Manchester City’s chairman issued an apology to their fans for the European Super League fiasco in 2021 but he would not apologise for the continued ambition to take the club forward.
“We will continue to push the envelope in everything we do. We want to be the best club in the world and to do so, we have to disrupt and we will disrupt,” Khaldoon Al Mubarak told club media in a message intended to be heard far beyond the walls of the Etihad. “In being disruptive, sometimes you make mistakes.
“We have made mistakes in the past, we will make mistakes in the future, but we will do more right than wrong.”
City will hope to be crowned as the best in the world on the pitch by the end of this year as they enter the Club World Cup as reward for finally winning the Champions League, while off it they are on course to smash the record for the highest revenue generated by a football club. Success breeds success, and the Treble winners have continued to improve deals since being very publicly charged with serious financial offences by the Premier League.
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One of those has been an improvement on their deal with cryptocurrency exchange company OKX, which is one of the club’s top three sponsors after agreeing a £55m deal that will see them sponsor the sleeve of the men’s and women’s matchday shirts for the next three years. City connections with cryptocurrency suits the wish to disrupt given the volatile nature of that industry, but also invites criticism given the fair share of scandals that have already emerged from a relatively new sector of business; one of those involved the Blues, when a partnership with 3key had to be embarrassingly scrapped when it emerged that the company executives could not be found on internet searches.
It should also be said that nearly all Premier League clubs have taken some kind of sponsorship from crypto companies and the industry is becoming increasingly visible across the game. However, this article will focus on City not just because this newspaper does but because City and OKX appear to have formed a partnership that bucks the general trend.
Are City right to be so involved with cryptocurrency, especially given they have had their fingers publicly burned over it already? Will these partnerships exploring fan tokens, non-fungible tokens (NFTs) and cryptocurrencies be seen, in hindsight, as another major pushing of the envelope or more wrong than right?
Fan tokens
Taking its name from the word for supporter-run clubs such as Barcelona that City’s hierarchy know so well, Socios launched with a bang in 2021 and advertise that people can become “more than a fan” or “an ultimate fan” by buying a token of their club in cryptocurrency. The concept, offering fans to invest and be able to make decisions at their club, exploded out of nowhere and is still pushing hard – Lionel Messi has been signed up to endorse it – despite the value of basically all tokens plummeting.
City’s token actually started and remains at a higher mark than nearly everyone else – and loads of clubs have been involved in this – but has also fallen steeply and there is little to dispel the idea that – as the website advertises – these tokens are as much for people to trade rather than for fans to keep. The highest point by far for the token remains in September 2021 – the brief hours when it looked most likely that City would sign one of the biggest superstars in the game in Cristiano Ronaldo rather than any of the brilliant sporting achievements the Blues have managed since.
Anyone with a City token can win hospitality packages on the app or vote for the music to be played at the Etihad at half-time, with an upcoming reward the chance to watch open training in Japan on the pre-season tour; none of it is life-changing but it does provide opportunities for supporters to attend games. For a club interested in giving supporters the best day out they can have, it is pretty low risk for modest rewards and City took the step of offering all season ticket holders the chance to own a token when they came out so they weren’t missing out on any benefits.
However, as of last year, there had been more than £270m spent on fan tokens for football clubs with City among those generating the most sales, so the club has still made plenty out of allowing fans to have their say on incredible minor decisions. Does that feeling make up for the money spent?
“The implication is that real fans will buy this and then they buy it and it shoots up in value, more people get involved, and then it craters. That has pretty much been the exact pattern anywhere you look, the most dramatic example being PSG which was sold with [Leo[Messi supposedly getting some of his wages so everyone bought into it and now it has cratered so everyone has lost all of their money,” said Alex Timperley, a City fan who helps run the City Fans Foodbank Support group.
“The problem is that it is targeting football fans based on an emotional connection to the club but actually it has nothing to do with the club or emotions at all. It’s a money-making scheme and relies on more and more fans getting involved and if they don’t then initial fans will lose money, which has happened at every single club so far.
