WAGMI United: Are NFTs the future for ownership of English football clubs?
The prominence of non-fungible tokens (NFTs) to own a part of popular culture was taken to another level this summer with the purchase of Crawley Town Football Club by WAGMI United – a consortium aiming to fund the club through sales of the digital tokens that entitle owners to execute decisions on club direction. The scheme has already seen a seismic £3.5 million pumped into the English League Two club since the takeover was announced.
Although the concept of fan ownership is nothing new, even to the lower leagues of English football, Dr Andrea Baronchelli, Reader in Mathematics at City, University of London and Dr Francesc Rodriguez Tous, Lecturer in Banking at Bayes Business School (formerly Cass) believe non-fungible tokens are certainly broadening the range of possibilities.
“There are many reasons to purchase an NFT, depending on the context,” Dr Baronchelli said.
“Supporting a personality or club is certainly a big one, especially in the context of sports or music. The flexibility of a digital token allows the creation of a special connection between fans and the team, with the latter able to run crowdfunding campaigns and reward the fan base with unique experiences. Many Spanish football clubs like FC Barcelona have a long tradition of "socios" (members) who get special status by purchasing match tickets and merchandising, such as voting rights for important club decisions.
“Most clubs may not have the worldwide pull or stature of FC Barcelona, but NFTs can definitely thrive among small communities.
“Unlike cryptocurrencies that rely on numbers of people using them to add value, NFTs are more about the rarity of an item – a lot like stamps.
“Where a community football club like Crawley might be in trouble is if these NFTs become too popular and end up in the hands of buyers with little interest or emotional attachment, and lose their identity – something which is highly significant for smaller clubs in the UK.”
Two potential drawbacks, particularly at such an early stage of the NFT revolution, are reliability and security. For Dr Rodriguez Tous, raising money in this way may be effective but might not be sustainable if the digital bubble bursts.
“Sentiment for NFTs can change quickly, as we’ve already seen,” Dr Rodriguez Tous said.
“To a lot of people – not just fans of Crawley Town – the chance to own a stake in the running of a football club is one that really excites them, which is why the scheme has raised the amount it has so far. However, similar projects have tried and failed because the novelty and enthusiasm has died out.
“The danger of clubs like Crawley pursuing this is there’s no guarantee of long-run sustainability in raising funds, and if the project does eventually collapse or slow down they would have little else in the way of raising capital. However, I do not foresee this as a problem yet, so early into the scheme.”
All quotes can be attributed to Dr Andrea Baronchelli, Reader in Mathematics at City, University of London and Dr Francesc Rodriguez Tous, Lecturer in Banking at Bayes Business School (formerly Cass).
More of Dr Baronchelli's work can be found here.