A soccer club in Hawaii, Makani FC, is looking to use Bitcoin and digital assets to facilitate fan-ownership and eventually establish a professional team in the island state.
Digital currencies, digital assets and blockchain technology have so far had a turbulent relationship with the business and culture of association football.
NFT rackets and fan tokens disguised as “fan engagement” have taken advantage of supporters’ attachment to their clubs in attempts to make more money from them or use them to drive the adoption of various cryptocurrencies.
As with many new technologies, the issues are not always with the technology itself, but with what it is used for and by whom.
Naturally, a technology related to digital currency will get hijacked by those looking to make a quick profit. This is done with no consideration of the value for the consumer, the stability of value they are getting, or the effect on the reputation of the technology.
The small print will state that these are not investments or a form of financial trading, but the reality is that these are volatile, risky investments, as demonstrated by the recent crash.
But what if the technology can be used not with the initial aim of making money, but instead using a blockchain to assign fan ownership or club membership to supporters?
Hawaiian soccer club Makani FC is attempting to go down one such route, using Bitcoin +8.6% as a way to create a fan-owned team in Honolulu.
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Pancho Shoffeitt, who holds the title of chief technology officer at the club, states one of the original aims as: “Digitizing fans’ ownership to show that it's immutable.”
Could a record of fan ownership on a blockchain, created not with the aim of making money (whether it has the future potential to or not) but with the initial aim of simply assigning supporters’ membership of the club digitally, be a more useful application of the technology in football?
If a supporter is investing in the club, the value of their membership or ownership is in the membership itself, and not just its current monetary value (it could be argued that a cryptocurrency in itself has no value).
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Of course, the very nature of Bitcoin as a currency with fluctuating value means any investment will carry a “capital at risk” type warning, but if the value is being attached to a club, being a member of it, and joining more like-minded fans, then for some, that is the only transaction and value that matters.
“If the treasury of the club is managed right, we have to do it in a way that's transparent,” adds Shoffeitt.
“The key thing with seeing their digital assets is everyone that's a member can see exactly what's going on.
“And it's not like we were going to have our whole treasury in Bitcoin. We would still have to pay bills and keep it hybrid, but the majority of our treasury would be a Bitcoin.”
Fan ownership and membership in its various guises is seen as an alternative to the rampant, relatively unchecked, and increasingly unstable ownership seen at the majority of clubs in top-level soccer.
Despite the large amounts of money in the game at that level, there is the constant fear of financial crises because of the way these teams and leagues are run.
It only takes the collapse of a lucrative TV deal, or mismanagement and careless spending at the ownership level to end up with a club, or indeed an entire league, on the verge of financial collapse.
Examples of both have been seen recently in France, where the league's struggle to ink a new TV deal left several clubs fearing bankruptcy, while historic team Girondins de Bordeaux was relegated to the third division and forced to become semi-professional after failing to provide financial guarantees ahead of the upcoming season.
The soccer landscape is even more challenging for clubs in the United States where organic progress is stifled by a lack of promotion and relegation throughout its leagues.
This has led to the demise of hundreds of clubs. Many will reach a certain level and then go out of business, or fade away due to stagnation.
This is one of the reasons Makani FC has gone down the Bitcoin route. They see it as a more sustainable base for a club than the alternative which sees clubs folding left right and center.
“This is the only way I could see to sustain a lower league model out here,” adds Shoffeitt.
“It seems like lower league teams in the US just lose their investors' money.
“You had San Diego [Loyal] fold recently, and the leagues in the United States see a lot of that problem."
Traditional fan ownership prioritises a different aspect of the game. It works to maintain the link between supporters and the team they support, creating a club culture and stability that can often be lost when privately owned clubs turn into global brands, often as part of their owners’ wider portfolio of investments in sports of other areas.
This traditional method of fan ownership is effectively a membership that allows a voting right. It provides money for the club’s operation via membership fees and, in turn, means the club remains in the hands of those members.
German Bundesliga sides, with their 50+1 rule, are the most high-profile examples of this kind of ownership, though it is also seen in other leagues around the world including in the US lower leagues at clubs like San Francisco City FC.
Another type of fan ownership combines membership with a literal investment in the club that can be bought and sold. Local supporters can still invest a small amount to emulate the more traditional membership model, but those looking to invest larger sums in the team, and the sport as a whole, can do so.
Orange County SC—which plays in a US Soccer designated second-tier league, the USL Championship—and the Austrian team FC Pinzgau Saalfelden are examples of this kind of ownership.
Makani FC and other sports teams using Bitcoin could be said to be offering a third type of fan ownership that combines both traditional and investment methods, with an additional digital element.
In some ways, the club is looking to emulate the Australian baseball team, Perth Heat, which used Bitcoin to help it out of a financial hole following the COVID-19 pandemic.
The structure of American soccer means clubs are already operating in a volatile, unpredictable environment, with their own financial holes potentially lurking around every corner.
Many would see adopting Bitcoin as merely adding to that, but Shoffeitt, using the example of Perth Heat, sees it not only as a chance at stability in an unstable game, but also as the future of said game.
“If USL adopted Bitcoin,” he says, “it would overtake MLS in four to five years.”
Soccer's relationship with cryptocurrency and NFTs remains murky. It has so far been one of failed investments, fan token rackets, and excuses for promises not kept and targets not reached.
It has, perhaps inevitably, so far followed soccer’s traditional capitalist path to financial uncertainty through greed or mismanagement, and therefore will inevitably face the same problems.
Commercialism follows similar perilous, exploitative and often environmentally unfriendly paths whether the money it uses is traditional or digital.
But if the use of the technology erred towards membership and fan ownership, rather than attempt to make money from NFTs or artificially boost a new cryptocurrency, then soccer may find a more practical use for digital currency and blockchain technology.
