Cryptocurrency and blockchain are going to disrupt most industries. Nowhere is this more evident than in the world of sports.
We are already starting to see some things happening which provide a preview to the future.
Spencer Dinwiddie of the Brooklyn Nets already decided to tokenize his NBA contract. The league came back saying he cannot do it but he is going ahead with the plans anyway.
On Monday, the 26-year-old will launch his blockchain-based investment platform DREAM Fan Shares, where he’ll sell 90 bond-like SD8 coins— what DREAM is calling Professional Athlete Investment Tokens— that will allow him to collect a large chunk of his guaranteed three-year, $34 million contract up front. And if Dinwiddie’s plan, which the NBA does not approve of, is successful over the first year, other athletes and entertainers have already expressed interest, he said, in converting parts of their contracts in a similar manner.
We are moving into the world of tokenizing of everything. Dinwiddie is the first of many who are most likely to follow. By selling tokens, he can collect most of his money up front. Of course, there will be a discount which provides a return to the investors.
This will not be relegated to just their playing contracts. It is easy to envision how athletes will also follow the same pattern with their endorsement deals.
The idea is to offer a guaranteed rate of return to the investors while taking the up front money and using it for a larger return. This is a simple concept to follow. If the investors get 5% but the athlete can take the cash money and get 10% by investing in a business, he or she comes out ahead.
Contract tokenization is not the only thing that is going to change. How about team ownership? Most teams are owned by wealthy individuals. A sports franchise is the epitome of a non-liquid asset. There are normally a lot of things that have to happen for a team to be sold. By tokenizing it, an owner can get fair portion of the money out.
Naturally, there is a built in market to sell to. Fans would love to own a piece of their favorite sports team even if for novelty sake. The Green Bay Packers are a community owned team although the "stock" entitles one to nothing. There are no dividends and it cannot be bought or sold.
Tokens would provide someone with a legitimate claim to a piece of the team while getting the financial benefits.
What is interesting is that people could own both a piece of the team and the player's contracts at the same time. That would make for an odd dynamic during a labor dispute.
Stadium financing will also take a different course. Presently, the local municipality is usually footing most of the money through bonds. There are times the team does put up a few dollars but it is rare.
With tokens, the construction could be funded with ownership spread to the token holders. Through smart contract, the proceeds from stadium rents, endorsements, and whatever other monies are generated will be distributed.
We often think of the major sports. However, there are a lot of sports out there that do not operate at the same levels as the bigger ones. Take the WNBA as an example. The monies involved are a fraction of that of the NBA. Tokenization could close the gap via a crowdfunding mechanism.
The same is true for leagues in sports such as rugby, lacrosse, and, even, curling. Fans of those sports would be able to support the athletes directly through the use of tokens.
We would see the same for Olympic athletes. Most do not make a lot of money, instead having to work jobs while training. Outside the few well known names, most operate in obscurity. Tokens as a crowdsourcing mechanism might enable people all over the world to support the athlete in his or her dream.
This could go one step further. How placing a bet on a Victor Cruz type? Cruz was an undrafted football player who was able to get a tryout with the New York Giants. He not only made the team but became one of the best receivers in the game for a few years. This secured him a large contract with a lot of guaranteed money.
In this situation, people could essentially place "bets" on these long shots, providing capital to them. If the athlete does find success, the financial gain is distributed among the token holders.
eSports is also growing in popularity. Like their traditional counterparts, popular and successful teams can be worth a lot of money. This dimension of tokenization applies in the same manner. All contractual deals of any nature can be turned into tokens. People can invest in pieces of whatever they desire while a source of funding is presented.
The sports world is filled with passion. Very few are able to turn this into financial gain. Through tokenization, tans are able to get involved in the "business" end of things. Through passive ownership that can come with tokens, people are going to be able to share in the success of their favorite teams. They also will have a bigger say in how things are run.
As cryptocurrency grows and more people are holding different kinds of tokens, suddenly teams that are financially struggling will have access to a large amount of capital. We could well see small markets teams placed on par with the larger ones. In baseball for example, teams revenue is greatly influenced by ticket sales and local media contracts. New York and Boston have much better deals than a Tampa Bay or Oakland.
With tokens, people from all over the world can help to support these teams with capital in hopes of putting the team on part with the larger market teams, thus generating more revenue through greater success.
Once again, we are only at the beginning stages of what this technology is offering. Cryptocurrency is programmable money meaning we are going to be able to do a lot more than before. Innovation is just getting started.
Over the next few years, we are going to see opportunities arising that we never imagined. Those who have a fair bit of ctyptocurrency will be able to get involved. Most everything is going to eventually end up being traded on the open market.
With such a huge following globally, sports is a likely area to see the changes happening quickly.
There will probably come a day when you can use your STEEM or SPORTS tokens to buy part of Lebron James contract.
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