As defined by Wikipedia, being ESG compliant means implementing the concept of sustainable development to financial activity by making it sustainable finance. As the acronym ESG (Environmental, Social, Governance) suggests, sustainability is not understood to be limited to the environment, although it has been the pivotal principle behind the movement. To date, companies that most respect ESG parameters have an advantage in raising public and private investment. The world of sports, mainly in the event and sports facility sectors, is also beginning to monitor ESG factors, aligning itself with the European vision contained in Agenda 2030. During Cop26 in Glasgow, the major players in the sports scene set themselves very ambitious goals: halving emissions by 2030 and zero by 2040, a more challenging target than the EU target of zero by 2050. The very sport you don’t expect, Formula 1, has launched its Net-Zero Carbon program to zero emissions by 2030.

ESG, sport e infrastructures in Italy 

The issue of environmental sustainability turns out to be intertwined with the issue of infrastructure, and this also happens in sports. It is no coincidence that the 700 million euros available through the PNRR are dedicated to the modernization and construction of sports infrastructure with a view to sustainability. For Italy, the topic of infrastructure turns out to be a sore point, just think that according to a census by the Istituto per il Credito Sportivo, 60 percent of the sports infrastructure in Italy was built before 1980. This leads to a squandering of more than 800 million euros annually as well as significant climate-changing emissions.

The main critical issues: disclosure and measurement of offsets

To date, the main critical issues we find in the sports world with respect to the ESG movement relate to the disclosure and measurement of CO2e offsets. The majority of European soccer clubs do not make their emissions data public, and furthermore, since there is no gold standard for making measurements, the few data available are not entirely reliable. We can take as a reference soccer, the most played sport with the greatest impact on GDP in Europe, and research conducted by Standard Ethics, which established a European Football Index on sustainability based on a nine-grade rating.

The research was conducted on the 15 top listed European clubs and from this it emerged that:

• 13% of the companies adopt sustainability-oriented policies and an adequate reporting system;
• 67% of the companies still have a low level of disclosure, although 20% of them have started a path to improve ESG reporting;
• 20% of companies still have unsatisfactory sustainability management.

If we then go to analyze unlisted companies, we see that almost none have an adequate level of disclosure and provide ESG data.

For sports companies, being ESG will also have an important impact on the new generation of fans who are showing increasing awareness of environmental issues.

The relation between Blockchain and ESG

The main features that have made Blockchain the most revolutionary technology of the current decade are now well known: immutability, transparency and speed. While at first Blockchain was considered to be the clear antithesis to environmental sustainability, it is now being recognized as one of the main tools that will be able to revolutionize such an innovative and growing field as ESG. In fact, with the emergence of the new green blockchains and consensus algorithms that are no longer as energy-intensive as those of Bitcoin, projects created to facilitate the buying and selling of Carbon Credits are beginning to flourish. The Carbon Credit market, previously the preserve exclusively of large, publicly traded multinational corporations, with the use of tokenization turns out to be accessible to SMEs and, consequently, to for-profit sports clubs as well. Both Microsoft and the Emirate of Dubai have relied on the purchase of carbon credits using blockchain to achieve carbon-free status.

But how does the process of tokenizing carbon credits work?

• A company implements soil carbon sequestration initiatives i.e., ground storage of CO2e present in the atmosphere;
• For every ton of CO2e stored on the ground it emits a carbon credit which can be tokenized;
• The buyer interested in achieving carbon-free status purchases the equivalent of the tons of CO2e released into the atmosphere in carbon credits.

Transparency and traceability

The role of Blockchain can also be instrumental in the proper measurement of emissions and accessibility of data consultation. The purchase and sale of carbon credits that took place on Blockchain turns out to be easily searchable and from there one could trace the emissions of the respective company by knowing the address (or public key) of the respective wallet.

In addition, the trustworthiness of the data being notarized on Blockchain will be increasingly enhanced by its combined use with Internet of Things technology: interconnected objects that can process and transmit data. Through oracles, these objects could perform a data collection activity and notarize it on Blockchain, making measurements standardized and reliable.

That of the reliability of measurements is a key issue for the virtuous development of the ESG movement. In the world of sporting events, the case of the World Cup in Qatar is emblematic. According to the NGO Carbon Market Watch, the emissions generated by the top national competition will be 3.6 million tons, almost doubling the last edition held in Russia, which reached 2 million tons. Emissions reported by the Gulf Research and Development Organization are only 1.8 million, half of those highlighted in the report. Offsetting is supposed to take place through two projects (developed in Turkey, among others), but these take just over 133 thousand tons, 7.6 percent of emissions, out of the atmosphere. This shows that even the world of sports, which is supposed to promote correct values, is not immune to propaganda and the now widespread phenomenon of greenwashing.

