Blockchain will shake up professional sports

The main focus

The challenge is to build a transparent and reliable technology ecosystem that unites athletes, clubs and fans:

- reduce transaction costs and risks

- protect data using biometrics

- build new channels for monetizing sports

- increase access to the market of players and clubs

- help talents to achieve their goals

The social mission is to equalize the chances of talented athletes for success on the world stage, regardless of their place of birth, capital and connections. Decentralized blockchain technologies make this a reality.

Overcoming resistance and conservatism is not easy, but modern communities are developing new mechanisms that benefit athletes and clubs and are trying to build a better and more equitable model of the sports market.

Sports market issues

The sports market is highly fragmented and run by bureaucratic sports federations, which often pursue their own interests and are not interested in financial transparency. The interests of wealthy clubs and famous athletes dominate, and financial and human resources are lacking to develop and promote young talent.

Sports clubs have established agency connections and work with proven scouts who have proven themselves to the management. The system for selecting promising athletes is not transparent, talents have to rely on the help of numerous intermediaries and their personal connections.

Particularly affected are aspiring athletes from developing countries who do not have “rich parents” and agents with connections in the sports world. Numerous intermediaries make money from their hard work in sports. Inadequate paper-based systems and fragmented national athlete registration systems exacerbate the challenges of promoting young athletes.

Clubs incur additional costs associated with the selection and execution of documents, as well as assume the risks of concluding contracts without complete and reliable information about the players and their real value. The centralization of sports federations and the corruption scandals that shake them up do not allow hopes for a solution to this problem and an increase in market transparency.

Movement potential in football

A total of 18,112 international transfers of professional footballers were registered in 2020, according to the FIFA TMS report. The pandemic has left its mark on the 2020 performance, with 17,077 international transfers completed in men’s professional football, down 5.4% from 2019. The transfer market is expected to revive and grow in 2021.

These 17,077 transfers involved 4,178 clubs, 187 FIFA member associations and players from 180 different nationalities.

At the same time, there are no large platforms or marketplaces in the global football (and sports) market as a whole. It is especially difficult to connect key markets — suppliers of football players (Africa, Latin America) and buyers (Europe), working through multiple layers of intermediaries.

There is tremendous potential in the sports market to create a platform that simplifies the interaction between athletes and clubs, while reducing costs and risks. The decentralized blockchain architecture has tremendous benefits in the sport of solving transparency problems for all market participants.

In terms of monetization potential, according to FIFA data for 2019, the volume of transfer fees was $ 7.35 billion, an increase of 5.8% compared to 2018. It is easy to calculate that even a single percentage of market share, which is quite realistic to win a new global platform within 3–5 years, provide a turnover of several hundred million dollars per year.

In addition, blockchain technologies allow to increase the volume of the market itself, simplifying access to the global market, speeding up transfers and eliminating losses. Smart contracts simplify the transfers of athletes and make it possible to guarantee the automatic fulfillment of the obligations of the parties, incl. to carry out solidarity payments in the auto mode, the losses of which due to the imperfection and opacity of the world football system reach $ 300 Million. in year.

New technologies for the selection of players

New football scouting platforms allow system participants to process transactions on the blockchain with transparent registration of athletes’ data, carry out transactions using smart contracts and guarantee the authenticity and protection of data integrity.

The internal and external blockchain design protects sensitive data while allowing clubs, academies and federations to participate in data validation and create a decentralized system unlike any other in the sports market.

Through the Ethereum-based public blockchain, the platform will provide all the tools for tokenizing player rights, contracts and sports assets such as Know Your Customer (KYC) and Anti-Money Laundering (AML) connectivity, based on banking standards. Creation of an investment prospectus, certification of security tokens, audit of smart contracts and provision of PwC guarantees.

The tokenization platform must have an integrated fiat-crypto payment processing system. Legal advice and cybersecurity services are available.

In the following articles, we will consider the main direction of blockchain in sports recruiting and scouting, their development prospects.

Keep for updates.