Inside the web3 fan groups transforming pro sports

David Harrington
January 19, 2023
“Web3 makes it easier to reward and engage your most loyal and passionate fans ” — Tod Reynolds, Director of Web3 Strategy at SailGP
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Web3 presents an opportunity to reinvent how fans interact with their passions in all areas, including sports, where it gives teams the chance to foster a deeper level of engagement. David Harrington explores how blockchain can redefine sports fandom.

Sports is not just a game anymore, especially when it comes to web3. Athletes, teams, and leagues are quickly becoming some of the most significant cultural influences to embrace the blockchain, introducing dynamic applications that all consumer-facing brands can take inspiration from.

At the heart of the dovetail between sports and web3 are innovative approaches that completely transform the relationship between fans and athletes. Whether it be a ticket connected to an NFT that provides exclusive opportunities, or a community allocating shared resources to propel up-and-coming athletes into the big leagues, the way that fans engage is changing — for good.

“Web3 really has a chance to reward fans in more meaningful ways.”

— Vasu Kulkarni, Managing Partner at Courtside

“The conversation in web2 generally goes in one direction,” says Vasu Kulkarni, Managing Partner at the venture capital firm, Courtside Ventures, where he has been investing in the sports industry since 2016. “Teams and leagues produce, and fans consume.”

Kulkarni looks to web3 to augment that dynamic. “Web3 really has a chance to open things up, rewarding fans in more meaningful ways, and giving them more ownership over their experiences.” These claims are far from conjecture: web3 technologies are already being used to have an impact on sports and fandom. From sailing to motorsports, the sports industry is using web3 to energise supporters, create deeper and bi-directional connections between teams, athletes, and fans, and let those fans feel more like real insiders.

Turning passionate fans into insiders

Peter Miller has had a fascination with cars and motorsports since before he was a teenager, and vividly recalls watching Formula 1 races with friends as a child. “I was wrenching on cars when I was four years old, and my dad and I built a Studebaker in our garage when I was in high school,” Miller recalls.

After graduating from Stanford and going on to found a patent law firm, he saw an opportunity to apply web3 to motorsports and build something that would transform passionate supporters like himself into fans, in a way that would have a real impact.

Through GarageXYZs token, ten community members had exclusive access to the garages, pits, and grid on race day, and attended a private party post-race with the drivers.

“We watched crypto gain massive momentum in 2021,” he continues. “Web3 culture was all about communities coming together and working on big things. In my mind, there was a future where communities would come together to be part owners of an F1 team, be involved with NASCAR, and help launch new drivers.” GarageXYZ is the result of that imagination: an NFT-gated community, whose members gain unprecedented access to professional motorsports. With membership restricted to those who hold one of 500 GarageXYZ NFTs, members actively take part in discovering, funding, and managing drivers at the top-tier of a sport that they love. 

“Web3 lets you access data in a much more transparent way.”

— Tod Reynolds, Director of Web3 Strategy, SailGP

On the seas as on the track, SailGP, the international sailing competition, provides another example of what web3 offers sports communities, having recently launched the first fan-owned team in professional yachting. Holders of the non-ownership token for the league’s Bermuda and Caribbean team will vote on key team decisions, gain rewards based on the team’s success, and even have access to unique fan experiences, like being able to talk to sailing team members during a race.

“You can obviously reward fans with discounts, collectibles, or money in web2,” acknowledges Tod Reynolds, SailGP’s Director of Web3 Strategy, “but the data is often siloed across different platforms and you need to trust whoever is giving you those customer stats.”

SailGP has recently launched the first fan-owned team in professional yachting.

Web3 transforms that dynamic, with customer behaviour and interactions occurring on the blockchain, public and un-tamperable, for all to see. “Web3 lets you access and work with data in a much more efficient and transparent way. It’s easier to reward and engage your most loyal and passionate fans.”

Making collectibles useful

GarageXYZ and SailGP demonstrate how a sports NFT community can achieve much more for fans than simply distributing a digital collectible. The next generation of sports NFTs will not just be JPEGs, they will also reward fans for their support and have some form of experience-based utility.

“When you start looking at the history of physical collectibles, most of them start off as a utility-based product,” explains Kulkarni. “Wristwatches, for instance, were originally intended to tell the time. And now they're one of the hottest categories of collectibles. I think we’re going to see a new evolution of NFTs, where you can do something with them, and many will be redeemed for something that is useful or enjoyable.”

“The lowest hanging fruit is ticket stubs,” Kulkarni continues. “Old ticket stubs are valuable in a large part because, back in the day, people simply threw them away. But with the Covid era ushering in a world of digital stubs, that same supply dynamic no longer exists. And therein lies the opportunity: how can someone create digital ticket stubs with both collectible value and utility?”

