This time things are different.
That’s the message Manchester United want to send as they become the latest sports team to unveil a range of non-fungible tokens (NFTs), a word increasingly synonymous with scammers, grifters, and lines on graphs that plunge downwards.
United believe the sector can have real positives for its fans around the globe and is launching a new collection of NFTs which the club hope will form a “community designed to educate, reward and unite its global fanbase through digital and real-world experiences”.
This NFT scheme will operate on the blockchain — a type of open-source computer network — run by Tezos, which already features on Manchester United’s training kit as part of a sponsorship deal worth in excess of £20million ($23.7m) a year.
Cryptocurrency prices are now tanking and companies are collapsing, with FTX — one of the biggest exchanges for buying and selling these volatile digital assets — filing for bankruptcy on Friday.
Yet Manchester United believe this external noise is not relevant to their scheme, which they believe can provide genuinely useful and engaging things to their fans around the world.
The club also plan to donate 20 per cent of proceeds from subsequent NFT collections to the Manchester United Foundation.
What do United say about the new scheme?
“Much like the football traditions of old, such as collecting match programmes, club badges and sticker books, fans will soon have the additional option to collect this new type of digital memorabilia,” says Phil Lynch, the club’s CEO of digital products and experience.
The first NFTs will be gifted to fans rather than sold, with later NFTs costing £30.
Later ones may cost more but the club hope this lower price point will mean it avoids the problems of other schemes where fans pile in huge sums and then lose out when they fall in value.
The club says they have consulted with fans on how best to set up what they hope will help provide “unique and enhanced engagement opportunities to our incredible fans”.
Mason Edwards, chief commercial officer of the Tezos Foundation, says the partnership intends to create “digital collectibles which the club and its followers will cherish for years to come”.
Manchester United are one of the world’s best-supported sports teams and many of those who love the club will never set foot inside Old Trafford.
The club hope the Tezos NFTs will be a way of engaging and exciting those supporters in an exciting new digital world.
What’s the catch?
NFTs in sport are associated with transactions in which fans buy what they think could be a lucrative financial investment, which then rapidly plunges in value, effectively working as a cash transfer from poor to rich.
The most notorious is John Terry’s Ape Kids Football Club, which lost almost all of its value after being promoted on social media by the former Chelsea captain.
Official club schemes like Manchester United’s seem more credible but many of the same issues are still there.
The idea of NFTs as “digital collectibles,” akin to programmes or stickers, makes some sense on the surface.
But there is no particular evidence sports fans are genuinely interested in NFTs as supposed “collectibles” rather than mere vehicles for financial speculation, and few schemes seem to have stood the test of time and are genuinely cherished by collectors distinct from their financial value.
It is true that other major players in football who have more recently entered this world, such as world football’s governing body FIFA, seem to think it better to operate at a higher quantity and lower price.
United hope this approach will mean a more credible scheme that will not expose fans to major financial losses.
Who else has tried it?
These criticisms are no longer hypothetical or a matter of opinion.
The facts are that sport’s recent forays into the world of cryptocurrency and NFTs have been completely disastrous. This was a topic of debate in the UK parliament earlier this month, with Aaron Bell MP criticising “low-quality due diligence” by clubs.
Earlier this year The Athletic revealed how 19 out of 20 Premier League clubs have promoted cryptocurrency products that have tanked in value, including the Tezos token which has lost around 70 per cent of its value since appearing on Manchester United’s training kits.
The last year is littered with examples of sports teams unveiling schemes that briefly surge amid hype by anonymous financial speculators only to quickly plummet in value, with virtually no engagement from actual fans of the club.
This means sports fans cough up cash for what they think could be a lucrative financial investment, but it rapidly plunges in value, so they lose money.
Earlier this year Liverpool announced the LFC Heroes Club NFT scheme which was a resounding failure, with only 6 per cent of the NFTs for sale ever being bought.
Every time the club posted about the scheme on social media, the response was overwhelmingly negative. The club have not tweeted about the scheme since April and the official LFC Heroes Twitter account has not tweeted for two months.
� Less than four hours to go �
Be part of the interactive journey, with @LFCHeroesClub. Join the online community and unlock all perks �
— Liverpool FC (@LFC) April 4, 2022
The Liverpool NFTs now trade for far less than their purchase price and the server on Discord — a social media server strongly associated with the world of cryptocurrency and NFTs which Manchester United are also making use of for their Tezos scheme — is largely quiet.
Why are Manchester United doing this?
Though people in the world of cryptocurrency often call for “education”, believing the public only needs a deeper understanding of blockchain technology to realise that NFTs and cryptocurrency are valuable and exciting, the direction of travel increasingly appears to be the opposite.
While a year ago sports fans were generally bewildered by the idea of cryptocurrency, now lots do understand what it is and hate it.
The response to this announcement is likely to be extremely negative, as it was when Liverpool released the Heroes NFTs in May — perhaps even more so given the wider collapse in cryptocurrencies since — which begs the question: why United are doing it.
The obvious motive is financial, though the club insist this is not a simple cash grab like the ones that other clubs have been so strongly criticised for. The first releases will be free, while paid “drops” will come later.
The existing deal between Tezos and Manchester United is worth in excess of £20m a year. The motivation for Tezos makes sense, deepening their ties to one of the world’s most famous brands.
But the Tezos token has lost 70 per cent of its value since forming a partnership with United in early February.
Both Tezos and the club insist this token price is not relevant because this is not about financial investment.
Speculation or ‘community’?
Every time a sports team unveils an NFT scheme, they use buzzwords like “Web3”, “utility” and “community” and insist the project has nothing to do with the financial investment.
But there is now a long trail of evidence suggesting there is little behind any of these schemes beyond financial speculation which transfers cash from fans to clubs and athletes in exchange for not very much at all.
“Web3” is corporate jargon that attempts to convince consumers that this is exciting technology akin to the early internet, downplaying the link with cryptocurrency tokens, which many football fans now associate with scams, tanked investments, and footballers trying to sell pictures of cartoon monkeys.
There is indeed a great deal of “utility” in things like matchday tickets or discounts in the club shop, which are often offered in conjunction with NFTs, but there is no clear reason to link this to volatile cryptocurrency tokens.
A football club is one of the most authentic and genuine “communities” in the world and NFT advocates think the technology can forge new digital communities.
The “community” claim was made by the McLaren Formula One team last year when it unveiled a similar project in partnership with the Tezos blockchain that Manchester United is using.
Join the conversation! �
— McLaren (@McLarenF1) October 24, 2021
That Discord server no longer exists.
Perhaps Manchester United’s scheme will be different and this will indeed form an exciting community that lasts.
Perhaps people will get behind this for reasons completely divorced from financial speculation.
Perhaps it is different this time.
But given the consistently embarrassing consequences for fans and teams who have promoted NFTs, you could be forgiven for expecting otherwise.
(Top photo: Julian Finney/Getty Images)