MANCHESTER, England (Reuters) – Blockchain sports company Chiliz, which is heavily involved in European football, will invest $ 50 million in an expansion into the US, Managing Director Alexandre Dreyfus told Reuters.
The Malta-based company offers fans tokens that they can use to vote in a series of polls and receive special promotions and rewards. Working with global fan communities creates a so-called “new digital source of income” for sports organizations.
The fan tokens are listed on Binance, one of the world’s largest cryptocurrency exchanges. Last week, AC Milan, the Serie A club, became the youngest team to launch their token, generating $ 6 million in sales on day one.
This move follows the launch of tokens on the company’s fan engagement platform Socios.com for other high profile clubs such as Juventus, Paris St. Germain and Barcelona.
Cryptocurrencies and related technologies have generated a lot of interest in recent months as mainstream investors and corporations take advantage of Bitcoin, the most popular digital token.
Dreyfus said his company is now opening an office in the US to target the country’s top sports franchises.
“The USA is a major focus of our global growth plans. That’s why we’re opening an office in New York and investing $ 50 million in the country’s sports industry to launch fan tokens with leading franchises from the five major US sports leagues, ”said Dreyfus.
“We’re traveling to the US with a proven track record of generating millions in revenue for some of Europe’s largest sports organizations. In 2020 we shared more than $ 30 million with our partners, but this year we’re aiming for a minimum of $ 60 million. “
Dreyfus said FanMarketCap, a price and market information tracker for fan tokens operated by Chiliz, is currently close to $ 200 million and that it expects to grow with new European football clubs in the coming weeks.
Chiliz is also in talks with Formula 1 and esports teams, he added.
Joseph Edwards, head of research at Enigma Securities, a cryptocurrency broker, said the timing is perfect for clubs needing to increase their revenue after the hits due to COVID-19 restrictions given the current popularity of the crypto markets.
“Fan tokens hit the perfect itch at the perfect time – fans are physically separated from their fandom, and this helps fill that void,” he said.
“It should be said that Socios have usually been very smart about these launches – I can’t think of any that were headline errors, even in the entire crypto bear market – but there is a reason they were this from now on have reinforced late.
“It hits right at the moment when the sports entertainment is.”
Edwards said fan tokens grew in popularity while a new type of digital asset – known as a non-fungible token (NFT) – grew in popularity during the pandemic as enthusiasts and investors scramble to spend huge sums of money on items that only exist online.
Giorgio Ricci, Chief Revenue Officer at Italian champions Juventus, emphasized that the tokens will generate more than just revenue.
“(It) is not just a short-term solution to the problems caused by the pandemic,” he said.
“It is a solution to the longer term question of how to get in touch with 99% of fans who cannot watch games from the stadium or who can ever set foot in Turin.
“Under normal circumstances, our stadium has 41,000 spectators, but recent estimates suggest a global fan base of around 400 million, many of which are thousands of kilometers away,” he added.
(This story corrects typos in the first paragraph)
Letter from Simon Evans; Additional coverage from Tom Wilson in London; Adaptation by Ken Ferris