Sports has become a global enterprise. As a result of advancements in digital streaming, online chat rooms, and videogames, fans from even the most disparate parts of the world can now follow their favourite teams from the comfort of their own homes. Kids from villages in Uganda can watch as France beats Croatia in the 2018 Fifa World Cup in Russia. US expats living in Spain can cheer on the St. Louis Blues as they beat the Boston Bruins in the 2019 Stanley Cup.
It’s certainly a marvel how far we’ve come. And yet, while technological advancements have undoubtedly brought sports fans closer together, barriers to entry for sports merchandising remain far too high, discouraging participation and contributing to countless missed opportunities to generate revenue. In order to keep up with the pace, I posit that sports teams should consider implementing advancements in blockchain technology in order to break down silos that have long impeded progress within the industry.
You’re probably thinking: What does blockchain have to do with sports? Blockchain technology can best be described as a distributed ledger of information that’s not inherently tied to one institution or entity. Because blockchain networks are decentralised, meaning that they are distributed across thousands of servers around the world, they aren’t slowed down by the cross-border payments process.
Transactions that once took days or weeks to clear can now occur without unnecessary waiting times, chargebacks, and price fluctuations. For users, the opportunity to buy products on blockchain networks not only means the chance to send and receive payments without varying exchange rates, but it also means opening the door to global commerce in ways typically considered to be restricted by international bureaucracy.
Consider the following scenario: As a young football fan in Argentina (soccer for the purposes of this argument), you attempt to buy a jersey for an Eduardo Salvio, Franco Cervi or Germán Conti of S.L. Benfica. The process is exceedingly cumbersome to complete effectively. Firstly, inflation rates in Argentina are astronomical, rising at an inter-annual rate of 44%. An item costing €39.99 may seem feasible for a fan in Portugal, but in a country where nearly a third of citizens are living under the poverty line, it’s likely to be too difficult to consider.
Even for those who are lucky enough to afford the jersey, there are other issues on the table. By the time your transaction clears, it’s more than likely that the exchange rate between the Argentine peso and the Euro will have changed dramatically, leaving you largely in the dark about just how much you owe. It’s a costly and time-intensive process — one that’s historically discouraged participation worldwide.
Using blockchain technology, however, we can assign a fixed rate to all purchases made, allowing fans to interact confidently in the value of their assets regardless of geographic location. Returning to the above example, our young fan from Argentina would be able to pay for his or her S.L. Benfica jersey in Bitcoin rather than in Argentine peso, ensuring that its value will not depreciate due to shifting international sentiments.
Once the jersey is purchased, that transaction would occur instantaneously, providing the fan with necessary assurances in the value of that item at the time of sale. For some, the economic impacts of blockchain may not seem significant enough to impede progress for the entire merchandising industry; however, I implore you to consider the painstaking process of buying products overseas. With the time, energy, and cost involved: would you consider it worthwhile?
Blockchain’s economic properties aren’t the only positive signal for the future of sports merchandising, it’s immutability and decentralisation play an important role as well. Whenever you buy sports merchandise online, there is always going to be a degree of risk with regard to the authenticity of your purchase. How can you be sure that the signed David Ortiz baseball you bought was actually signed by David Ortiz? Does the certificate that comes with your purchase really quell any uncertainty you might feel about its value?
As the counterfeit goods industry climbs to $461 billion, it’s safe to say that the probability of buying faulty sports merchandise is growing too prominent to ignore. Unfortunately, without necessary assurances in a product’s authenticity, growing uncertainty will continue to discourage buyers from making new purchases.
Blockchain systems, by contrast, provide consumers with a complete view of a product’s lifecycle from juncture to juncture. Because blockchain platforms are fundamentally built on decentralised and immutable ledgers of information, data inputted can be added to and independently verified from anywhere in the world. Should you decide to buy a signed baseball, for example, you’d actually be able to follow the product back to its source, ensuring that the products you purchased are legitimately the products you intended to buy.
Herein lies an important argument about the future of the sports merchandising industry: In order to stimulate the market, you don’t need fancy products or tech-forward service offerings, you need trust. With greater confidence, there is little obstructing loyal sports fans from supporting their favourite teams.
Five or 10 years ago, who would have thought that a kid from Kansas, or even a kid from Melbourne, would be actively invested in the sports merchandise of Manchester United. Who would have believed that communities once isolated by regional designations would quickly expand to become global enterprises?
This is the state of sports today, and it’s only going to become more globalised as access to technology continues to stretch around the world. As we undergo this transformation, it’s imperative that we ensure that sports merchandising can keep up with the pace. We may not be able to bring all seven billion people under one arena, but with the power of blockchain, we might — once and for all — bring sports merchandising into the future.
By Nuno Correia, CEO and Founder, UTRUST
Disclaimer: We do not give advice on financial products.