The President of renowned Spanish Football Club Barcelona, Joan Laporta, has announced the club will launch its own cryptocurrency, non-fungible token (NFT) collection, and metaverse. The decision to manage the projects itself follows a recent controversy when it dropped a crypto deal with Ownix. We speculate that its planned crypto token could be an equity offering via a security token.
“We are developing our ‘metaverse’ and have refused to be associated with a cryptocurrency company,” said Laporta. However, it already has an active deal with Socios for a fan token which we’ll come back to.
Recently the club rejected higher bids from cryptocurrency sponsors and settled for a lower offer from Spotify as a shirt and stadium sponsor. The club has reasons to want to distance itself from cryptocurrency platforms. In November, it had to cancel an NFT deal with Ownix shortly after announcing it due to crypto fraud allegations involving someone who helped arrange the deal.
When discussing the rejected crypto sponsorships, the club’s board commented, “It is a speculative, risky, highly variable and unethical sector.”
The club’s own crypto motivations
The reasoning behind the desire to launch a cryptocurrency is to become more financially competitive against clubs with billionaire owners. Barcelona has been struggling financially for a couple of seasons because of high debt levels. New LaLiga regulations mean clubs need to finance player transfer fees and salaries without taking on too much debt. As a result, Barcelona had to let go of its legendary player Messi last summer.
“We do not have big corporations or shareholders behind us. That forces us to be imaginative, innovative, brave and be a step ahead in many areas that surround the sports industry,” said Laporta.
The President was wary about pre-announcing details, but it will be interesting to see whether Laporta is talking about a security token rather than a pure cryptocurrency. The difference is a security token is a kind of stock with actual ownership interests in the club. In contrast, fan tokens provide no ownership. Also, a security token issuance could potentially be handled by a conventional investment bank.
What about the Socios token?
Barcelona currently has a partnership with fan token platform Socios, which was signed before Laporta’s tenure. The tokens are exchangeable for rewards associated with the club and can be traded similarly to securities. If Barcelona launches its own cryptocurrency, it is unclear what will happen to Socios’ tokens. The price of the tokens has already fallen by 85% from its peak in March last year.
We asked Socios about Laporta’s statements, but the organization chose not to comment.
One possibility is that the Socios deal is ongoing, in which case the launch of another fan token could be confusing. In terms of the metaverse, Socios previously announced a partnership with The Sandbox for multi-sport fan zones, which could be in line with Barcelona’s vision for the metaverse.
Another option is Barcelona ignores the Socios token, and it’s up to Socios to fund rewards. The only question is whether all the promised rewards can be delivered without Barcelona’s support. Barcelona would have profited from the sale of tokens that promised rewards. This might diminish consumer trust in fan tokens in general, as well as in Barcelona’s cryptocurrency.
Confidence in fan tokens has already taken a hit. McLaren and football clubs Sporting and Spezia dropped cryptocurrency exchange Bitci as a sponsor, with one of them citing non-payment as the reason. Bitci had a deal to issue fan tokens and there’s a McLaren fan token. It’s unclear what happens to token holders. Additionally, Binance announced a fan token deal with Argentina’s national football team, despite an existing token with Socios.
Meanwhile, LaLiga did an NFT deal with fantasy football platform Sorare which hence includes FC Barcelona. And four NFT platforms are battling for Premier League football rights over NFTs in a deal worth up to $590 million.