain technology give sports stars more control over their brand image, directly engaging with their fans and discovering new revenue streams in ways that conventional social media cannot offer.
This article looks at the close relationship between crypto and the global sports market and why it’s good for both sectors. Read on to find out how this started, the popular use cases for crypto in the global sports industry, and emerging digital transformation opportunities in the global sports market.
Crypto in Sports - How it Started
We could attribute the fascination of the sports industry with cryptocurrencies to the practice of pro athletes willing to take their salaries in digital currencies. The crypto bull run of 2021 saw the market cap soar past $3 trillion, catching the celebrity athletes' eye.
To them, the surge in the value of cryptocurrencies offered a way to offset inflation which would have otherwise impacted their earnings in US dollars or other fiat currencies. The phenomenal growth in Bitcoin’s value over the years and the rising adoption of the cryptocurrency by global investors further supported the appeal of taking payments in crypto.
Sports Stars Accepting Payments in Crypto
Notable examples include Carolina Panthers’ player Russel Okung, who became one of the first athletes in the US to accept his salary payment in Bitcoin in 2019. American football team Los Angeles Rams wide receiver Odell Beckham Jr. also announced his interest in taking his salary from the NFL in Bitcoin.
Other sports stars, such as Green Bay Packers quarterback Aaron Rodgers and NBA star Andre Iguodala announced that they would accept a portion of their salaries paid in BTC. Meanwhile, Jacksonville Jaguars’ player Trevor Lawrence had agreed to accept his signing bonus in cryptocurrency.
Partnerships With Crypto Firms
The next step was celebrity endorsements and partnerships. Major crypto companies announced partnerships with celebrities from the sports industry - such as MLB champions, signing them on as brand ambassadors, collaborators, and more.
This trend includes Los Angeles Angels’ basketball star Shohei Ohtani, who acquired a stake in FTX and worked as the exchange’s global brand ambassador. Another instance of this is NBA player Cade Cunningham who signed a deal with BlockFi to produce educational content, participate in promotional campaigns, and offer exclusive interviews.
More Crypto Use Cases in Sports
Players accepting payments and bonuses in crypto was only the beginning of a change in the existing business model within the traditional sports industry. The next step saw others jump in on the trend and make the most of it. Here are some of the most popular applications of crypto and related technologies in the sports industry:
Professional sports franchises started cashing in on the rising adoption of crypto by accepting its use for monetary transactions. Sports fans could buy tickets and merchandise from their digital wallets using cryptocurrencies, offering a convenient use case for digital currencies in the mainstream world.
Crypto adoption in the sports world hit the headlines in October 2021 when billionaire and crypto believer Mark Cuban announced a partnership deal with Voyager Digital. His team, the Dallas Mavericks, was one of the first sports teams to start accepting payments in Bitcoin, followed by the Sacramento Kings and San Jose Sharks. In March 2021, the Major League Basketball team Oakland Athletics started letting people purchase season suites using Bitcoin for payment.
The bullish mood towards digital assets in early 2021 saw cryptocurrency exchanges announce partnerships with the professional sports industry. If Crypto.com became the official sponsor of the FIFA World Cup Qatar 2022, Coinbase signed on to become the exclusive cryptocurrency platform partner of the US National Basketball Association (NBA), WNBA, NBA G League, NBA 2K League, and USA Basketball.
US-based exchange FTX signed a 19-year sponsorship deal with Miami Heat to rename the team’s home court to FTX Arena. The company also became the official crypto exchange of Major League Basketball, the Mercedes Formula One team, and more.
Another player, OKX, signed a multi-million dollar deal to become the official crypto exchange partner for English football club Manchester City. Bybit announced a $150 million partnership with Red Bull F1 for three years in early 2022.
The crypto-savvy sports stars then caught on to the next big trend in the crypto industry in 2021 - non-fungible tokens (NFTs). NFTs took the crypto market and the whole world by storm last year and made their mark in the sports service industry.
NFTs became an excellent aid for sports fans to invest in digital collectibles and express their support for their favorite players and sports teams. Some of the most significant sports-themed projects in the NFT market include American football star Tom Brady’s sports NFT marketplace Autograph.
Think sports, and the biggest NFT collection that pops into your head has to be Dapper Labs’ NBA Top Shot - the official NFT collection from the NBA Players Association. The company’s UFC Strike trading cards are among the sports' most successful crypto collectibles in the market.
