Explained: Manchester United’s NFT collection and what it means for fans

Explained: Manchester United’s NFT collection and what it means for fans

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 plunging lines on graphs.

United believe the sector can have real benefits for its fans worldwide and are launching a new collection of NFTs which the club hopes will form a “community designed to educate, reward and unite its global fan base through digital and real-world experiences”.

This NFT scheme will operate on the blockchain – a type of open source computer network – powered by Tezos, which already features on Manchester United’s training kit as part of a sponsorship deal worth over £20 million ($23.7 million) a year.

Cryptocurrency prices are now falling and companies are collapsing, and FTX – one of the largest exchanges for buying and selling these volatile digital assets – filed for bankruptcy on Friday.

Yet Manchester United believe that this external noise is irrelevant to their scheme, which they believe can provide genuinely useful and engaging things to fans around the world.

The club also plans to donate 20 percent of the proceeds from subsequent NFT fundraisers to the Manchester United Foundation.

What does United say about the new arrangement?

“Like old football traditions, such as collecting match programmes, club badges and sticker books, fans will soon have the opportunity to collect this new type of digital memorabilia,” said Phil Lynch, the club’s managing director of digital products and experiences. .

The first NFTs will be given to fans rather than sold, with later NFTs costing £30.

Later it may cost more, but the club hopes 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 say they have consulted with fans on how best to set up what they hope will help provide “unique and enhanced engagement opportunities for our incredible fans”.

Mason Edwards, chief commercial officer of the Tezos Foundation, says the partnership aims to create “digital collectibles that the club and its supporters will treasure for years to come”.

Manchester United is one of the world’s best supported sports teams and many of those who love the club will never set foot at Old Trafford.

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The club hopes Tezo’s NFTs will be a way to engage and excite these supporters in an exciting new digital world.

What’s the catch?

NFTs in sports are associated with transactions where fans buy what they believe may be a lucrative financial investment, which then rapidly plummets in value, effectively acting as a cash transfer from poor to rich.

The most infamous 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 such as Manchester United’s seem more credible, but many of the same problems are still there.

The idea of ​​NFTs as “digital collectibles”, similar to programs or stickers, makes some sense on the surface.

But there is no particular evidence that sports fans are genuinely interested in NFTs as supposed “collectibles” rather than mere vehicles for financial speculation, and few schemes appear to have stood the test of time and are genuinely valued by collectors other than their economic value.

It is true that other major soccer players who have recently entered this world, such as world soccer’s governing body FIFA, seem to think it is better to operate with higher quantity and lower price.

United hope this approach will mean a more credible scheme that will not expose fans to large financial losses.

Artwork used in the Tezos NFT form (Photo: Tezos)

Who else has tried it?

This criticism is no longer hypothetical or a matter of opinion.

The fact is that the sport’s recent forays into the world of cryptocurrencies and NFTs have been utterly disastrous. This was a topic of debate in the UK Parliament earlier this month, with Aaron Bell MP criticizing “low quality due diligence” by clubs.

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Earlier this year The Athletic revealed how 19 out of 20 Premier League clubs have promoted cryptocurrency products which have declined in value, including the Tezos token which has lost around 70 per cent of its value since appearing on Manchester United’s training kit.

The past year has been littered with examples of sports teams unveiling schemes that briefly rise amid hype from anonymous financial speculators, only to quickly plummet in value, with virtually no involvement from actual fans of the club.

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This means that sports fans cough up money for what they think could be a lucrative financial investment, but it rapidly declines in value, so they lose money.

Earlier this year, Liverpool LFC announced the Heroes Club NFT scheme, which was a resounding failure, with only 6 per cent of the NFTs for sale ever being purchased.

Every time the club posted about the arrangement on social media, the response was overwhelmingly negative. The club has not tweeted about the fixture since April and the official LFC Heroes Twitter account has not tweeted for two months.

The Liverpool NFTs are now trading for far less than their purchase price, and the server on Discord – a social media server heavily associated with the world of cryptocurrencies and NFTs that Manchester United also uses for their Tezos scheme – is largely silent.

Why are Manchester United doing this?

Although people in the cryptocurrency world often call for “education”, believing that the public just needs a deeper understanding of blockchain technology to realize that NFTs and cryptocurrency are valuable and exciting, the direction of travel increasingly seems to be the opposite.

While a year ago sports fans were generally confused by the idea of ​​cryptocurrency, many now understand what it is and hate it.

The response to this announcement is likely to be extremely negative, as it was when Liverpool released Heroes NFTs in May – perhaps even more so given the wider collapse in cryptocurrencies since – which begs the question: why are United doing it.

The obvious motive is financial, although the club insists that this is not a simple fundraiser that the other clubs have been so heavily criticized for. The first releases will be free, with paid “drops” coming later.

The existing deal between Tezos and Manchester United is worth over £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 percent of its value since forming a partnership with United in early February.

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Both Tezos and the club insist that this token price is not relevant because this is not about financial investment.

Speculation or “community”?

Whenever a sports team unveils an NFT scheme, they use buzzwords like “Web3”, “utility” and “community” and insist that the project has nothing to do with the financial investment.

But there is now a long trail of evidence to suggest that there is little behind any of these schemes beyond financial speculation that transfers money from fans to clubs and athletes in exchange for not much at all.

“Web3” is corporate jargon trying to convince consumers that this is exciting technology like the early internet, downplaying the link with cryptocurrency tokens, which many football fans now associate with scams, big investments and football players trying to sell pictures of cartoon monkeys . .

There is actually a lot of “use” in things like match day 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 real “communities” in the world, and NFT advocates believe the technology can create new digital communities.

The “community” claim was made by the McLaren Formula 1 team last year when it unveiled a similar project in partnership with the Tezos blockchain that Manchester United uses.

That Discord server no longer exists.

Perhaps Manchester United’s scheme will be different and this will truly form an exciting community that lasts.

Perhaps people will get behind this for reasons completely separate from financial speculation.

Maybe it’s different this time.

But given the consistently embarrassing consequences for fans and teams that have promoted NFTs, you could be forgiven for expecting otherwise.

(Top photo: Julian Finney/Getty Images)

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