Arsenal Finds Brave New Crypto World Must Be Navigated With Care

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Arsenal got their wrists slapped by the ASA for fan chips, but this is just one example of football’s latest money-making craze.

News that Arsenal has been censored by the Advertising Standards Agency (ASA) for promoting Socios Fan Tokens is a fitting way to end a year in which the cryptocurrency has started to really sink. in the game. Across the world, dozens of clubs – including many of the larger ones – have climbed aboard this particular bandwagon, making you wonder if those involved in running the clubs were even aware of it. of the nature of this particular beast.

The ASA found fault with two advertisements placed by the club, one on the club’s website and one on social media, six days apart in August. They found the ads to be irresponsible (to take advantage of the inexperience or gullibility of consumers and the commoditized investment in cryptoassets) and misleading (not to illustrate the risk of the investment). Further, they found that the Facebook post “did not specify that the ‘token’ was a crypto asset, which could only be obtained by opening an account and trading with another cryptocurrency that had to be purchased.”

This is the latest in a series of stories that have emerged this year about football’s growing relationship with cryptocurrency. There are over 8,000 competing cryptocurrencies, some extremely popular, many largely dormant, all based on blockchain technology, which acts as a ledger of all transactions updated and held by currency holders. These are considered to be extremely volatile markets, largely unregulated and sensitive to wild fluctuations in currency values. Scams are not uncommon.

In the case of Arsenal, Socios’ “fan tokens” had to be purchased using a cryptocurrency called Chiliz and could be used, according to Arsenal themselves, to “bring fans closer to the club through a series of fun interactive polls, games, competitions and quizzes every season ”. The club claimed in its defense that fan tokens were used to encourage fan participation and were different from cryptocurrencies – which were virtual currencies used as a form of payment – and that they promoted the tokens. responsibly by reminding fans that they only need one token to vote. decisions, that they should only buy what they could afford, and that they urged buyers to seek independent financial advice if necessary.

The ASA argued that the Financial Conduct Authority classified utility tokens as crypto assets, which were a complex and sophisticated investment, subject to frequent changes in value and potentially resulting in significant losses, and that the advertisement did not contain no information that Capital Gains Tax (CGT) could be due on profits from an investment in crypto assets. But the club’s statement on the matter confirmed that “we will seek an independent review of the ASA’s decision to gain more clarity on the current position of the ASA.” , it is the regulators who are wrong.

This is the latest in a string of cryptocurrency and football stories that have started to look like a flood as Christmas approaches. The most notable of these did not involve a Premier League club. Eyebrows were raised through the game when The Washington Post, the newspaper whose reporting ultimately brought down Richard Nixon’s US presidency in 1974, published an article about a group called WAGMI United, a group of speculators who foresaw, not only to buy into a football club, but who would finance their purchase through their speculation.

NFTs (Non-Fungible Tokens) are another tentacle in this rapidly growing world. In short, an NFT is proof of ownership primarily associated with reproducible digital files such as photos, videos, and audio files, the record of which is stored in the blockchain digital ledger. They allow people to buy digital items that are traded online, and it’s a global market that has swelled to an estimated value of £ 16.5 billion in 2021. WAGMI United is an extremely speculative group. rich led by Preston Johnson, a prominent sports gambling analyst. , Eben Smith, a former derivatives trader, Daryl Morey, a basketball executive, businessman Gary Vaynerchuk and social media “personality” Bryce Hall.

Despite all their bluster, the Washington Post article was full of red flags. Their intention was to buy a League One or League Two club, but they were extremely hesitant to mention which club. They spoke of “investing heavily in analysis”, but there was no indication that they would do everything that other clubs – even at this level of play – are already doing, while the NFTs that would be sold to fund selling the club would not give anyone beneficial ownership of anything. It would stay with WAGMI United, meaning that those who bought NFTs, whether supporters of the club or not, would effectively buy the club for WAGMI United, a surprising situation given the wealth of those who want to buy a club. .

The story collapsed very quickly. Tariq Panja of the New York Times revealed that the club they were watching was Bradford City, but Bradford owner Stefan Rupp confirmed in a statement that he received an email with an offer to buy from the club that he had rejected. In the Washington Post article, Eben Smith said that “the EFL has been surprisingly progressive in our conversations with them, and they are excited about the overwhelming interest we hope to generate.” The EFL had declined to comment on the story. When contacted by The Athletic (£), it was established that the EFL had only been contacted by WAGMI United on the day the article was published, and that “when the project was explained to them they [the EFL] were neither progressive nor excited ”.

WAGMI United has not gone anywhere. They will almost certainly be back. And they’re not the only ones either. A speculator, Peter McCormack, has confirmed he bought a non-league football club with the intention – stop me if you’ve heard that before – to turn it into a ‘global brand’, McCormack himself stating that ‘my goal is to raise £ 50million – a mind-boggling amount’. McCormack had his own puff, this time at City AM.

For the record, the club he bought is Bedford FC, which play in Division One of the Spartan South Midlands League, the tenth tier of the English league system, but the idea of ​​being “nine promotions from the Premier League Is a generous assessment of the club’s position. Bedford’s average attendance this season is 45, and they play at McMullen Park, a small field adjacent to The New Eyrie, home of Bedford Town, which plays two divisions above them. Both courses are less than five miles from the center of Bedford itself.

And while nine promotions might almost seem achievable in the long run if viewed through a certain prism, it should be added that the nine levels above them contain 722 clubs, which gives a better idea of ​​the where Bedford FC – which McCormack has already, almost predictably, announced he will be renamed to ‘Real Bedford’ – are part of the football food chain and how realistic it might be for them to overtake over 630 other clubs to claim a place in the EFL. It has now been confirmed that the Bedford manager has resigned because of it.

It’s not hard to see why football is capitalizing on this craze. Clubs are suckers of money at the best of times, and there can never be enough sources of income that can be tapped into. But these aren’t the best times, with the financial effects of the pandemic still being felt by most clubs, and on top of that, it looks increasingly likely that there will be further restrictions on the football industry. game, which has become one of the biggest sponsors of the game. That clubs can simply swap one form of gambling for another with even less regulation is an irony that does not even seem to have occurred to many. who trade shirt sponsorship deals with gaming companies for deals with cryptocurrency companies.

But the risks are real. Manchester City have partnered with a company apparently without doing due diligence on them and had to put their partnership on hold after the company’s lack of online presence raised concerns. If the game decides to join this rush for “decentralized finance” (and if we replace the word “decentralized” with “unregulated”, we begin to understand more clearly why the capitalists of Big Football’s Wild West would be so interested. by it), then it must be absolutely clear that this whole area requires very careful navigation. Arsenal didn’t say this clearly enough, and that’s why they got slapped on the fingers by the ASA, but more will follow, and the governance of the game needs to tackle this gold rush. before anyone, be it a fan base or a club itself, is seriously injured. .

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