$CITY - The Future of Football Cryptocurrency

The cryptocurrency market has seemingly ballooned over the last 10 years – but in spite of this, no one actually expected it to become integrated into the football industry. A few years ago, the idea of player transfers being completed by way of digital currency would likely have been dismissed as a throwaway comment about the distant future, but with recent news revealing that you can now purchase $CITY Fan Tokens, this reality may be actualised sooner than people previously thought…

In the following article, I explore how cryptocurrency has entered the beautiful game, its future within it, and if this may just be another avenue to exploit devoted football fans.

What is it?

In March 2021, it was announced that Manchester City were set to launch the $CITY Fan Tokens through their partnership with Socios.com. As described directly on the Socios website:

“Fan Tokens are digital assets that represent your ownership of a voting right. Once acquired, they remain in your possession as long as the club remains on the Socios.com platform or until you decide to sell them.”

Fans are not limited to the number of tokens they can own, so if they want their opinion to hold greater weight in a vote - they are able to do so (albeit to a certain extent - each club partnered with Socios has imposed an upper limit to moderate decision making).

In order to buy a fan token, you must first purchase $CHZ (Chiliz) – the digital currency set up by Socios for their blockchain technology. With these $CHZ you can then purchase the fan token of your choice, when provided the opportunity to do so during a Fan Token Offering (FTO). To ensure a fair deal, prices are initially limited at these FTOs by Socios; however, after this point, when the tokens are traded in the in-app marketplace, prices can be set by the seller at their discretion. It should then come as no surprise that the pricing differences between retail and resell might be exorbitant: not a pretty sight.

So - what can you actually do with these tokens? As mentioned above, each token represents a vote in a decision to be made within the football club. The voting will be linked to a number of binding and non-binding polls which each socios-partnered club has committed to prior the start of the season. Binding polls are used for decisions that the club will relay entirely to the token owners, whereas the results of non-binding polls will be used to (as per the Socios website) “gauge fan opinion, but they don’t necessarily have to act upon the result”. We are yet to see a non-binding poll, but I suspect the decisions being made by the fans will likely be very trivial.

Who is using Socios?

Manchester City joined Barcelona (not to be confused with their actual members who are called ‘Socios’), Juventus, AC Milan, PSG, Atletico Madrid among others to become partners with Socios in issuing these fan tokens on the site – and you can only really see this list increasing in both number and prestige going forward.

What’s the incentive for football clubs? Of course, another revenue stream is always welcome – but crucially, this will generate revenue from a market that has barely been tapped into yet. Many of these big European clubs have huge international followings; whether you are on holiday in Asia, Africa or the Americas, you will undoubtedly see a few people with Messi-10 or Ronaldo-7 on the back of their shirts.

However, this type of support does little financially for these clubs.

The shirts worn are often cheap knockoffs not official merchandise; the games watched are via pirated streams or in large groups – rather than individually paid subscriptions to service providers; and 90% of these fans will never travel to their club’s stadium and purchase a match ticket or a go on a stadium tour. The only time this market is tapped into by these clubs is during their 2-3 week pre-season tours, when they partake in friendly matches with other high-profile sides in front of a packed stadium.

(Manchester United play Real Madrid in a pre-season friendly in front of 109,000 American fans)

With the introduction of fan tokens, these clubs are now baiting fans across the globe with the opportunity to assume the title of ‘superfan’, and participate in decisions that will directly impact their club itself- but these decisions are ultimately meaningless. For example, here are the two polls which have been put out by Barcelona and Juventus so far:

· Choose a piece of fan-designed artwork to go inside the legendary home dressing room at the Camp Nou (Barcelona)

· Choose the new goal song celebration played at the Allianz Stadium (Juventus)

These are trivial decisions which could easily have been made by season-ticket holders, or just ordinary official club members (who, in the UK, already pay c.£30 a year just for the ability to purchase a home ticket alone).

They are monetising the right to have an opinion – and who knows how far they might take this. It is not hard to imagine children from across the world using their parents’ credit cards to prove that they are more of a ‘superfan’ than their other friends at school.

Thankfully, the supporters at West Ham United saw through this, and perhaps are the main reason why their club are no longer in partnership with Socios.com. Having announced their partnership in April 2019, the decision was met with great contempt by many of the clubs’ Supporter’s Groups, who launched the campaign “Don’t Pay To Have Your Say” in opposition. Socios ultimately pulled out of the deal before the launch of the West Ham Fan Token – ironically blaming the lack of fans in the stadium following the COVID-19 pandemic for this decision.

Admittedly, after competing in empty stadiums for more than a year, there is nothing wrong with looking for another source of revenue, and - following the collapse of the proposed European Super League – there has been a need to allow greater fan participation in decisions made by clubs. But this is not the way to do it…

With the 50+1 model ownership structures in Germany, fans (who have become shareholders) hold the rights to vote on serious decisions that genuinely impact the clubs’ futures, such as who the next chairman of the club should be, or what next year’s season ticket prices should be – not what colour the club should paint the home dressing room. The sooner the supporter groups at these clubs follow their counterparts at West Ham and recognise the exploitation that is occurring over here, the better.