Why are Premier League clubs being paid in Bitcoin for their commercial deals with trading platform eToro?
If 2018 has been the year of football dipping its toe into the world of cryptocurrency, then this week saw some teams go a little deeper into uncharted waters.
On Tuesday, seven Premier League clubs including Tottenham and Crystal Palace announced that they had signed commercial partnerships with investment platform eToro.
What made these deals unusual, however, is that the teams were paid in Bitcoin.
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Arsenal made the Premier League’s first move into the market in January when they signed up American iGaming-focused cryptocurrency CashBet as a sponsor.
The agreement, which saw the Gunners promote CashBet’s initial coin offering, was though to be the first of its kind involving a high-profile sports team.
Colombia and Bayern Munich star James Rodriguez went one better on the eve of this year’s World Cup, launching his own cryptocurrency JR10.
It promised buyers access to James-related souvenirs and experiences and proved wildly popular: it made $500,000 within 12 seconds of its launch, according to its sales platform.
Colombia star James Rodriguez got in on the crypto craze by launching his own currency (Source: Getty)
Other cryptocurrency initiatives have emerged in 2018, from big names such as Havas Sports and Entertainment and newcomers like the London Football Exchange, but they have been aimed at fans rather than teams.
Why would football clubs want Bitcoin?
For clubs, there seems little business sense in owning Bitcoin, given that it is not as widely accepted as traditional currencies, has fluctuated dramatically in value and now appears to have settled into a steady decline.
From its peak in December last year, when it was worth $19,343, it has lost two thirds of its value in eight months and was yesterday trading at just under $6,500.
“They [clubs] are not doing it from an investment perspective, saying ‘we want to be paid in Bitcoin and we’re going to hold onto it for six months and hopefully earn a lot more in the future’,” concedes eToro UK managing director Iqbal V Gandham.
The clubs – Newcastle, Leicester, Southampton, Brighton and Cardiff have joined Spurs and Palace – are not obliged to retain the Bitcoin and are free to convert it into sterling or euros immediately. Gandham says most have probably cashed out already.
Why has eToro signed up Premier League teams?
But payment in cryptocurrency is not purely a stunt to capture the media’s attention – for eToro, at any rate. The deal has effectively bought the company time to pitch its platform to clubs and walk them through their first Bitcoin transactions.
“The key thing is it’s giving us an an opportunity to sit with the clubs’ legal and commercial departments and explain to them what crypto and cryptowallets are about,” he says.
“For us that was the first step in getting them to start adopting Bitcoin and hopefully as we move forward they’ll be more open to having those conversations.”
How could football use cryptocurrency and blockchain?
Gandham believes cryptocurrency and the blockchain technology that underpins it has potential applications for the football industry in ticketing and merchandising.
Crystal Palace have also sampled cryptocurrency via their new partnership (Source: Getty)
“When you buy a football shirt, how do you know it’s a real one and not a fake one? From the manufacturer to the club to the store, you can keep record on the blockchain. And since its immutable, you know that nobody can edit it,” he says.
In future fans might be able to scan a barcode on a piece of merchandise and be reassured that it is an official authorised product. Similarly, it could bring transparency to the sale and resale of tickets.
Transfers in Bitcoin?
It feels a long way off, but the dream for eToro would be clubs using Bitcoin for player transfers – using their platform, naturally.
World governing body Fifa is working on an overhaul of the transfer market that is expected to bring in greater transparency, something that blockchain could, in theory, facilitate.
For eToro, their multi-club deal is a first step on that road.
“It’s about education, but not just of the clubs – of the fans themselves, in terms of the possibilities of Bitcoin and cryptocurrencies,” says Gandham.
“In the future, it would be great if [clubs used cryptocurrency for] player transfers. And if they want to use eToro in carrying out that transaction between the clubs, we’d be happy to do that.”