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Sponsoring from a “dirty corner”: the crypto industry is pushing into the Bundesliga

Sport Sponsoring from “Schmuddelecke”

The crypto industry is pushing into the Bundesliga

FILE PHOTO: FILE PHOTO: Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration

Companies from the crypto industry are discovering the sport for themselves. They hope to gain a positive image with sponsorship

What: REUTERS

More and more crypto cash is flowing into sports. The Bundesliga also relies on digital assets. But sponsorship is tricky. Hertha and Hoffenheim are already working with two providers. The great FC Barcelona is one step further.

SCost evasion, drug financing, money laundering: the crypto industry has an image problem. However, the world of digital wealth is increasingly pushing into sports. The sponsorship of crypto companies, not least in the Bundesliga, can become a problem for the credibility of professional clubs.

“As is so often the case, there are two sides. A positive side consists in an innovative power. The professional clubs connect with digitization through their partners and can serve as a testing ground for modern products,” explained Professor Markus Kurscheidt, Chair of Sports Science II at the University of Bayreuth.

“Blockchain encryption can be a very positive service for fans by gaining higher data sovereignty and reliable encryption technique for money. If you position yourself as a modernizer in brand management, you can present this to your fans quite positively.”

Cryptocurrencies are relatively opaque

The negative, however, is that “cryptocurrencies continue to come out of the shabby corner and are still relatively opaque. Of course, companies from the crypto industry try to set positive image signals for themselves and to generate an image transfer. Then there is the unsolved, negative side of blockchain: the energy consumption and thus the ecological footprint,” explained Kurscheidt.

Payment flows are also an important topic for the “Future Professional Football Task Force” of the German Football League (DFL). This working group, which was set up in the time of Corona, repeatedly emphasizes sustainability and fan dialogue in order to counteract rampant commercialization and oppressive alienation from the grassroots. “If the partnership between professional clubs and partners from the crypto industry gets the upper hand, then the active fans will certainly ask critical questions,” warned Kurscheidt.

The crypto industry is increasingly pushing into professional sports. The Crypto.com trading platform, for example, is a sponsor of the 2022 World Cup in Qatar. The Bundesliga clubs, however, are primarily pushing the trade in digital trading cards. These are referred to as NFTs (Non-Fungible Tokens), i.e. non-exchangeable or replaceable tokens. However, Hertha BSC is already working with the financial service provider Caizcoin, and the cryptocurrency Baby Doge is a partner of TSG 1899 Hoffenheim.

In Spain, FC Barcelona, ​​which has been living beyond its means for years, even wants to produce its own NFTs without an external partner, which are unique thanks to the individual encryption using blockchain technology.

Corona pandemic as an accelerator

“The crypto industry can reach the masses in professional football, from young to old. It’s less about a clearly defined and delimited target group. You can hardly find a leisure environment that is charged with so much attention and emotionality,” explained Kurscheidt. “This is highly attractive for companies that offer innovative products and services. Because you reach all consumer segments.”

The corona pandemic has accelerated this development. In view of the long empty ranks, professional football complained about a slump on the income side. The Bundesliga experienced the biggest financial crisis in its history. An industry with an investment volume in the billions is of course extremely attractive.

“The crypto industry has a reputation problem because there are black sheep there,” said Professor Bernhard Herz, who researches monetary theory and monetary policy at the University of Bayreuth, among other things.

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A key issue for cryptocurrencies is anonymity. “Cryptocurrencies that allow transactions to be conducted anonymously are at risk of being used for tax evasion, terrorist financing or drug financing,” Herz said. “The crypto industry is trying to limit that itself because they know it’s a problem. However, a currency that is produced anonymously per se will always be susceptible to such transactions.”

Herz drew a comparison with Swiss banks. “They have a reputation for facilitating tax evasion, for example. This creates backlash and public protest,” he explained. “Professional clubs have to be very careful about who they do business with.”

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