As Barcelona FC Prepares to Its Own Crypto, Are Fan Tokens Worth It?

Indeed, crypto has witnessed its ties with the world of sport deepen in the past week, as none other than Barcelona Football Club announced plans to launch its own official cryptocurrency and non-fungible tokens. In an environment where Chiliz and the Socios.com platform already let soccer and other sports teams create their own fan tokens, Barcelona’s decision to develop its own cryptocurrency in-house signals that more teams may take a similar independent route, as a means of using the growing interest in crypto to bolster their finances.

However, for the average fan and retail trader, questions remain as to whether fan tokens are a good investment. Because if you look at the price histories of most fan tokens, few if any have really provided big returns. At the same time, fan groups have actually spoken out against such tokens, arguing that they don’t provide genuine sports lovers with value and that they undermine meaningful fan engagement.

Barcelona FC to Launch Its Own Cryptocurrency, NFTs and Metaverse

Regardless of the view that might be taken of fan tokens, it seems that the idea of mixing sport and cryptocurrency is catching on. This, at least, is the impression created by the news that Spanish soccer team Barcelona FC is going to develop its own in-house cryptocurrency.

“We want to create our own cryptocurrency and we have to do that ourselves. We are different because we survive financially from what we can generate through the industry of sport,” said Barcelona’s president, Joan Laporta, who was speaking at Mobile World Congress.

Laporta added that Barcelona does not have big corporations or shareholders behind the club, something which is forcing it to be “imaginative, innovative [and] brave” in bolstering its finances. And it really does need to bolster its finances quickly, since the team has debts of around €1 billion (c. $1.09 billion).

To this end, it will be entering crypto in a variety of ways. Its first step will be to launch a range of non-fungible tokens (NFTs), although Laporta didn’t specify what shape such NFTs may take.

“The players know what we’re working on, that this is a modern club that makes use of new media. There are clauses in their contracts related to the NFT world and the metaverse,” he added.

And aside from NFTs and its own cryptocurrency, Laporta revealed that Barcelona is “developing [its] own metaverse.” While this could mean any number of things, it at least suggests that the club is planning on creating a crypto-based ecosystem of tokens and other digital items.

Good for Investors or Fans? Or Neither?

This may be exciting news, at least for those who always welcome crypto making one more inroad into the public’s consciousness. However, fans and retail investors may want to hold off a little before rushing for whatever signup lists Barcelona may or may not release in the coming weeks.

The performance of other, already launched fan tokens suggests that any investor hoping for a quick (or slow) buck may come away disappointed. To illustrate, here are the biggest soccer fan tokens in the cryptocurrency market right now, including their performance:

• Paris Saint-Germain Fan Token (PSG) – Up by 10% in the past 30 days; down by 70% since an ATH of $58.79 in April 2021; up by 219% since launch.

• Manchester City Fan Token (CITY) – up by 1.8% in the past 30 days; down by 71% since ATH of $36.19 in August 2021; down by 55% since launch.

• Atletico Madrid Fan Token (ATM) – down by 6% in the past 30 days; down by 91% since ATH of $58.46 in May 2021; up by 5.5% since launch.

• FC Barcelona Fan Token (BAR) – up by 21% in the past 30 days; down by 89% since ATH of $72.55 in April 2021; up by 25.5% since launch.

• Inter Milan Fan Token (INTER) – down by 15% in the past 30 days; down by 55% since ATH of $13.21 in October 2021; down by 30.9% since launch.

• Lazio Fan Token (LAZIO) – down by 13% in the past 30 days; down by 89% since ATH of $26.75 in October 2021; down by 87% since launch.

The above are the top six fan tokens by market cap, and interested parties can check the full CoinGecko category of “fan tokens” for themselves to see others (they’re almost exclusively for soccer teams). The main point to take away, however, is that if you want to make explosive returns by buying a new altcoin soon after it launches, you’re almost always better off looking elsewhere.

For instance, looking at Synthetix Network (SNX), the 100th biggest coin by market cap (according to CoinGecko), it has appreciated by 709% since its launch back in March 2018. Here are some more:

• 99th: Convex Finance (CRX) – up by 230% since launch in May 2021

• 98th: NEM (XEM) – up by 39,000% since launch in April 2015

• 97th: Loopring (LRC) – up by 358% since launch in October 2017

These are only a small number of lower-cap coins. If you look at bitcoin and ethereum, to take a couple of other examples, they’ve appreciated by a gigantic 48,807,399% and 207,100%, respectively. Basically, if you can find a new cryptocurrency with a genuine use case, it will likely be a more fruitful investment than a fan token.

But what about actual fans? Sure, the average investor with no interest in sports may be advised to stick with ‘traditional’ cryptocurrencies, but surely a real fan would benefit from owning their team’s token?

This would be the claim made by Socios.com, the platform which issues all of the fan tokens listed above, as well as the vast bulk of the biggest. When fans buy a token created in partnership with Socios.com — which they can do by acquiring some Chiliz (CHZ) — they gain access to various perks. Most notably, they receive the chance to win prizes, and they also become able to vote in certain team-related decision-making processes.

However, fan groups don’t think this is a very good deal, and neither do they think sports tokens are good for fans who want to have a genuine democratic involvement with their favorite teams. The most prominent exponent of this view is Football Supporters Europe, which recently spoke out against a deal the European football association UEFA made with Socios.com. It described this deal, which is a three-year licensing and sponsorship deal, as legimitizing “risky investments in highly volatile and largely unregulated financial assets.”

Fan Tokens Present Numerous Challenges

FSE’s website ran an illuminating interview in February with author Martin Calladine that neatly unpacks just why it and other fan groups are against the increasing link-up between sports and cryptocurrencies, and between Socios.com and soccer teams in particular.

In this interview, Calladine noted that, while fan tokens promise increased engagement and involvement in decision-making, the polls supported by Socios.com are “largely meaningless.”

“The most consequential one I’ve seen is where owners of the tokens could vote on Juventus’ goal music. Most of the time, though, the polls cover ludicrously trivial matters. There was even one I saw that asked token holders to vote on which players’ wash bag they wanted to see the inside of, as if anyone would care,” he said.

On top of this, Socios.com’s platform introduces the problem that anyone can buy a sports team’s fan token and participate in votes. In other words, rival fans could potentially vote in the polls of other teams.

“This means that anyone can vote on any club’s business, and that’s a strange way to approach fan engagement. Moreover, the more you pay, the more say you have. This undermines the core principles of membership democracy, which is based on the idea of one member, one vote, and that only those affected by decisions should be permitted to vote on them,” Calladine added.

For Calladine, the tokens offered by Socios.com are basically schemes aimed at encouraging fans to buy Socios’ native Chiliz (CHZ) token, which is needed to purchase the official fan tokens in the first place. “They’re cryptocurrency recruitment schemes disguised as fan engagement businesses,” he said.

So whichever way you look at it, fan tokens may not be great acquisitions for investors or for fans. That said, with Barcelona launching its own in-house cryptocurrency soon, the way in which fan tokens work may end up evolving. Of course, with Barcelona facing massive debts, it also can’t be taken for granted that its tokens will directly benefit either retail investors or its supporters.