First DAO Buys a Pro Sports Team
A DAO bought a pro soccer club in England, which is exciting news. Learn more about how Crypto entities are impacting the sports ownership.
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There have been a few halfhearted attempts to buy pro sports teams in the United States using a DAO structure, but none have gotten any legit traction. Krause House DAO popped up last year with the slogan “We're a community of hoop fanatics just crazy enough to buy an NBA team.” They sold tickets to the DAO and raised 1,000 ETH (about $3.25MM). They have 1,692 backers, and the largest contributor put in $60K. This is a fun concept, but the NBA is unlikely to allow an entity of this type to purchase a stake in a team. The league did make a change recently to allow private equity to buy up to 20% of a team, subject to lots of restrictions. Maybe the Krause House team can figure out how to get into this category, but it’s probably a few years out at least.
Another group called BuyTheBroncos DAO made some press headlines recently when the NFL’s Denver Broncos started their sale process. This one is a much, much bigger longshot. The Broncos are likely to sell for $4Bn or more, and the group hasn’t started raising money yet. The NFL also has major restrictions on the number of owners and is less friendly to private equity minority stakes. Fun articles, no chance of happening right now.
Let’s get to the subject of this article today, WAGMI United. WAGMI stands for “We’re All Gonna Make It”, a common rallying cry in the Crypto world. This group came together to try to buy a club in an English soccer league. They set their sights on a more reasonable target, shooting for one of the lower leagues and not the big time English Premier League. After a failed attempt at a club last year, WAGMI got an agreement in place to purchase Crawley Town Football Club. The club is based in the outskirts of London and has operated for over 100 years. They play in the fourth tier of England football, so a long way down from Chelsea or Man U, but still a legit pro team.
The leaders of WAGMI were on the Joe Pomp Show podcast last week. It was a lot of fun to hear how these two Americans with no soccer management experience plan to turn around a struggling team that is currently in 13th place in their division. The basic concept is that the club is grossly underfunded. They spoke about not having enough soccer balls for training and a limited budget for food. The entire annual budget of the team was around $2MM last season. They plan to roughly double it. WAGMI is funding this with Crypto and NFT sales, though I couldn’t find a ton of details on this. The cool thing about English soccer is that the top teams each season get the opportunity to be promoted up the ranks to a higher division. WAGMI hopes to spend their way up the charts. It will be fascinating to watch.
While not exactly a DAO, the Fan Controlled Football is doing some very cool stuff with Crypto technology. If you haven’t heard of FCF, it’s a wild good time. Think Madden NFL video game meets arena tackle football. They let fans call the plays live for 7-on-7 football played at a high level with former NLF and NCAA players. You can see more in this video. (Disclosure: our group BTG Network is an investor in FCF.)
The league ran with four teams in season one. The original teams had celebrity owner captains like Quavo, Marshawn Lynch, Renee Montgomery, and many more. They worked through the traditional equity crowdfunding platform Republic to sell about 10% ownership in each team to fans. This was a registered sale open to any investors, not just wealthier accredited ones. In season two, the league expanded with four new teams, each built around NFT communities. Instead of an equity crowd sale for these new teams, each team sold NFTs to fans through the Ballerz Collective program. While US securities laws prohibit these NFTs from conferring true economic ownership over the teams, the Ballerz NFTs allow the fans to control the actions of the teams. NFT holders can vote on the plays in-game and plenty of other topics like the name, logo, jerseys, rosters, and more. It is a really unique approach and I encourage you to check it out. If you are here in Atlanta like me, come check out a game this spring.
There are currently a few projects looking to fractionalize ownership of lower tier basketball teams. Ice Cube’s Big Three league announced this week that they will offer NFTs tied to 12 of its teams. These NFTs will be expensive, with price tags at $5K and $25K each, and they will come with a bunch of perks beyond the ownership. A group called Atlanta 8IGH is looking to sell NFTs to fund a new team in The Basketball League, a minor league in the U.S. I’ve also heard rumblings about DAOs or NFT communities looking to buy racing teams and fund MMA fighters.
There are exciting innovations taking place in sports driven by new Crypto tech. I will certainly be bringing you more news here as the markets develop.