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“ Blockchain fundamentally allows you to trust a transaction through its transparency and also make that transaction automated,” says Iqbal Gandham, the Managing Director of global investment platform eToro,“the scale it can be used to improve football is second to none.”
It has been just six months since eToro signed a sponsorship agreement with seven leading Premier League clubs. The announcement of the deal was a watershed moment as the worlds of blockchain, crypto and football finally converged. Significantly, eToro – which allows traders to invest in cryptocurrencies in addition to more traditional commodities and stocks — paid for its deal with the likes of Tottenham Hotspur and West Ham United in Bitcoin.
“We signed our sponsorship deal with the clubs in cryptocurrency so that they could get used to the different kind of currency,” Gandham explains. So, clubs could get used to using a digital wallet for example. We are still at the education and introduction phase, but the next stage will be much easier, I expect to see the purchasing of players using Bitcoin and crypto asserts.”
Fintech in Football
For Gandham, the advantages that blockchain and cryptocurrencies can bring to football are numerous. However, he understands the traditional nature of football and how the industry as a whole can be slow to adapt to new technology. One only has to consider the opposition that the practical VAR software has received following its inception at the 2018 World Cup as evidence for this.
Whilst half a year has passed since the signing of eToro’s original crypto-sponsorship deals and adoption of the technology has since been steady, Gandham believes attitudes are changing across Europe. 2018 was a year of firsts for football and fintech.
Gibraltar United became the inaugural football team in Europe to pay its players’ wages in a cryptocurrency, Quantocoin. Heritage Sports Holdings who own Gibraltar United then followed this by purchasing Italian side Rimini FC 1912 in crypto – something which had never happened before. Omer Faruk Kiroglu? The Turkish midfielder made history when he signed for Harunustaspor in January, as Bitcoin was used as part of a transfer fee for the first time.
Even the giants got in on the act. When fierce rivals Real Madrid and Atlético Madrid met in the European Super Cup, fans were able to purchase tickets for the game via a revolutionary mobile phone-based blockchain application. A number of notable former players, including Ronaldinho and Wesley Sneijder, also launched their own cryptocurrencies, in the hope that they will be used to make purchases in football in the future.
“Football is still working in a very old-fashioned manner, but the players and fans themselves have changed,” continues Gandham. “For example, branding has changed and social media has changed. So, maybe we should look to change the aspects of how money is transferred in football too?”
The use of blockchain and crypto within the Premier League is still at an infant stage but Gandham confirmed that eToro has held productive meetings with both the Football Association and individual clubs, who are intrigued by the possible advantages both could bring.
“The subjective feedback I have had is that it is time football moved forward and this is about modernizing football over the next decade, the next twenty years,” Gandham said. “In terms of what eToro would like to do, we want to work with blockchain companies and help them interact with football teams. Building the fintech and football ecosystem, so if there is a good blockchain platform out there which can tackle ticket touts, we can then take it to Tottenham Hotspur.”
Crypto and Corruption
Eradicating criminality in football is one of the key reasons that Gandham believes that football clubs will increasingly use the cost-effective blockchain. The transparent nature of blockchain payments means that any illegal ticket sales can be easily traced back to their source through its incorruptible system of ledgers. Instead, fans could use legal blockchain-powered platforms to purchase re-sale tickets, safe in the knowledge that the ticket they are re-purchasing is no scam. Through the same principle, back-handers and bungs can also be traced, promising to expose those who have tarnished the beautiful game with corrupt dealings. Football has been rocked by a number of high-profile scandals of this nature, such as the accusation that Qatar bought votes as they won the right to host the World Cup in 2022.
“What would blockchain give you?” questions Gandham. “It gives you that guarantee of trust and I think that is really, really important. It will allow us to build a great twenty or thirty year record, a database which shows all money transfers from clubs to players. That would be really interesting to a true supporter.”
Allegedly, Manchester United declined to sign Argentine forward Carlos Tevez in 2009 over a lack of clarity over his controversial third-party ownership. Blockchain would have allowed the club to see who and what exactly owned the player to make a more considered decision.
“There is so much money in football and the fact it is still so opaque is astonishing, in terms of even who owns the players,” Gandham continues,”it’s these things that blockchain can make far more transparent, the money flows in and also out of our sport.”
In an age where football teams are ever more increasingly viewed as commercial enterprises as well as a sports club, Gandham believes the blockchain can deliver advantages in both merchandise sales and sponsorship. “If I walk into a shop in China and purchase a football top, how do I know it is the real deal?,” he says, “being able to look at the blockchain for supply chain and logistics can provide answers.”
Gandham also believes that for clubs struggling to stay afloat financially, blockchain can allow them to open up sponsorship to fans. He believes that only through the simplicity of blockchain could a Ligue 2 club say, receive €100 from hundreds of different fans, and monitor who had sent what amount. The automated ledger nature of the blockchain could then mean that a club could set up specific bonuses for fans who had contributed money should they reach a positional target in the league or a comfortable profit margin.
Paying a player in crypto certainly has its advantages too. Gibraltar United began playing its players in Quantocoin after it signed Egyptian centre-forward Ayman Elghobashy and it encountered problems setting up a bank account on the Rock due to his nationality. While many leading Premier League or La Liga sides have dedicated personnel to ensure no such teething-problems for many clubs around the world adopting Gibraltar United’s approach could eradicate red-tape over new signings.
Furthermore, direct payment into a crypto wallet cuts out bank charges, again beneficial for clubs running on tight profit margins. Aware that many retailers are yet to offer the option of paying for produce in crypto — through the Quantocoin wallet, players could convert their crypto into fiat currency.
Everyone was a winner.
“Over the next five years, if you look at the football industry there are a lot of problems that can be solved by using both blockchain and crypto assets,” enthuses Gandham. “Because of this, I would be very surprised if blockchain is not implemented in football. It makes the flow of money and value so much easier and football has more value than any other sport that I know of.”
March 3, 2019 at 07:41AM
Forbes – Entrepreneurs