“It is sold on that connection and also as the best way for a fan to connect with their club. My question or objection to that is what do fans get, which is specific to this crypto coin or fan token. There’s nothing happening which requires this unregulated product to make it happen.
“It will all disappear and the people who are going to miss out are fans. It’s probably also worth pointing out that as with every other thing City push on the fans, the core of City fans live in one of the poorest places in Europe.”
Non-fungible tokens (NFTs)
NFTs are essentially digital art, with people buying the original work and downloading it as they would a ticket or a boarding pass. They have caught on with retired footballers; former Chelsea defender John Terry was one of the most prominent promoters early on, but ex-City stars Shaun Wright-Phillips and Nigel de Jong have also enthusiasts.
City have launched a number of series over the past three years in collaboration with different artists and believe that there is a legitimate crossover between people who enjoy football matches and those who want to own the art on offer. City CEO Soriano firmly believes that the 98 per cent of City fans around the world who do not go to games can be targeted to purchase digital associations with the club, and shirt sleeve partner OKX are partly in place to try to encourage that.
There are benefits to them, and artist Damien Hirst is among those in the creative industries to have experimented with them, but NFTs appear to be a clear and obvious loss of money. It has essentially proven impossible to police the authenticity of digital art and a crypto entrepreneur who paid £2.2m for the first ever NFT – the first ever tweet from Twitter owner Jack Dorsey – depreciated in value by 99 per cent in its first year.
That isn’t to say that people cannot take other satisfaction from owning NFTs, but they are paying for things that don’t hold their financial value. In an age where the cost of living is making things more and more difficult for people to get by, football clubs and players have come under fire for inviting fans to invest in something that essentially guarantees they lose money.
Growing ties with OKX
OKX are one of City’s biggest sponsors and will be visible during every men’s and women’s match this season, so who are they and what do they do? Here is where the bulk of City’s exploring of cryptocurrency is, and where they get the bulk of the money.
Unlike gambling, cryptocurrency is unregulated and big chunks of the sector pride themselves on it. This means that while it can be better than traditional banking in saving you traditional fees and restrictions, it is more open to fraud and criminal activity and harder to police.
Cryptocurrencies are also not recognised as legal tender in the UK so while you can use Bitcoin, for example, as payment online with some companies you couldn’t expect to use it anywhere. Some in the industry predict it to become as common as using credit cards in the future, but for now, there is still uncertainty and the fact that the Financial Conduct Authority – the UK financial regulator – has shut down 26 of the 34 crypto ATMs it has visited this year under money laundering regulations shows the problems that still very much exist.
“It’s not investment because there’s nothing underlying it. It’s gambling with a small ‘g’,” said football finance expert Kieran Maguire. “It’s effectively saying we have a product with a relatively fixed number of units so if you were to artificially restrict supply there is opportunity through the demand system to have price movements – but what exactly are you buying?
“In due course there will be a shakeup but we’re a long way from that at present, and therefore the snake oil salesmen are still in a position where they can make a quick buck.
“That is what everybody is trying to do until the music stops. There is some potential stability there and some of the broader issues as far as the wider industry goes – the benefits of blockchain, if you’re an artist, are great and do have the potential to protect the interests of people – but it’s a classic unregulated industry where people are crossing their fingers on where they put the money.
“I’ve seen constant references to ‘buy the dip’. Historically, that is a code word for ‘find a bigger fool’.”
Based in the Seychelles with a number of offices around the world, OKX are a growing cryptocurrency exchange company that works a bit like a stock index in ranking the strength of various cryptocurrency tokens – Bitcoin is first, for example – and invites users to invest and trade currencies through their platform. The company is keen to tell you about the checks they have in place to educate people about crypto and stop them from losing too much money but have also conceded they are in the business of making money and – as with gambling companies – their definition of too much money probably differs from that of an individual.
