ARE NFTs THE KEY TO IMPROVING FOOTBALL’S FINANCES?
There is no doubt that the finances of football clubs in this country are a mess.
The wealth generated by football is largely concentrated within the Premier League and the vast majority of EFL clubs are loss making.
The parachute payments made to clubs in the EFL Championship undermine fair competition in that league and the financial gap is starting to widen between League One and the Championship.
Ticket revenues, sponsorship revenues and player sales are the commercial focus of most clubs but from my recent discussions with some clubs we are starting to see the evolution of an approach which is prevalent in other sectors of business but is new to football. That relates to the introduction of NFTs.
NFT stands for Non-Fungible Token. Non-Fungible means it is unique and Token means that it is an asset that can be traded by users on an appropriate public platform. The trading of tokens in a football context allows clubs to raise funds both domestically and internationally.
Back in the late 1990s when I was appointed CEO of Charlton Athletic, I was passionate about rebuilding The Valley. The Charlton Board set me the task of raising £2m to allow the north stand development to go ahead and the money was raised from a north stand patrons scheme and a European Union grant to house a college in the new stand. If that was happening now, I would most definitely be looking at NFTs as a way of raising finance against such a specific asset.
Traditional ways of raising commercial income are under threat from the cost-of-living crisis and the global destabilisation of the energy market. When you see your gas and electric bills doubling then justifying buying a football season ticket or sponsoring a match for example becomes difficult to justify be that an individual or a company.
Football needs to fundamentally re-think its commercial strategies to take advantage of advancements in the modern digital age. If it doesn’t then the losses made by clubs will grow and we have seen already with so many clubs where that leads.
Football at the lower levels cannot rely on the Premier League coming to the rescue with a redistribution of revenue as many Premier League owners believe that Championship clubs have very wealthy owners who choose not to invest in their clubs and for that reason, I don’t see them agreeing to any meaningful level of redistribution anytime soon unless it is forced upon them by regulation.