The issue here is that it feigns genuine, meaningful supporter involvement in football.
There is a seeming snowball effect of more and more clubs, leagues and now even UEFA in February 2022 striking agreements with digital currency companies. These agreements have been widely criticised by supporters from across Europe.
Cryptocurrency is a deeply complex subject, and by nature so is its transmission into the football ecosystem. Below, SD Europe attempts to break down cryptocurrencies entering football and the concerns attached to it.
What are cryptocurrencies?
Cryptocurrencies have been available to the public for over a decade now, and have grown in popularity more recently. So, how does cryptocurrency work and how is its value determined?
Crypto vs Fiat (traditional currency)
Firstly, let’s differentiate between crypto and “fiat” currency (Euro, Dollar etc). The main difference is that a fiat (traditional) currency is backed by governments and is declared a legal currency. Most countries operate in a ‘fiat’ currency system, where central banks and monetary reserves control the supply of money.
Cryptocurrencies are not regulated by governments; they are decentralised. Most countries are yet to accept them as a legal currency to purchase, for example, a coffee. In contrast to traditional currencies, cryptocurrencies are solely digital. They can not be withdrawn directly as coins or notes.
How cryptocurrencies are valued
The most effective way the price of a cryptocurrency coin is determined is by its demand. Heavy demand from buyers will increase the value of a digital coin. Likewise, if a coin has a high supply with little demand, its value will drop. Other factors that influence the price of a crypto coin is how ‘useful’ the token is. A 'difficult creation process' would mean it would be more difficult to increase the supply of the coin when demand is high, putting pressure on the price. To understand this in relation to fan tokens, the ‘usefulness’ is what someone would receive in return for purchasing them such as the advertised benefits from the club. A ‘difficult creation process’ would be where the benefits from owning a ‘fan token’ are finite, such as VIP experiences or merchandise, limiting how many can be made.
So far, this explanation already demonstrates the ethical concern with ‘fan tokens’. The question remains of how every supporter who may be enticed by fan tokens can be expected to have a fair understanding of what they are buying into.
Who are Socios.com who made an agreement with UEFA?
Socios.com first launched in late 2019. They have partnerships with Juventus, Inter, Paris-Saint Germain, Atlético de Madrid, Galatasaray, A.S. Roma, FC Barcelona, Argentinian national team, Portuguese national teams Man City, Arsenal, Everton, Leeds, Aston Villa and UEFA. The organisation also has deals in many other sports.
They claim over one million fans globally are using fan tokens to apparently engage with their team, though daily users are reported to range between 100,000 - 200,000. Their long-term vision is for this to become a part of the sport landscape, targeting the relationship of international fans in particular as an area to capitalise on.
How does Socios.com work and what are fan tokens?
Socios.com works via a platform using a special crypto currency. Fans, through Socios, can then buy fan tokens which gives them access to voting rights in areas the club determines, varying in its significance. Once fan tokens are purchased, the platform facilitates polls and other features suggesting more apparent influence.
How do the clubs, leagues and UEFA make money from this?
Fees. Depending on how it is structured, teams receive a majority percentage of the transaction in the initial release of the fan token. They then get fees in relation to fan tokens involving their club. Socios.com makes money via marketplace trading fees, as well as all subfeatures of the app have fees.
Why is SD Europe concerned about fan tokens/digital currencies in general?
Put simply, clubs, leagues and governing bodies should not expect supporters to risk their own money through unpredictable and unregulated digital currencies to have influence in football, nor use digital currencies to fool them into a false sense of influence in the game.
Digital currency partnerships in football commonly imply to offer influence in football for supporters without properly explaining the risk - fan tokens are prone to rising and falling in value meaning people’s money is at risk - nor the extent to what influence becomes available once buying in - which is often minor. Doing so raises serious ethical questions as to what extent supporters’ commitment to their clubs is being taken advantage of.
There is also the plot hole in all this that nothing stops supporters of other clubs buying fan tokens in your club with mal intentions to interfere and have a negative impact.
These practices are not what SD Europe recognises as genuine and meaningful supporter influence.
These digital currencies and fan token companies often run with marketing lines similar to ‘become more than a fan’ and claim to be offering ‘fan influence’. The issue here is that it feigns genuine, meaningful supporter involvement in football. Genuine mechanisms for supporter involvement such as supporter liaison through SLOs, member ownership and structured dialogue continue to develop to give supporters a say in the future of the game at the local, domestic and international level, whilst these currencies seemingly use similar terminology to piggyback on their notoriety, particularly since the European Super League debacle.