Kulkarni speculates that event ticket stubs (in sports and beyond) could evolve to become even more engaging — or useful. For example, fans who are verified to have attended a game could redeem their digital stub for some form of NFT related to that specific event, with a limited rarity.

Speaking to Forty-Eight Minutes, Mark Cuban, owner of the Dallas Mavericks basketball team, explains his vision for applying NFTs within the stadium. “Let's say that Luka Doncic has a 30 assist game. There are going to be 500,000 people who say that they were there, but only those who were actually there get the NFT commemorating that game.” 

“I think we’re going to see a new evolution of NFTs.”

— Vasu Kulkarni, Managing Partner, Courtside Ventures

Ultimately, Cuban adds, the whole idea is to find new ways to engage match-going fans. “What gets you the NFT is that you actually scan your ticket. And if you go to ten games, well, there will be rewards for that.”

This turns digital collectibles into assets that are actually useful to fans. “One of the companies we’ve invested in is securing rights from leagues to get game-worn jerseys right after games are played,” Kulkarni explains. “They vault that jersey in a secure location and mint an NFT connected with it.” Those sorts of items are valuable collectibles themselves, and represent the tangible utility that make web3 sports communities exciting for their fans.

“Fans deserve to be rewarded, whether that’s through ownership, experiences, or even monetary gain,” says Kulkarni. “That’s what I’m most excited about, and it is where the intersection of sports fandom and web3 is heading.”

Redefining fan communities and ownership

With those sorts of opportunities — namely, those that persuade fans to buy into a community, potentially with a view to selling their membership NFT for a profit —, web3 communities run the risk of their membership passes being interpreted as securities, thus bringing legal quagmire with them. Indeed, many communities, like Krause House and DeGods, both of which have purchased valuable assets in their ownership stakes of minor league basketball teams, are exacerbating this overlap.

That concern was critical to SailGP as they sought to do the same thing, but for a sailing team. “The first step was figuring out how we were going to do this in a regulatory compliant way,” Reynolds explains. “An ownership stake in a professional sports team is a security, plain and simple.”

Their solution is an ownership structure involving two classes of tokens, one for a main DAO, and another for a sub-DAO, both of which are built on the NEAR blockchain. Holders of the Class A tokens must be accredited investors in the United States, and it is this DAO that has the ownership stake, but other fans can purchase Class B tokens, which function more like a high value season ticket for holders, leveraging the data interoperability that exists in blockchain ecosystems.

SailGP's Class B token gives holders access to exclusive benefits, including in-person experiences.

“We wanted to create opportunities for fan engagement for those who aren’t accredited investors,” says Reynolds. “Our Class B token is not an equity stake in the team, it is more of a membership that comes with voting and governance rights, along with exclusive benefits that range from digital to in-person with the team.”

GarageXYZ demonstrates the tangible ways in which these benefits can be appealing. They are advised by Scott Dixon, one of the most successful motorsport drivers of all time, who the community sponsored in the Indy 500 race last May. Ten community members had exclusive access to the garages, pits, and grid on race day, and attended a private party post-race with the drivers. It is a glimpse into the future of how sports and web3 can combine to feed passion and reward a team’s most engaged fans.

The next leap for Miller and the Ethereum-based community is propelling undiscovered drivers to new heights. GarageXYZ is currently funding and supporting two drivers, Rasmus Lindh, of the Indy NXT circuit, and Julia Landauer, who is attempting to break into the NASCAR Xfinity series.

“We saw Julia and Rasmus as two drivers with huge potential, and for whatever reason, their funding had dried up,” Miller explains. “We came together as a community and the holders voted that we use funds and resources to support them. For instance, the community is helping Rasmus with suit design, travel coordination, and social media management.”

The Future of Fan Engagement

Across the world, sports fans have felt as though they were on the outside looking in, despite their passion and endless dedication to their favourite team or athlete. Projects, founders, and innovators in web3 are planning to drastically challenge that dynamic. GarageXYZ members can actively propel an athlete into the spotlight; those in the SailGP DAO can impact their team’s performance; and NFTs hold a promise to tangibly reward those fans who attend every single game, with valuable collectibles and more.

“The head of web3 from one of the world’s largest racing leagues actually minted one of our NFTs and has been lurking in the GarageXYZ Discord for months,” Miller says, smiling. They want to know how their league can create a community as we have, where you can be involved at a compelling level with pro motorsports.”

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David is an independent writer working at the intersection of decentralised technology, culture, and commerce. His writing has been featured in media outlets such as Forbes Technology Council and Tech in Asia, and he loves telling unique stories about the transformative potential of web3. His current interests include decentralised science, NFT sports collectibles, and creator-owned economies.

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