March 1, 2022 represents a historic date that may revolutionize the sponsorship market: the first blockchain sports sponsorship contract in Italy has been signed.
To subscribe to this first smart contract were Volleyball League, the consortium that brings together the teams participating in the men’s volleyball leagues of Superleague, Series A2 and Series A3, and ChainOn, the first marketplace for buying and selling sponsorship and media rights in sports and entertainment that operates through the use of proprietary algorithms, blockchain and artificial intelligence.
The legal representatives of the two parties remotely signed a smart contract, or digital contract. By virtue of this first, historic, smart agreement, ChainOn has become an Official Innovation Partner of the Volleyball League.
The agreement provides free access until the end of the year to the www.chainon.it marketplace for the league and its 53 member clubs, which will then be able to submit their sponsorship deals on the platform.
To mark the occasion, the ChainOn/League Volleyball Innovation Award was established, which will be given to the league club that has most distinguished itself during the season in the area of innovation.
As part of the agreement, ChainOn was featured on the courtside LEDs at the 2022 Italian Cup Final Four that saw the Perugia team triumph.
The signing of this agreement, which took place on Chainon’s platform, opens the door to a new scenario for sponsorships, sports and otherwise.
How ChainOn works and its features
ChainOn is a peer-to-peer (P2P) trading marketplace , based on the use of blockchain and artificial intelligence, which, in the ambition of its creators, wants to revolutionize the market for sponsorship and media rights.
is a very secure cryptographic system and allows “smart” contracts to be drafted that can be negotiated with the same guarantees as traditional ones: in very little time (days, not months) and automatically managing variable consideration. All with a much reduced cost of intermediation compared to the traditional offline market.
The platform www.chainon.it is online as of March 4, 2022. It is a restricted-access “showcase” in which investors (companies) and sellers (clubs, federations, athletes, intermediaries) have access to a growing database of sponsorship opportunities. Investors and sellers can meet virtually, exchange information, negotiate and conclude digital sponsorship contracts.
Will blockchain also take hold in sports sponsorship and media rights?
The world of sponsorship has often lagged behind technological progress. But a service such as the one launched these days requires-as Giovanni Palazzi, Ceo and Founder ChainOn, states. New paradigms, based on the transaction speed, the possibility of demobilizing the stock of unsold sponsorship rights (a market estimated to be worth about 100 million euros a year in Italy). All with commissions that today on ChainOn are 1 percent of the sale value, compared to the average 15 percent charged with traditional brokerage. All without counting the additional savings in search, negotiation, contracting and management costs.
A digital marketplace like this overcomes some of the traditional limitations of the sponsorship marketplace as we have known it to date, which in my opinion have greatly limited its development:
- First and foremost, the implementation, negotiation and management (including any litigation) of contracts. The implementation and negotiation of the sponsorship contract alone can be very complex. How many times have I been busy for weeks with the contracting party!?!! The innovative solution offered by ChainOn is the Smart Contract, a digital contract with legal validity that simplifies the process and also allows for: the breaking down of national borders for signing and payments; the security of collections on due dates; the possibility of automation of performance-related fees; and the rapid handling of disputes through online arbitration.
- opacity, because a marketplace is necessarily characterized by transparency-both of supply and prices.
What are the opportunities for investors (companies) and sellers (clubs, federations, athletes, intermediaries)?
Among the main opportunities that an offer like this promises I highlight these four:
- make a large database of sponsorship (and later media rights and licensing) opportunities available to investors and rights sellers;
- suggest to vendors the product sectors and companies that may show the most interest in their offerings, identifying, for example, companies that sponsor in his or her region with a specific spending cap, or identify sponsors that have been contracted by a competitor;
- show potential buyers the partnership opportunities with higher Return on Investment (ROI) in a given area or which entities sponsor a competing company;
- thanks to technology, sponsorship rights will be able to be turned into digital tokens exchange able on the Internet for cryptocurrencies. A Token allows an investor, for example, to expose three minutes of an advertising message on the LEDs of a sports competition. After purchasing the token, the buyer can either advertise his product or resell it again at a higher price than the purchase price. Tokens are a lever to broaden supply and demobilize significant amounts of resources.
Today I am unable to say whether ChainOn’s selling proposition will be a success, but it could represent a revitalization opportunity for sports at every level. This is a revolution from which even smaller clubs and even grassroots sports associations could benefit, as they will be able to access the platform and publish their sports sponsorship deals in blockchain, to propose them to even much larger investors than those with whom they usually collaborate.
But the revolution promised by ChainOn is not limited to sports: in the future, the system may also be extended to the world of entertainment and culture.
I personally expect that blockchain can, at least in the medium term, decisively change the process of buying and selling sponsorships that we currently know.
Blockchain will be able to enable supply and demand matching, negotiation, and contract signing in real time with very high savings on commissions through disintermediation, benefiting smaller sellers in particular. All of this is done by streamlining processes and reducing costs.
Let the revolution begin….