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Blockchain

Online poker businessman behind plans by Juventus, PSG to sell cryptocurrency tokens to soccer fans

French entrepreneur Alexandre Dreyfus’s Malta-based Mediarex Group is owner of the Global Poker Index, equivalent to the ATP rankings in tennis. His latest venture is signing up professional sports teams to sell cryptocurrency tokens to fans

PUBLISHED : Wednesday, 26 September, 2018, 6:03am
UPDATED : Wednesday, 26 September, 2018, 6:03am

Armchair managers rejoice!

Diehard soccer fans may soon be able to demonstrate they really know better if a French entrepreneur’s idea of selling voting rights on club decisions through cryptocurrency tokens takes off.

That moved one step closer after
Italian football club Juventus this week unveiled plans to launch tokens for its more than 340 million fans globally as early as the first quarter of next year, which will give them voting rights on some of the club’s decisions. The move comes two weeks after a similar initiative from French champion Paris Saint-Germain (PSG).

Behind the token launches is a blockchain start-up called chiliZ, which operates the sports voting platform Socios.com. Founded by French entrepreneur Alexandre Dreyfus just 15 months ago, the Malta-based venture has raised US$66 million from investors including Beijing-based venture firm FBG Capital and Binance, operator of one of the world’s biggest cryptocurrency exchanges.

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Explaining how the blockchain-powered fan voting system works, Dreyfus said it is up to sports teams themselves to decide how many tokens they will sell and what kinds of voting rights are attached. For big names like Juventus, he said, fans are likely to have a voice on less important decisions such as the colour of team shirts, summer-tour stops – and perhaps friendly line-ups in the future.

Dreyfus, however, said smaller clubs that are less structured may ask their fans “to sometimes guide them on player selections”.

“What we are doing is to help these clubs listen to, and hear their fans, and to monetise them as well,” Dreyfus said in a phone interview. “Of course, you can sell voting rights, but blockchain gives you transparency and the creation of unique digital assets that you cannot change.”

Juventus did not immediately respond to a request for comment on what decisions token holders can weigh in on. PSG’s digital director Russell Stopford said in an email that while there are many areas fans can be involved with, team line-ups are strictly “the coach’s responsibility”.

The moves by Juventus and PSG – featuring superstars such as Cristiano Ronaldo and Neymar da Silva Santos Júnior – are among the latest examples of cryptocurrency and blockchain projects going mainstream.

While most people still do not use cryptocurrencies every day, institutional interest in the space by the likes of asset management giant BlackRock, as well as a collaboration between New York Stock Exchange owner Intercontinental Exchange, Starbucks and Microsoft on a digital asset platform, means cryptocurrencies have started to engage a wider audience than just the financial fringe.

On the sports field, teams including the Premier League’s Arsenal and the NBA’s Houston Rockets have signed sponsorship deals with cryptocurrency firms recently.

But the volatility of cryptocurrency prices remains a major barrier to mass adoption. The total market cap of cryptocurrencies has plunged about 65 per cent since the start of this year, according to data from CoinMarketCap.

In the past month, bitcoin – the largest digital currency – has traded at around US$6,000-US$7,000, compared to an all-time high of US$19,000 in December last year.

Socios – which is built on top of the ethereum network and has its own native $CHZ token – is expecting to sign up at least 50 professional sports teams for its platform by the time it officially launches in the first half of next year, Dreyfus said in the interview. The title “Socios”, according to the 40 year-old, is inspired by the Spanish word football clubs such as Real Madrid and Barcelona use to describe their members.

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“We are always very careful and proactive towards innovation and new technologies,” said Giorgio Ricci, head of Juventus’s global partnerships, in a press release on the token sale, adding that blockchain is a “cutting-edge way” for fans to engage with the club.

Another seven to 10 top European soccer clubs are expected to announce plans for their token sales through Socios by the end of this year, said Dreyfus, and then the platform will expand its partnerships to include football, baseball, cricket and e-sports teams in Asia, South America and beyond.

All voting will be weighted by the number of tokens each voter owns so fans must hold their tokens to participate rather than spend them, Dreyfus said. Socios’ partner clubs will be committed to holding a minimum number of votes each season that include binding votes on things such as “Player of the Match” and non-binding votes on questions such as team formation.

Each club’s fan token will only be available through Socios and tradeable against the platform’s $CHZ token. But then the $CHZ token can be transferred freely, and will be listed on major fiat-to-cryptocurrency exchanges by the end of this year, said Dreyfus. Socios will make money by taking a cut of the clubs’ token sales. Dreyfus noted that the fan tokens are utility tokens rather than securities because they do not represent ownership, hence the clubs will not run into regulatory risks.

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Dreyfus’ previous entrepreneurship was mostly focused on the online poker industry. His Malta-based Mediarex Group is owner of the Global Poker Index, equivalent to the ATP rankings in tennis. Dreyfus said he has never bought a single cryptocurrency token himself. “I'm a builder, not a trader,” he said. “My role is not to speculate in cryptocurrency.”

Socios has yet to conduct any surveys among sports fans to see how interested they are in the tokens issued by their favourite clubs. Right now, one of the biggest challenges for the start-up is to educate sports teams about blockchain, Dreyfus said, but the deals with PSG and Juventus should help to get more people on board.

“After all, clubs never want to be the first to make mistakes,” he said.