Sources

• https://www.economymagazine.it/il-mondo-dello-sport-e-i-fattori-esg-quanto-e-sostenibile-il-calcio/
• https://www.linkiesta.it/2022/07/mondiali-calcio-qatar-2022-emissioni-impatto-ambientale/
• https://www.lanuovaecologia.it/stadi-italia-riqualificazione/
• https://www.repubblica.it/green-and-blue/dossier/cop26/2021/11/04/news/cop26_lo_sport_per_il_clima_zero_emissioni_entro_il_2040_serve_un_gioco_di_squadra-324997431/
• https://www.esg360.it/digital-for-esg/crediti-di-carbonio-e-blockchain-la-nuova-frontiera-delle-criptovalute-green-per-la-sostenibilita-del-business/

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Why does security increase?

Thanks to the KYC procedure, frequently used on platforms that apply blockchain technology, it will be easy to track all ticket resales and place conditions on resale prices and many other parameters that may be useful for the safe conduct of an event. Very often through false identity DASPO recipients have managed to circumvent the restraining order. Undoubtedly such innovations could arouse interest and support from institutions. Other innovations are being implemented that could facilitate health tracking of the public attending an event, an application of great utility when we think of the pandemic period.

Tickets may also be used for Fan Engagement

NFTs replacing traditional tickets could be used as cards to access other goods, services or experiences dedicated by companies. Offering promotions and cross-selling items at a dedicated price, giving access to an experience upon reaching a certain number of NFTs could be just some of the commercial activities that could be pursued through this new tool. In addition, it would be easier for companies to keep track of fan activity, profile offerings by increasing customer satisfaction, and use commercial data to enable sponsors to generate higher ROI.

New ways of selling

What if companies want to sell their NFT tickets using different ways? This is also an advantage that this technology can offer. By leveraging external marketplaces that are compatible with the ticket’s Smart Contract, tickets could be sold through auctions. Leveraging external marketplaces is possible and also easy; it could be a good strategy relatively to exclusive tickets or conversely for last-minute tickets that remain unsold.

NFT ticketing has lower costs

It may seem strange, but the costs associated with selling and minting NFTs are far lower than the direct and indirect costs of the traditional ticketing system. The preconception around anything to do with blockchain is that it is an inaccessible technology, culturally and economically. This happens because most of the news that enjoys great resonance is about the record sales of an NFT or the staggering growths of Bitcoin, Ethereum, or even the market capitalization of other cryptocurrencies.
In reality, this technology is low-budget and therefore the biggest obstacle is cultural.
Cultural, in the sense of understanding the phenomena, but also in the sense of lack of know-how within sports clubs. The ability to create NFT tickets using blockchain is not and will not be exclusive to the top brands in global sports.

NFT Tickets: will their spread increase?

As was evident from the preceding paragraphs, the benefits of using this technology are multiple. The benefits of using NFT technology in ticketing are two-sided; organizers and guests are able to benefit from it. The latter play a role that is not limited to attendance at an event but can become all-round customers by using the right levers and determining their respective potentials as stakeholders. How is it then that this technology has not yet had a strong market hold when compared to other blockchain products such as Fan Tokens?

• The benefits that would succeed in using this technology are less intuitive than the operation of other products such as Fan Tokens;
• Tickets are assets that can be found even through the use of traditional methods;
• Revenue generated from other initiatives generates spot, but immediate revenue;
• Because it is a tool dedicated more to governance than to customers, it enjoys limited media appeal.

What may foster the development of this use will be the generational change of the prevailing segment of customers, who will be increasingly digital natives and attentive to innovations and new technologies.
It will be an audience increasingly devoted to interaction and intolerant of passivity, who will seek increasingly tailored offerings to meet their needs and feel part of a reality.
At the same time, a generational shift will take place that will also affect the governance of companies.
Certainly those who move with the right timing, identifying the needs of customers in the near future, will be able to gain more substantial slices of the market and with more ease considering the scarcity of competitors. Important will be to use the data extrapolated from this new mode of ticketing, which could be the most important touchpoint between event organizers and spectators.

