Apple TV’s show “Ted Lasso” asks, “What happens when a college football coach in America becomes the head coach for an English soccer (aka real football) club?”
The simple premise created a smash hit. A comparable plotline is playing out in real life, but with a Web3 twist.
In April, a group of investors — led by a former ESPN gambling analyst (Preston Johnson) and derivatives trader (Eben Smith) — bought Crawley Town FC, a football club in English Football League 2, which is three tiers below the world-famous Premier League (where Liverpool and Manchester United play).
Paid in British pounds, the purchase price was undisclosed, though the Washington Post estimated it could have amounted to $20 million. The ownership group also had to commit to fund two years of expected losses, which totaled about £1 million ($1.2 million) in the past few seasons.
As co-chairmen of Crawley Town FC, Johnson and Smith are injecting Web3 ideas of decentralization and transparency into the team-building process with the goal of promotion to the next league up (English Football League 1) and eventually the Premier League.
So, what exactly is Web3 about the project?
Start with the corporate entity that purchased the 126-year-old club: It’s called WAGMI United. For the uninitiated, wagmi is a popular Web3 acronym that stands for “we’re all gonna to make it.”
WAGMI is owned by more than 30 people, including Daryl Morey, the president of basketball operations for the Philadelphia 76ers, and Gary Vaynerchuk, a high-profile internet entrepreneur. In the decentralized ethos of crypto, no single person has more than a 10% stake. As a point of comparison, the U.S. National Football League requires that one member of an ownership group hold at least a 30% stake.
To be sure, there are European football teams — like FC Barcelona — that are owned by 140k+ club members, but the key decision-making is done by a small board of directors (the same applies to the Green Bay Packers, which has a grandfathered ownership structure of 530k+ shareholders but is run by a board).
That’s where the next crypto twist comes into play: non-fungible tokens (NFTs), which WAGMI is using to facilitate decentralized decision-making.
Crawley FC recently sold more than 10,000 NFTs to more than 5,400 buyers and has so far raised $4.8 million. Liverpool — which is one of the world’s most popular sports teams — barely raised $1 million with its own NFT drop against total projected sales of $11.2 million.
Johnson tells me that Liverpool’s NFT sale flopped because they were selling to fans who didn’t actually want NFTs. The Crawley approach took a “reverse strategy” by bringing a football club to people who already understand and embrace the idea of NFTs.
The WAGMI team doesn’t have a lot of English football club experience, but its members are deep in the NFT world. Johnson co-created the popular Punks Comic NFT collection and Smith is behind the Digital Collectibles Agency, which promotes NFT business opportunities.
While the NFT market has cooled off in 2022 alongside a broader crypto sell-off, the WAGMI NFT stands out by integrating tangible fan benefits.
First, NFT holders are entitled to a special Crawley Town FC jersey designed by Adidas. More interestingly, NFT holders have rights to vote on decisions that affect on-field performance.
Example: The team had money to sign a player and put the decision of which position to fill (goalkeeper, defender, midfielder, attacker) up for vote. The vote weight was allocated 50% to NFT holders and 50% to season-ticket holders (there are nearly 1,000 for the upcoming season, but not all participated in the vote). The result called for a midfielder, and Crawley Town management obliged.
Fan reaction to WAGMI’s Twitter account announcing the move was mixed. One said that personnel decisions should be left to the professionals. Another was more blunt and took a shot at NFT holders who weren’t originally Crawley fans.
Johnson says that while some of the NFT owners were “not as informed,” the team provided voters with “data analysis” and “went over previous signings.” Also, the actual player selection still fell to management (a Twitter Spaces discussion on the vote attracted 2,400 listeners, and the fans are educating one another in WAGMI’s Discord servers.
The decentralized decision-making plays into WAGMI’s plan to become the “internet’s team,” where anyone with an internet connection can participate.
Compare that to fan tokens issued by other popular football clubs using a platform called Socios. The benefit to these fan holders includes votes on what soda a stadium should offer or what music to play — not exactly crucial on-field decisions.
The NFT sale has also improved Crawley’s financial position. The $4.8 million haul is six times the total revenue that Crawley Town FC made last season. After splitting the funds with its NFT launch partners, the team will use the proceeds for both basic (equipment, team chef) and more advanced (coaches, video, analytics) needs. The money has also allowed the team to reduce ticket prices for Crawley Town locals by 30%.
Longer term, the entire ownership structure could get a full Web3 makeover by turning into a decentralized autonomous organization (DAO). In a DAO structure, people own tokens in an entity that executes instructions (e.g., how to spend a treasury) by rules encoded on the blockchain. Instead of a central decision-maker, governance is set by token holder votes.
A WAGMI DAO is still “so far away from being a realistic option” says Johnson, noting that the regulatory and legal landscape around that type of crypto organization is still developing. Professional sports leagues are inherently conservative, and dealing with DAOs is much too complicated.
Does WAGMI need Web3, though? Couldn’t decentralized decision-making be done with existing tech?
“We could have sold collectibles with voting rights on a Web2 platform,” says Jacob Martin, another team owner. “But with NFTs, it’s all transparent on a public ledger and holders will know the vote is being counted properly.”
The team plans to put other weighty decisions up for vote, including whether Johnson and Smith get to keep their jobs as co-chairmen if the team hasn’t been promoted within two seasons. That’s remarkable accountability for sports ownership (just ask New York Knicks fans).
The first season begins with a home game on August 6th, but Crawley supporters have been treated to recent wins on and off the pitch. The club has notched resounding victories in friendly matches, and its new head coach comes from Premier League heavyweight Arsenal.
Between the internet-first approach of fandom and high-participation of the NFTs, WAGMI is betting it can build a global and engaged following.
Such a fan base would provide revenue streams that have mostly eluded Crawley Town FC, including big dollar corporate sponsors and media deals. WAGMI is turning the early buzz into potential partnerships with Fortune 500 firms and a docuseries with a UK production firm owned by Warner Bros. Discovery.
One piece of content lined up for the day before the new season starts is a fans vs. owners match on the field. (Martin says there will be “so much trash talking, you can only imagine.”)
Crawley Town FC always faced a long, difficult road to the Premier League. There’s no guarantee the team will ever get there, but WAGMI’s Web3 approach promises to bring more people along for the ride.
More From Bloomberg Opinion:
• Crypto Breaks the Rules. That’s the Point: Tyler Cowen
• What Fantasy Football Can Teach You About Managing Your Money: Mark Rubinstein
• This Crypto Winter Will Be Long, Cold and Harsh: Jared Dillian
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Trung Phan is the co-host of the Not Investment Advice podcast and writes the SatPost newsletter. He was formerly the lead writer for the Hustle, a tech newsletter.
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