Blockchain in Sport - Thematic Research

Blockchain is a method of storing information that makes it very difficult to change the information or cheat the system. The technology can be seen as a digital record of transactions like a ledger that is decentralized, meaning that there is no central authority or intermediary, such as a government or a bank, to validate a transaction. Instead, transactions are shared (distributed) with all participants in a network (on a peer-to-peer (P2P) basis). Transactions are then validated using consensus methods and cryptographic techniques designed to ensure that no single entity can control the blockchain.

In the analyst's October 2020 Emerging Technology Trends Survey of more than 1,700 senior executives worldwide, over half of respondents stated that they were already investing in blockchain, and 35% confirmed that they would be accelerating investment in blockchain over the next 12 months. Of the eight technologies surveyed, blockchain ranked second to last for both current and future investments.

Sport is always looking for ways to generate more revenue, and the cryptocurrency boom in 2021 has provided the industry with ample opportunity. The size of sponsorship deals being struck between sports teams and leagues with crypto firms increased massively in 2021 and is unlikely to slow down over the next few years. COVID-19 has encouraged sports to look at different angles of monetization, and items including fan tokens and digital collectibles have spiked in popularity, with some forking out thousands of dollars on such purchases. While the sector is growing extremely quickly, it does face obstacles, namely the lack of regulation, which could prove problematic as more fan tokens and items are introduced to the digital marketplace.

The acceleration in major crypto sports deals began in 2018 when CashBet signed a deal with Arsenal to serve as the club’s exclusive blockchain partner. The deal was struck largely to promote the launch of CashBet coin, a cryptocurrency specifically used for CashBet’s online betting platforms. The UFC then struck a deal with Litecoin, who became the official crypto partner of UFC 232, which was headlined by a long-awaited light heavyweight rematch between Jon Jones and Alexander Gustafsson. The event was significant for Litecoin, with the brand accruing over 40 million Twitter impressions to a global audience of over 16 million online users.

An analysis of the current state of play with blockchain/crypto, and its initial forays into sport.

Key Highlights

• The biggest sports sponsorship deal with crypto is the UFC’s 10-year deal with Crypto.com. The deal was initially struck in July 2021 and would see the firm serve as the global kit partner for the UFC, with the logo visible on fight kit apparel worn by the athletes. The initial deal was valued at $175 million over the decade, but in November, the deal was expanded to include a multi-year licensing agreement for a series of UFC exclusive NFTs. The deal is now estimated to be worth approximately $50 million a year, and $500 million in total, which highlights the financial scale of crypto in the modern-day. The second biggest crypto deal was again struck by Crypto.com and saw the Los Angeles Lakers agree to a naming rights deal with the firm, which will see the name of their home arena change from the Staples Centre to the Crypto.com Arena. The 20-year deal is reportedly worth $35 million a year and will be worth $700 million over the next two decades. Another significant crypto deal in the world of basketball came with the NBA’s agreement of a two-year deal with CoinBase, who became the league’s official cryptocurrency partner, as well as a partner to all of the WNBA, NBA 2K, NBA G League, and US Basketball brands. The deal is worth $25 million a year, and $50 million over its duration. These deals highlight how quickly basketball, and the NBA in particular, has pounced on the value of cryptocurrency in 2021.
• The US Securities and Exchange Commission (SEC) has expressed concern over the number of digital tokens that have been introduced over the past year, as well as the newly established companies and platforms that have been set up to trade and deal with these tokens. Between October 2020 and March 2021, the Federal Trade Commission reported that consumers had lost over $80 million on crypto investment scams. What has allowed these crypto scams to thrive is the lack of regulation, with many impulsively spending large sums of money on illegitimate projects, only to realize their mistakes later. This was never truer than the story of Dr Ruja Ignatova, who created the Ponzi scheme OneCoin, which allegedly brought in over $4 billion between 2014 to 2016. OneCoin was never actively traded, and the coins could not be used to purchase anything else. Ignatova disappeared in 2017 and has been an international fugitive ever since, while co-founder Sebastian Greenwood was jailed in the US for money laundering and securities fraud. While this is an extreme example of crypto fraud, it highlights the many dangers in the sector that investors face, and the sporting world will have to take care in navigating the fast-growing industry.
• The platform segment is expected to show steady growth owing to the rising demand for blockchain protocols, such as Hyperledger Fabric, R3 Corda, and ConsenSys Quorum, across various industries. However, the services segment accounted for most of the growth in 2020 and will continue to do so over the forecast period. The financial services sector is where the bulk of venture capital investment is going. Most of the early use cases are being developed in this domain. More than 40% of global blockchain spending came from the banking, finance, and insurance industry in 2020, where prominent use cases include: cross-border payments and settlements, trade finance, asset management, regulatory compliance, claims processing, and identity management. The financial industry is forecast to maintain a strong pace of blockchain investment, with a CAGR of 48% between 2020 and 2030.

Scope

• This report provides an overview of blockchain, and the explosion in its growth and popularity in recent years.
• The current trends dominating blockchain as well as the trendsetters leading the industry, and what sports leagues and teams have capitalised the most the boom of blockchain with regards to sponsorship.
• The report provides a look at the future development of the blockchain landscape, and what challenges it faces it in its immediate future.
• An in-depth look at the value chain for blockchain, and what generates revenue for the biggest platforms in the sector.

Reasons to Buy

• For those wanting an in-depth analysis the current landscape of blockchain, and how the sports world has begun to utilise blockchain to maximise their own revenues and business profile.
• For those wanting a sense of the current performance of many of the leading blockchain/crypto platforms, and the difficulties and controversies they are currently facing to stay dominant in an extremely competitive and diluted market.
• the analyst's thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.