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NFT Ticketing: the first applications

This use of blockchain and non-fungible tokens does not enjoy the same popularity as Fan Engagement tools, yet its application has already been successfully tested at the highest level.
UEFA first tested this technology at the Europa League final in Gdansk. Subsequently, ticketing on NFT was also used at the Champions League final in Porto.
Relying on non-fungible tokens made capacity management more agile and secure, checkered audience arrangement in compliance with anti-Covid regulations, speed and automation of refunds, and resale of refunded tickets due to the designation of a new venue.
Head of Revenue Operations Philippe Margraff said, “The two finals were handled excellently and demonstrated to us the effectiveness of blockchain-based mobile ticketing.” For this very reason, UEFA announced after a few days its intention to sell one million tickets at Euro2020 with the help of this new technology.

Tickets in NFT format: speed and process automation

Reading between the lines, it can be seen that the use of NFTs for ticketing has brought significant benefits in terms of speeding up and automating processes, all made possible by the Smart Contracts on which NFTs are based.
In fact, with smart contracts, reimbursements upon the occurrence of certain conditions-such as a change of location, a Covid positive or a forced quarantine-become automatic and fast.
Similarly, it is possible to easily transfer one’s ticket to another user.
Another advantage given by the use of NFTs in ticketing is being able to adapt very quickly to sudden changes in regulations caused by the progression or vice versa of the pandemic.
Once the know-how for designing and distributing NFTs is acquired, the creation time is also very rapid. Each ticket in NFT format can be ready for sale in less than a minute.
Distribution is also automated; the moment the ticket price is paid, the Smart Contract validates the sale of the NFT and delivers it to the chosen address.

Ticket on NFT: certified authenticity

Registering a ticket on blockchain is equivalent to guaranteeing its authenticity. In fact, each NFT has a specific digital authenticity certificate. The large-scale use of tickets on NFTs would put an end to the phenomenon of scalping or the phenomenon of selling fake tickets even online, and would also limit the so-called scalping 2.0, that is, the wild secondary selling practiced online by some brokerage companies.
We have not infrequently witnessed events that sold out within minutes only to see how large spaces turned out to be unoccupied. This happens because the markup applied in secondary selling, thanks to the artifactual scarcity of the asset, allows them to make a large profit even if not all the tickets are resold. Some companies have already been fined for these unfair practices. This situation certainly causes impatience in fans who buy at much higher prices or are excluded from the event they have been waiting for. What certainly comes out of it is loyalty. In addition, fans would be able to keep that ticket whose authenticity and uniqueness turn out to be certified in blockchain, without the risk of losing it … and who knows, this might become a collector’s item

Perpetual revenues

An additional opportunity arises for sports clubs: create a dedicated fan space for resale of tickets at a locked-in price and perhaps a commission to be charged on each resale. This kind of initiative would succeed in offering an alternative that would shield fans from speculative maneuvering. In addition, companies could leverage NFTs’ Smart Contracts to generate perpetual revenues. Should the ticket cover an iconic event, any resale made even in markets outside of corporate markets would bring royalties into the companies’ coffers.

In the next article of this blog, we will look at other aspects of ticketing in NFTs, including the benefits related to traceability (e.g., in terms of safety of sports venues), and cost reduction for adopters.

In the next article of this blog, we will look at other aspects of ticketing in NFTs, including the benefits related to traceability (e.g., in terms of safety of sports venues), and cost reduction for adopters.

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eSports are a form of electronic sports competition in which competitors compete on gaming platforms and in video games, sometimes with a spectator audience. Their notoriety has increased significantly in recent years, especially during the pandemic.
Participation in the competitions is open not only to professional gamers, but also to fans, who, after registering or passing selections, can take part in the tournament.
Major competitions can be streamed through YouTube or Twitch platforms, and both participants and spectators can be present at the event, physically or remotely.

In 2021 there were 240 million fans actively playing games worldwide; by 2024 this is expected to increase to 291 million. As for the audience, however, compared to 474 million in 2021, 577 million are projected in 2024.
The estimated economic impact for the eSports sector, in Italy, amounts to between 45 and 47 million euros, according to data recently released by OIES (Osservatorio Italiano E Sports).

Blockchain and eSports, the benefits

The world of eSports has already approached blockchain very strongly. The advantages of this technology applied to eSports, lie mainly in the ability to track and validate results, ensuring transparency and data sharing with all participants on the platform.
The ability to clearly show the progress of tournaments and track transactions, through new technological models, results in increased trust on the part of all players and fans.

For example, one of the most immediate benefits of distributed ledgers lies in the ability to enroll all users on the platform so that awards are visible to all and transparent, including by leveraging on cryptocurrencies or tokens.
Startups entering the world of eSports have begun to turn to blockchain as early as the planning and fundraising stages. Initial Coin Offering (ICOs), fundraising via crowdfunding, are directly aimed at obtaining funding for a project using distributed ledgers. The operation of ICOs is based on the issuance of tokens that are sold in exchange for a fee intended to finance the initiative.

