The use of Smart Contracts in sports and entertainment, particularly with regard to sponsorship, can be extremely beneficial.
It is possible, through technology, to carry out the negotiation phase entirely online to decide every detail, from the beginning until the final signing of the agreement. The contract, once entered into the distributed registry, gains legal validity and allows for intelligent management of agreements. The pandemic has hit the sports industry hard, but with a view to recovery, blockchain and Smart Contracts can be very useful tools.
The blockchain to identify the best opportunities
First, these innovative technologies can be leveraged to identify, by both clubs and sponsors, the most cost-effective contracts for each form of business, in terms of affinity and economic value.
Large sports clubs can make the most of smart contracts. The advantage of not having to manage and control the correct performance of the clauses preparatory to the termination of the contract (thanks to the blockchain), translates into a huge saving of time and expense.
The stipulated sponsorships can be much more detailed also from a geographical point of view: hyperlocalising the investments, from an economic point of view, is considerably more advantageous.
Speeding up processes and reducing costs are the first two steps towards the future of sponsorship, and the resulting benefits could also benefit the individual athletes they are aimed at.
Smart Contracts and sponsorships of the future
The first key step in establishing a contract, entered into a distributed registry, is to find the most appropriate sponsorship format. Clubs and sponsors identify the partner that best meets their business needs from a database. Once the eligible parties have been identified, the negotiation phase begins, in which the key conditions for the parties to sign the agreement are established. Only once these conditions are determined, the contract will be registered on blockchain and will acquire legal validity. Sponsors, in this way, can identify the most suitable clubs in a timely, selective and cost-effective manner. The same applies to clubs.
Another advantage is found in the possibility to establish a priori thresholds of expectation: for example, the definition of a minimum turnout of participants at the event below which the sponsorship is considered ineffective. If the assumptions set out in the contract are not met, the next stage of the contract will not take place. For example, if attendance at an event does not meet the established criteria, the sponsor may pay a proportionately reduced payment. Conversely, in the optimistic event that the thresholds are abundantly exceeded, clubs can receive increased rewards. It is up to the blockchain to transparently monitor the successful outcome of negotiations.
Blockchain for athletes and clubs, culture and entertainment
Today, contracting through distributed platforms and smart contracts is primarily leveraged by clubs and businesses.
In the not too distant future, however, the model could be extended to individual athletes as well as those in the arts and culture sector. Artists, journalists and those who benefit from copyright, through smart contracts, can sell their products avoiding labels and therefore interacting directly with their audience.
Small sports clubs, which are struggling in the traditional sponsorship market, may find interesting new opportunities through blockchain. For example, the technology can help local sports by facilitating the selection of local businesses for clubs in the same geographic area. In this way, profits would grow for “smaller” realities that can take advantage of the investments of local businesses.
Another area of application is advertising space on the sidelines at sporting events. These, often, remain unsold due to the very long time required for the negotiation and conclusion of agreements, as well as due to the high costs of the long chain of intermediaries. Failure to sell space translates into a substantial economic loss. Through blockchain technologies the time of negotiations can be shortened considerably, and up to a few hours before the event it becomes possible to sell advertising space. And through the elimination of third-party figures, costs can be significantly reduced, while increasing the transparency and security of the partnership.