Sports leagues, teams, and even individual players soon started harnessing the power of cryptocurrencies and digital technology powered by blockchain to drive more fan engagement. The ‘Fan Engagement Token’ category consists of digital currency tokens representing a sports club, sports team, or even an individual player.
The ownership of these fan engagement tokens could serve several purposes - from establishing membership in the community, empowering them with voting rights on topics related to the team/club they support, enjoying VIP access to exclusive merchandise, exclusive rewards, and more. Some fan tokens are also based on projects of fantasy sports leagues, enabling users to participate in an open and transparent process.
Some of the most popular fan tokens in the crypto market represent football clubs and teams, including Paris Saint-Germain, SS Lazio, Manchester City, FC Barcelona, and AC Milan. KuCoin is home to some top fan tokens and eSports tokens traded in the market, such as ALPINE, LYM, CHZ, MOOV, RED, and ARNM.
Cryptocurrencies also became an extremely convenient way to raise funds for sports clubs, sports teams, athletes, and even health and fitness companies. One such famous example of a sports industry blockchain project is SportyCo (SPF) - a decentralized launchpad where sports teams and players can create profiles and request their fans to support their progress through fundraising via crypto. In exchange for their contribution and support, the SportyCo platform also allows investors to enjoy a percentage of revenue generated from the projects through sponsorships.
Fan Engagement Platforms
The next wave that brought crypto and sports closer was powered by Web 3.0. Merging the physical world with digital, sports engagement via Web3 applications is soon becoming the next innovative area for the sports industry to expand into.
An example is the sports media platform SoBet which uses Web3 technology to foster higher engagement with sports fans. The platform lets sports players and sports organizations launch their own hybrid NFT collections, improve the sports betting experience, and offer higher transparency and economic opportunity to players and their communities of passionate fans.
The Evolution of Crypto and Sports: Upcoming Trends Shortly
Here’s a look at some more use cases for crypto and blockchain projects within the realm of sports that could gain traction in the coming months and years:
Still in the nascent stage, we could see decentralized autonomous organizations (DAOs) take on a more dominant role in how sports teams and clubs are managed in the future. DAOs enable true decentralization and allow the community of token holders, or fans, in this case, to recommend ideas and leverage their voting rights to decide on club decisions such as selecting new players, managing teams or clubs, selecting promotional activities, and deciding on the team’s strategy for success.
As the need for security grows, we could see more projects powered by crypto and blockchain focus on preventing fraud in the sports ticketing space. Ticketing frauds cause losses of millions of dollars to the sports industry and is an essential leak to plug.
Blockchain-based ticketing solutions leveraging digital identities to issue tamper-proof tickets could be the answer to tackling this fraud. Tokenizing sports tickets and issuing them as NFTs on the blockchain could also make it easy to transfer ownership of game tickets, support their value, and drive another exciting opportunity for making the ticketing process in sports more effective, secure, and lucrative.
After NFTs, the next big opportunity for the sports industry lies in the metaverse. Merging the physical world with the digital, the metaverse offers e-sports, sports teams, clubs, and events to offer a virtual experience and reach more users worldwide.
From FC Porto announcing the development of a virtual stadium in the metaverse where games will be played and viewed to sporting brands opening virtual stores in the metaverse selling NFTs such as digital sneakers - the opportunities for fan engagement in the metaverse are plenty. While some inroads have been made, we’ve only scratched the surface of the metaverse's immense potential.
From offering virtual sports arenas to enabling a more immersive engagement experience for fans, the metaverse can support an unlimited audience, unlike a physical venue with limited potential. The virtual real estate of the metaverse will be what the internet had been a few decades back to the sports industry - it’s the next online market to harness in the socially distanced world of today.
Beyond the metaverse experience, the sports industry could also explore monetization opportunities in the blockchain gaming and play-to-earn sphere. Official games offering branded merchandise virtually in the form of NFTs and in-game assets could be the next frontier in driving engagement with fans online while providing them incentives and rewards to play and participate.
P2E offers a lucrative way to earn crypto while playing in the virtual world. Although not directly linked to the sports industry, P2E could be the next big frontier for sports and gaming companies to come together by offering virtual experiences for gamers and sports fans.
Sports offers an exciting way to take crypto mainstream, offering a higher potential for mass adoption. We’ve seen examples in the past and could expect more shortly.
You too can be a part of this combined future by starting your journey by investing in sports tokens and projects in the crypto market with KuCoin. Ready to start trading? Open a KuCoin account and begin your journey as a crypto investor with us!
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