After purchasing the tokens, users actually become part of the system, which allows players and brands to both organize events and tournaments and set up prize pools for winners.
In this way, in addition to ensuring real sharing of the initiatives taken by the various tournament players, it is possible to increase the pool of users who aspire to become professional players in the world of eSports.
In addition to event organizers, professional players will also be able to make use of technology to broadcast their matches live, earning money on their channels through advertising.
Thus, a new perspective opens up for sponsorships, which can identify not only events and teams but also professional gamers with whom to sign mutually beneficial agreements.

Blockchain and eSports, toward the future

Blockchain represents an innovative circuit in which to give rise not only to economic exchanges, but also a virtual platform in which audiences and fans can be actively involved in the enjoyment of various initiatives.
In this way, all players on the scene find themselves playing an equally important role and gaining benefits regardless of their position in the ecosystem.
Novice gamers, who aspire to become professionals, often face quite a few difficulties in overcoming the barriers to entry created for the benefit of the preponderance of team sports that, by definition, require the creation and management of a team. Thanks to blockchain, this issue can be easily solved. Indeed, with modern platforms, gamers can challenge themselves individually: if interested in team competitions, they can easily find other “peers” (anywhere in the world) through recruitment platforms.

Blockchain and eSports: more security, trust and speed

Everything related to the contractual phase and financial transactions can be easily managed by the platform, resulting in faster time to make agreements and increased security and trust between the players in the exchange.
It is the creation of trust and the pursuit of transparency and security that are cornerstones not only for the success of platforms, but also for the growth and development of eSports.

With a decentralized and incorruptible method, the risk of system corruption can be reduced and what happens within the platform (including on the eSports-related betting side, for example) can be regulated in a crystal-clear manner.
What remains a substantial problem is the lack of established legal certainty, but the increase in litigation in the industry has led to a growth in attention to eSports regulation and will certainly produce case law in the near future that can increase protection for all gamers.

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n 2021, 0.04% of the world’s population bought an NFT: but the criteria for NFTs not to be a passing phenomenon, but a real outpost of the future, are all there.
In the year of the NFT explosion, in fact, we often heard of tokens being sold for record amounts. Why is this happening? Are these prices justified by real benefits or are they just part of a big speculation?

What determines the price of NFTs?

One of the most influential factors on the price of an NFT is definitely its history. For example, if an NFT is designed by a world famous creator, the auction base will surely be higher. Moreover, if an NFT has been owned in its history by a celebrity or an icon of the star system, the price, also in this case, will rise. In some cases celebrities may only be the testimonial of an NFT collection without having owned or created it. The higher the fame of the testimonial, the easier it will be to see sold-out NFTs from the collection, even at high prices.

Very often the NFT collections are in turn divided into various releases, even deferred in time: a technique adopted to be able to segment the offer, managing to meet the purchasing possibilities of the widest possible audience. Exactly as in other markets sensitive to the fame of the brand and to the availability of the good, the rarer an NFT will be, the more precious it will be.

Another factor characterizing the price is the liquidity and trading volume of a given collection. Liquidity is high when an asset is easily sold once it is put on the market: the higher the trading volume, the easier it will be to convert an NFT into cash or cryptocurrency to buy another asset.

he higher the purchase price of an NFT, the more difficult it will be to find a buyer willing to pay the amount spent: collectible NFTs, therefore, are subject to less liquidity.
Also the net on which the NFTs are mounted turns out a factor in a position to favor or less their liquidity. Minting is nothing but the publication of a non-fungible token on the blockchain to make it purchasable. There are many blockchains that support NFT, but for the moment the Ethereum ERC network, despite the high commissions (gas fees) to be paid for each transaction, remains the reference one. This happens precisely because of the liquidity it guarantees, being supported by the majority of wallets and NFT marketplaces of reference such as Rarible, OpenSea or Zora.

Utility: what makes an NFT most interesting outside of niches

But the element that most of all makes the purchase of an NFT virtuous is certainly its immediate utility. The utility of non-fungible tokens can be different depending on the ecosystem in which they are used. NFTs can serve to certify a digital or even physical property, can be an element of a game, represent a pass to access a good or service, or serve to guarantee the authenticity of a good, eliminating the possibility that the referenced good could be counterfeit. An NFT that has a well-defined utility, in everyday life, that is understandable even to non-experts in blockchain, becomes attractive even in the mass-market.

In the next article in this blog, we will illustrate how and why NFT can be useful and easily applicable even in industries that have existed long before their emergence, and that just by the advent of NFTs can be revolutionized.

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