Virtually everything football clubs have done with NFTs is wrong: Here’s what they need to do about it

Whether you love them or hate them; view them as an integral part of football’s post-Covid economic recovery, or are simply baffled by the very notion of them, Non Fungible Tokens (NFTs) have become an inescapable part of the sports business world over the past three years.

And so, when Off The Pitch meet Tim Mangnall, CEO of the NFT agency Capital Block, which works with clubs such as Galatasaray, AS Monaco and Legia Warsaw, it is with the timeworn scepticism of someone who has already seen too much of this nascent world.

But the scepticism doesn't last long.

“I do not agree 100 per cent with the club just launching a picture of the badge and then trying to sell it for $2,000 and then say "This is an NFT because it's registered on the blockchain". I fundamentally disagree with that,” he says a minute into our interview.

And then: “We as an agency are very much here to try and protect the fans from clubs making mistakes, because ultimately it's always just going to be the fans that are affected by this without having decent artwork, decent utility.”

And: “Should cryptos be linked to NFTs? Absolutely not.”

And on a recent club launch: “Bad utility, bad artwork, bad customer journey.”

And so it goes on.

Ten minutes into the interview, It becomes clear that Mangnall talks a completely different language to just about anyone else we have spoken to in the digital assets space: devoid of hype, forthright, honest, often sceptical. It is almost like a breath of fresh air.

It seems, talking to Mangnall, as if football has got everything wrong it possibly could get wrong in its brief love affair with digital assets – other than making lots of short term profits.

So, just what should they be doing?

Building communities

“The way I look at NFTs in sports is that NFTS are all around the fan engagement, that NFTs can open up the door to bringing your fans back in in a way that's not been possible before,” says Mangnall.

“But only if NFT is done in the right way with the right structure and the right strategy behind it.

“The use case for me around NFT is that it allows the club to talk to a new digital centric audience, a younger demographic that is coming up that engages in media in a different way, that interacts with the world in a different way, that has been around cryptocurrencies and understands the importance of digital ownership and digital wallets.”

Mangnall says that clubs have slipped up because they view financial gain from these products as “the be all and end all”, whereas they need to look beyond this and have “a digital team working on this every single day.”  The products need to have a utility that goes beyond a digital stamp connected to a piece of footage or artwork.

“These clubs at the moment are not understanding the level of work that really needs to go in,” he says.  

There is a comparison to be had with social media, perhaps, which nowadays has specialised teams working around the clock on engagement, whereas a decade ago many clubs just used it as a forum to post content from other platforms.  

Most successful launch ever

We talk about Liverpool’s recent NFT launch, which was simultaneously lambasted by the club’s own fans, many of whom don’t want anything to do with the products, and criticised by those experienced in the NFT space.

“Liverpool made a number of mistakes, but they've actually sold more NFTs than any club anywhere in the world,” Mangnall says. The launch is portrayed negatively because the club set out to sell 171,000 NFTs, but shifted just 11,000 – “which is phenomenal in terms of the numbers.”

Mangnall says the problems with the Liverpool launch go beyond negative perceptions: “The customer journey was wrong, the branding was wrong. A working class football club [selling via] Sotheby's – a very aristocratic English auction house. … Very bad artwork, bad utility.”

There was nothing shabby about the numbers they sold though and Liverpool made seven figure revenues from the sale. But Mangnall suggests that they got the equation wrong: they got a hit of cash, but created so much negativity that it may be a one off; that fans won’t engage around the technology in the future.

Transcending digital art

NFT’s, he says a technology that goes far beyond authenticating digital art.

“Yes, digital art is a thing, but digital art should be seen separate to how football clubs are launching,” he says.

“Football clubs should be launching this as a new medium to engage with fan engagement within that club.”

He also gives a possible utility for Everton. “Imagine Everton launching a limited edition NFT of Frank Lampard, and after every game he gave an exclusive interview that is different to TV interviews and personalised in some way and sent to holders of digital wallets. Imagine kids in the school playgrounds being able to show that?”  If that demand exists, the club could then do a wider or more expensive launch, he adds.

Mangnall says that the essentials are about making the product accessible, building fan loyalty, and a community.   There is money to be made, but it is a long term process.

But how does this differ from social media engagement? The difference, he says is partly generational. “There's a younger demographic coming up that is very much digital centric. Being able to have that ownership and then being able to see very quickly whether that is authentic and whether that is real. By being able to trace it and look it up on the blockchain, that actually becomes more valuable because people are very quickly able to see if that picture is yours or not.”

Own goals

He acknowledges that the industry is riven with scepticism that is largely of its own making. The links between NFTs and crypto have sometimes been helpful, because it brings in a very dedicated community, he says. But it has also been highly damaging because of the volatility of digital currencies.

If you’re obliged to buy an NFT in a Cryptocurrency that then plummets, it creates the perception that the NFT is worthless – whereas it is a reflection of the cryptocurrency’s volatility rather than the digital assets’ true value. There is also the very real risk of fans losing significant amounts while “investing” in their club.

There have been winners though, and rampant speculation has also created the perception that there are vast overnight profits to be made. But phenomena like the Bored Ape Yacht Club – which briefly netted millions for its makers – are exceptions.

Magnall says that those running sports organisations “Need to be educated and they need to understand it.”

“Fundamentally, if you ask them, do you wholeheartedly believe in NFTs and the concept of them? I feel fairly confident from my own view of saying probably around 95 per cent of senior management across top sports organisations in Europe fundamentally do not believe in NFTs, apart from it potentially being a revenue earner. And if that is the mindset that will stay there, then it's going to stifle the growth of the European market.”

Huge engagement

A few days after the interview, Mangnall sends a case study for a project Capital Block worked on with Galatasaray. The company’s brief was to help the Turkish giants “Be the first club in the history of Turkish football and the world to launch an NFT collection focusing on the historical moments of the club starting with the founder Ali Sami Yen.”

The presentation is slightly surreal: century old images of Turkish men bedecked in Fezs, being marketed and sold on cutting edge blockchain technology.

But the launch sold out in 59 seconds, netting €185,000.

Perhaps in a world of hype this shouldn’t be so surprising, but looking at the campaign engagement metrics something really remarkable came to light: nearly 50 million social media impressions over a two week period, 5.5 million engagements, including 43,000 comments and shares, 91 per cent of which were positive. And Galatasaray were earning money, while achieving this level of interest.

“Clubs have to realise that it's a big misconception that you're going to have all of this money that's going to come in overnight because it's just not the case,” Mangnall had told us.

“That isn't what sports fans are going to be here for. And yes, you can build a community and use NFT as a community to reach all your fans in different ways. But you shouldn't be thinking that it's going to be like an Ape or a Punk or whatever, and you're not going to make millions overnight. It's just not going to happen.”