As Chiliz expands to the US, experts explain how fan tokens offer greater engagement and alternative sources of revenue for the pandemic-hit sports industry
Popular blockchain sports venture Chiliz has announced today that it will be investing $50 million as part of the firm’s expansion into the United States. Chiliz’s CEO Alexandre Dreyfus told Reuters that the firm will be setting up an office in New York and will work with local leagues and sports franchises. The Malta-based company is currently heavily involved in European soccer.
Chiliz offers tokens that enable fans to vote in several polls and earn special promotional offers and rewards. The tokens also let fans have access to new engagement experiences including direct communication with players. Its blockchain-based system allows sports organisations to create and generate a new digital revenue stream through engagement with fan bases from across the world.
Chiliz works with some of the biggest names in the cryptocurrency industry. In 2020, it announced its partnership with Binance, the world’s largest cryptocurrency exchange and now lists the fan tokens of several European clubs on Binance’s Launchpool platform.
The company has been successful in generating millions of dollars in revenue for some of Europe’s biggest sports organisations including soccer clubs like FC Barcelona, Juventus and Paris Saint-Germain. Recently, Serie A club AC Milan earned $6 million in revenue within 24 hours of the launch of its token. “In 2020, we shared more than $30 million with our partners, but this year we’re targeting a minimum of $60 million”, Dreyfus said.
“A huge focal point for us in our global growth plans is the U.S. That’s why we’re opening a New York office and investing $50 million into the country’s sports industry in order to launch Fan Tokens with leading franchises from the five major U.S. sports leagues”, the CEO added.
Explaining the timing of the announcement, Joseph Edwards, head of research at cryptocurrency brokerage Enigma Securities, said that the firm planned to capitalise on sports organisations hit by the COVID-19 pandemic by offering them an alternative source of revenue linked with the increasingly popular crypto market.
“Fan tokens right now are just hitting the perfect itch at the perfect time—fans are disconnected physically from their fandom, and this helps bridge that gap”, he said.
On the other hand, Giorgio Ricci, Chief Revenue Officer at Italian champions Juventus added that there is more to fan tokens than revenue generation. He explained that with their global reach and the scalability, transparency and security offered by the blockchain system, fan tokens are the long-term solution for franchisees to engage with “the 99% of fans that aren’t able to watch games from the stadium”.