The sports industry was hit hard by the coronavirus pandemic. Most of the leagues were suspended and then the teams played without an audience for an extended period. Sports clubs began looking for new sources of income and the cryptocurrency industry arrived to help with juicy deals.
Numerous partnerships between major sports clubs made headlines over the past year. Even national teams and major club unions joined the trend. Thus, it became even more surprising when FC Barcelona and Manchester City, two of the biggest football clubs in Europe, ended their cryptocurrency-related sponsorship deals in the same week.
FC Barcelona canceled its association with the Non-Fungible Token Market (NFT) Ownix following the arrest of Moshe Hogeg, an Israeli crypto entrepreneur who was among the company’s consultants. Ownix rushed to deny any organic link to Hogeg in an avalanche on Twitter. Cointelegraph reached out to Ownix, but the company declined to comment further on the matter.
Manchester City also suspended its deal with 3Key, which the club has announced as a regional partner in “decentralized financial analysis and advisory technology” just a week earlier.
The sports industry is eager to join the hype for NFTs, which Morgan Stanley predicts will become a twelve-digit market by 2030. Timothy Mangnall, who helps sports clubs better understand cryptocurrencies and the NFT world through his agency NFT Capital Block, told Cointelegraph that it would be easy for clubs to forget to do basic due diligence on companies and professional backgrounds. before launching into long-term business deals.
Several NFT markets had contacted Barcelona in the months leading up to the announcement of the agreement with Ownix. Many of the contenders already had a strong track record in the NFT space, however Barcelona chose to go with a fairly unknown brand in this space, Mangnall explained:
“What this shows me is that Barcelona just looked at the money on the table rather than doing what it would do for any other endorsement deal, which is due diligence.”
The cryptocurrency market is full of small NFT companies that are ready to spend ten times more money than major exchanges just to strike big deals with sports clubs, He added, warning that this should be a red flag for any club, which should then double down on deepening their internal review process and digging deeper into the company and the owners.
Tokenization is a product of blockchain technology that attracts large companies with massive brand values and fan bases, adds Ahmet Usta, co-author of Blockchain 101 and co-founder of the Avaxtars and Crypto Mandala NFT projects: “Clubs naturally look to get high returns from fan and NFT tokens as first-time users. However, they must focus on adding value with innovation and strong business models to their token and NFT offerings. “
NFTs are not going anywhere and will be part of our future, Timothy Mangnall summed up, adding that “clubs should not be afraid of missing out on the hype right now, but take a step back to understand the sector and plan the next ones. 3 years minimum “.