ARE NFTs THE KEY TO IMPROVING FOOTBALL’S FINANCES?

The emergence of NFTs has sparked plenty of controversy

There is no doubt that the finances of football clubs in this country are a mess.

The wealth generated by football is largely concentrated within the Premier League and the vast majority of EFL clubs are loss making.

The parachute payments made to clubs in the EFL Championship undermine fair competition in that league and the financial gap is starting to widen between League One and the Championship.

Ticket revenues, sponsorship revenues and player sales are the commercial focus of most clubs but from my recent discussions with some clubs we are starting to see the evolution of an approach which is prevalent in other sectors of business but is new to football. That relates to the introduction of NFTs.

NFT stands for Non-Fungible Token. Non-Fungible means it is unique and Token means that it is an asset that can be traded by users on an appropriate public platform. The trading of tokens in a football context allows clubs to raise funds both domestically and internationally.

Back in the late 1990s when I was appointed CEO of Charlton Athletic, I was passionate about rebuilding The Valley. The Charlton Board set me the task of raising £2m to allow the north stand development to go ahead and the money was raised from a north stand patrons scheme and a European Union grant to house a college in the new stand. If that was happening now, I would most definitely be looking at NFTs as a way of raising finance against such a specific asset.

Traditional ways of raising commercial income are under threat from the cost-of-living crisis and the global destabilisation of the energy market. When you see your gas and electric bills doubling then justifying buying a football season ticket or sponsoring a match for example becomes difficult to justify be that an individual or a company.

Football needs to fundamentally re-think its commercial strategies to take advantage of advancements in the modern digital age. If it doesn’t then the losses made by clubs will grow and we have seen already with so many clubs where that leads.

Football at the lower levels cannot rely on the Premier League coming to the rescue with a redistribution of revenue as many Premier League owners believe that Championship clubs have very wealthy owners who choose not to invest in their clubs and for that reason, I don’t see them agreeing to any meaningful level of redistribution anytime soon unless it is forced upon them by regulation.

DERBY DILEMMA

Derby County FC

Football fans are the lifeblood of our national game. The Covid lockdowns of recent years proved that with the total lack of atmosphere inside the grounds.

When a club gets into financial trouble my first thought is always for the fans of the club because there is nothing the majority of them can do and they have to suffer in silence and rely on the media for updates. As a fan I have been there and on the three occasions my team have faced potential administration and worse I have got involved to do everything I could to remove that threat.

So it is with Derby County.

Prospective new USA owner Chris Kirchner was given until 10th June by the EFL to complete his proposed purchase of the club and he failed to meet that deadline. The promised funds have yet to materialise.

The Derby fans believed everything had been sorted out but now they need to sit and suffer once again. The club has been in administration since September 2021 and it took until April 2022 for the administrator to name Kirchner as the preferred bidder.

As things stand, Derby have just five first team players registered for the 2022/23 season and with the start of pre-season training just days away this is a terrible position for any club to be in. Now that the summer transfer window is open they are not allowed to sign any new players or offer deals to any player who is out of contract at the end of June.

I can tell you from experience that players at a club take a good look round at the start of pre-season to see how good their first team squad looks and what new players there are and if they don’t see an ambition to improve on the previous season, it is without doubt a negative and demotivating factor.

Under EFL rules, Derby can start the season in administration but the reality is their squad will be totally deficient and as with Bolton Wanderers two years ago they may have to field academy players who are not ready for the physical rigours of League One football.

The EFL is in a difficult position. On the one hand, they have to ensure the integrity of its competition and they have a duty to do right by other member clubs who have fully complied with their financial regulations. On the other hand, it would be devastating to remove a club of Derby’s standing from the EFL.

Fans of other clubs will feel for the Derby fans to varying degrees due to their tribal nature. But make no mistake, while it is Derby today it could be your club tomorrow and you will want your club saved just like those Derby fans. Let’s hope the situation is resolved sooner rather than later.

UEFA UNDER FIRE

UEFA and FIFA are both organisations who care first and foremost about their own reputations. The behaviour of FIFA officials in recent years is well documented and it has been a tale of corruption and self interest.

When UEFA announced on the night of the Champions League final that the delayed kick off was down to the behaviour of Liverpool fans and fake tickets, I for one was immediately suspicious that they couldn’t possibly have the full facts at their disposal when they issued their untimely statement on the night. The obvious response would have been to say that they would establish the facts and then comment but self preservation ruled above all else.

Normally they might get away with this but UEFA was besieged last week by complaints from their sponsors, which is something they can’t brush under the carpet as they would normally do.

Major sponsors like Heineken have provided evidence of their guests being tear gassed by French police and then being mugged by knife-wielding local thugs in a notorious are where fans should never been left to fend for themselves. Scores of Real Madrid and Liverpool fans suffered the same fate.

The pathetic excuse from the French authorities that they didn’t have enough time to plan for the match rings very hollow. Were they unaware that the area they diverted Real Madrid and Liverpool fans into was a crime infested area? Why were no police around to protect fans?

The independent inquiry needs to get to the truth of what happened as no fans watching their team should ever be treated in this way. UEFA has a responsibility to all fans supporting teams in their competitions and this time must act. If as I suspect the French police are widely criticised in the independent report then the French government needs to make sure there are repercussions and not just empty words.

I hope the sponsors keep up the pressure on UEFA because the threat of a financial loss going forward is the key to positive action ensuing.