Cryptocurrency and blockchain technology have been making big waves in industries outside of finance in recent years, from art to real estate. With that in mind, the sports world is starting to look at what blockchain could mean for traditional player marketplaces, particularly high-stakes areas like player transfers and contracts.
Cryptocurrency is a digital or virtual currency secured by cryptography that has become synonymous with holding, trading, and exploring digital assets in a safe and secure manner, and Binance platforms provide such insights on crypto trading and how to buy, trade, and explore digital assets. The foundational technology behind cryptocurrency, blockchain technology, could lead to a transparent, decentralized framework in which to streamline and ultimately revolutionize the way in which player management is handled in professional sports.
In this article, we will look at how blockchain can transform player transfers, contract negotiations and even team ownership, and provide a better deal for athletes, clubs and fans.
Towards a Transparent and Decentralized Transfer Market
Traditionally, the player transfer market is a complicated and opaque process, particularly so in sports such as soccer and basketball. These transactions often take place behind closed doors and may involve multiple parties (clubs, agents and sponsors) which can sometimes result in inflated fees or lengthy disputes. When we think about blockchain, there is an ability to make this process more transparent and more efficient, too.
Blockchain is a decentralized ledger, which means every transaction is recorded in a secure, permanent and public fashion. Blockchain-based player transfers would not only make the terms of each deal transparent to the relevant parties but also decrease the risk of misunderstandings or unfairly practiced deals. This level of transparency would end the era of “transfer fee inflation” where third parties charge extra costs. All this would help clubs get a better insight into transfer fees as well as contracts, which would help them make better decisions and avoid paying out ridiculous fees.
Furthermore, blockchain could also simplify the legalities of player transfers in sports across international boundaries, too. The blockchain could securely record each transaction for smooth international transactions and to minimize delays due to paperwork. For example, if a player in Europe is moving to a team in the United States, the blockchain ledger could speed up financial and contractual compliance, which may also make the process more efficient in the end.
Tokenizing Player Contracts: Bringing Fans Closer
Tokenizing player contracts is one of the most exciting blockchain uses in sports. Tokenization is basically the creation of digital tokens on a blockchain representing fractional ownership of some asset. Imagine taking a player’s future contract earnings or career milestones and tokenizing them, so investors can buy a little piece of the player’s future success. By taking this approach it could generate a new revenue stream for players and clubs as well as provide fans a chance to back their favourite athletes.
Players could then raise money directly from fans or investors by tokenizing contracts. These could be tokens of a share of future earnings or of a payout on the basis of some performance milestones. For instance, a player could tokenize a part of his contract and sell some of the tokens to fans who will feel themselves directly invested in the player’s career. With this democratized investment structure fans could form a closer bond with athletes who share some of the upside from the success of the player’s career. Special rewards for token holders too, such as exclusive merchandise, early access to game tickets, fan meet and greet events, etc. all create more value for fans.
Contract Management with Smart Contracts
Smart Contract usage is another powerful blockchain feature and a self-executing contract with the terms of the agreement directly written in code can be carried out. Automated transactions without an intermediary are highly efficient and require only smart contracts. The use of smart contracts in the realm of player contracts could be argued for automatically releasing payments upon the achievement of a set of conditions.
For example, you could have a smart contract, which automatically pays some bonus or reward to a player after scoring some number of points played, etc. It would obviate the length of contract negotiations for incentive-based clauses and reduce incidences of quarrels between players and teams. Other payments, e.g. salaries and performance bonuses, could also be automated by smart contracts so that players can receive the payments instantly and securely.
Additionally, smart contracts could include injury protection or early contract termination clauses as a security for players as well as clubs. It would provide a guaranteed payout for players in case of unforeseen events and clubs can rely on pre determined contract terms to safeguard its interests in event of player under performance or failing to meet expectation.
Decentralized Sports Teams: The Future of Fan Ownership?
With blockchain, the possibility of decentralized ownership of assets has been brought to the fore in other industries and, of course, the sports world. Imagine a world where fans own a sports team with blockchain voting and shareholding. In theory, this idea – sometimes referred to as a Decentralized Autonomous Organization (DAO) – could enable fans to buy fractional ownership.