The multi-billion-dollar sports industry is undergoing a digital transformation and Web3 elements are likely to play a major role. This notion was hig
The multi-billion-dollar sports industry is undergoing a digital transformation and Web3 elements are likely to play a major role. This notion was highlighted in Deloitte’s “2022 Sports Industry Outlook” report, which predicts an acceleration in the blending of real and digital worlds, along with growing markets for nonfungible tokens (NFTs) and immersive technologies.
According to the report, such advances may lead to a significant increase in fan engagement. This is an important point to consider, given that fan engagement has long served as the backbone for ensuring sponsor revenue, ticket and merchandise sales, along with the overall popularity of a sports league.
Yet as technology advances, sports fans have expressed interest in forming deeper relationships with sports leagues. For instance, the “Stats Perform 2021 Fan Engagement” report notes that sports fans are not only focused on watching sports now but that they also aim to “live” experiences through technological advancements.
Direct relationships with sports leagues
Eyal Donath Zafir, investor and crypto lead at Liberty Global Ventures, told Cointelegraph that Web3 will likely be a game changer when it comes to creating better fan engagement for sports leagues:
“Web3 is the internet with true ownership, as it provides a built-in layer that makes it easy to hold and transfer value. For sports leagues and their fans, Web3 can be a game changer in building direct relationships, aligning incentives and enabling true ownership and influence.”
Zafir added that Web3 projects utilizing decentralized autonomous organization (DAO) models, NFTs and cryptocurrency can demonstrate how owners of a sports property can use technology to perform revenue shares, open intellectual property licensing or take fan votes into consideration.
Although these concepts are still nascent, a handful of sports leagues have started exploring such models. For example, Karate Combat — a full-contact martial arts sports league — recently announced that it will form a DAO to transition its governance to its fans and athletes.
Rob Bryan, founder of Karate Combat, told Cointelegraph that during the summer of 2022, the entire league — including fighter contracts, copyrights, content, intellectual property and more — was sold to a foundation that serves as a legal wrapper for a DAO.
In turn, Bryan explained that there are no longer equity holders of Karate Combat but that the martial arts sports league will be governed and controlled by fans that hold the league’s token.
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“Token holders will have the most control over the direction of the league from here,” he said. Bryan elaborated that a DAO infrastructure will ultimately allow tokenholders to do things like vote on DAO suppliers that operate league functions, set token incentives and decide — within constraints set by the Fight Operations DAO supplier — who should fight against whom.
Adam Kovacs, league president of Karate Combat, further told Cointelegraph that such a model goes beyond popular Web3 elements like NFTs for sporting leagues. He said:
“Web3 needs to meet fans where they are and only then utilize incentivization. We don’t think fans want to pick out jersey colors. They want to support their favorite athletes, make predictions on who is going to win, set matchups and perhaps land a job with their favorite sports league.”
Echoing Kovacs, “Commodore,” the pseudonymous co-founder at Krause House — a global community of basketball fans want to operate the National Basketball Association (NBA) as a DAO — believes that sports fans need to be able to vote on certain things to feel involved with a sports league.
As of today, Commodore explained that NBA fans are not engaged on the levels that they should be. “One interesting thing to think about is that each NBA team really lacks a direct relationship with their fan base by doing things such as barring season ticket holders on an email list. Twitter, YouTube, TikTok, Instagram, Bleacher Report, ESPN and more all sit directly in between the fan and the team,” he pointed out.
In order to change this, Commodore said that Krause House is offering an NFT-based membership model, which essentially serves as a ticket into its community. Community members are then able to use a governance token that has no financial value to make decisions regarding their organization’s events and strategy.
According to Commodore, this process is internal, yet he noted that Krause House aims to bring this model to the NBA. “We are in conversations with NBA teams from an ownership perspective. This means that we are trying to buy into a team and then a team can partner with us on fan engagement.”
Flex Chapman, co-founder at Krause House, added that for a long time, fans have served as the underlying unit of sports leagues. Yet he…
cointelegraph.com