They are also the sizable meat in the sandwich of City’s dealings with crypto, having gone from being an exchange partner to the training kit partner to the sleeve partner in the space of less than 18 months. During that time, while City have found themselves facing more serious allegations one of their major sponsors has been doing its best to move on from previous controversies.
A major rebrand since 2022 that has involved using top brand and PR consultants has coincided with their evolving partnership with City, and it is striking how their description of the company in press releases has changed over 18 months. Where in March 2022 they were “reshaping the financial ecosystem”, by July they had included that they “strive to educate people on the potential of crypto markers and how to trade responsibly”; this year, in capital letters they stressed their commitment to transparency and included a disclaimer that shouted: “OKX IS NOT REGULATED BY THE FCA, THUS, PROTECTIONS SUCH AS THE FINANCIAL OMBUDSMAN SERVICE OR FINANCIAL SERVICES COMPENSATION SCHEME WILL NOT BE AVAILABLE.
“YOU SHOULD CONSIDER WHETHER YOU UNDERSTAND HOW CRYPTO WORKS AS THE VALUE OF YOUR ASSETS, INCLUDING STABLECOINS, CAN INCREASE OR DECREASE AND PROFITS MAY BE SUBJECT TO CAPITAL GAINS TAX. PAST PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.”
City and OKX buck the trend
If the increasing turn towards caution from cavalier is notable, that isn’t necessarily a bad thing. OKX is very aware of how the industry is seen and is keen to paint itself as the grown-ups in the room.
It is entirely possible that the few rather than the many cryptocurrencies survive, and perhaps the same will be said of companies. Previous deals from football clubs in the sector that have ended badly have been because those companies or their funds haven’t been as legitimate as they presented, but it could be that those that can build around something tangible will survive and thrive.
“There have been some fairly big players who have ceased to be if the banking industry was suffering in the same way, people wouldn’t put a penny in the banks,” explains Maguire. “I suspect that over time there will be a broad clear-out in a similar way to what we’ve seen in the online market where there used to be lots of retailers and now it’s basically Amazon.”
City and OKX is not a partnership that should be working given the market for these deals. An article in the business publication Bloomberg this year declared that ‘Crypto and football don’t mix, and now we have proof’, while the latest OKX deal was announced in Forbes as happening ‘despite crypto turmoil’.
But it does work, and is bigger than ever; CEO Ferran Soriano spoke candidly at the launch of the latest deal, with his mere presence a sign of how seriously the club view their business partners. Two businesses that crave to be both disruptive and legitimised share plenty of common ground, and are looking to make further progress together.
Should it be allowed to work?
Just because something does work, that doesn’t necessarily mean it is right to go ahead with it. There remain concerns about the stability and legitimacy of cryptocurrency as an industry and there are City supporters upset at the club for taking a fanbase whose core is not known for having much disposable income and exposing them to a form of gambling where they could lose significant money.
As a snapshot last year, 20 per cent of nearly 4,000 supporters were strongly against the club taking money to advertise cryptocurrency but 49 per cent weren’t bothered and a further 14 per cent saw it as a positive. To say there is some anger, the overriding sense is indifference.
That doesn’t make it right necessarily, but neither does it make it wrong. Having faced scrutiny for their sponsorship deals generally given the previous and outstanding charges against them, the club would not want to dismiss a revenue stream purely because of moral concerns – not least because there are so many moral concerns over so many other major sponsors in football.
“They’re damned if they do and they’re damned if they don’t,” said Maguire. “And actually, are there many ethical sponsors? If it’s an airline you have climate change issues, if it’s financial services if you type in the word ‘fine’ or ‘punished’ or ‘scandal’ after the name of that sponsor, then nobody is coming out with a clean bill of health.
City will know there is a risk to their partnership, but there are risks and concerns with every sponsor. What is clear is that, unlike others before them in the sector both with City and others, OKX represents a real and major source of income as well as a platform to connect with a younger audience and grow the fanbase globally.
Time will tell how right the forecasts will be but so far both sides of the deal feel they have picked a rare winner.
