EX Sports on Forbes

2019 Jul, 10     China

Leveraging Blockchain Technology for Transparency in Athletes’ Crowdfunding in the Sports Industry

In recent years, crowdfunding has become a major tool for funding athletes and team as it has gradually become difficult to secure government support financially for proper efficiency. When we speak of crowdfunding, the traditional thought has always been towards businesses or startups seeking to raise funds from the public to bring their innovative ideas to life. Thanks to platforms like GoFundme, Indiegogo and several others, individuals and businesses have been able to raise funds for different causes. 

However, recently several platforms have been developed, with a focus on raising funds for athletes and teams. These platforms give opportunities to athletes to raise funds from fans and the general public for sports purposes or to achieve a set goal that is sport related.

Crowdfunding opens more doors to athletes to access funding, especially from their fans whether to represent their countries at a national level or at local events. There have been stories of successful athletes who raised needed funds via crowdfunding platforms. Apart from well known ways of raising funds for athletes like hosting events, searching for sponsors, crowdfunding today has grown to be one of the most popular and cheapest means of raising funds in the sports industry.

The Lack of Transparency in the Crowdfunding Process Leading to Abuse of Funds

Whilst crowdfunding appears to be a more sustainable means of raising funds for athletes and fans can express their support financially to their favorites, there appears to be a lack of transparency as to how the funds are being used by these athletes. 

There isn’t enough accountability measures in place to ensure that these athletes actually use this funds for the intended purpose or if they genuinely needed the funds in the first place. Toli Makris, an expert in the sports industry with over 15 years experience and having organized over 100 sports events worldwide, shared on the abuse of funds by athletes who crowdfund. Using the UAE Jiu Jitsu Federation as a key example, he highlights how athletes have raised funds in the past and never showed up at the events. “The UAE JJ Federation is spending millions of dollars every year to establish Abu Dhabi as a sports hub in the Middle East and attract international athletes to compete in qualifiers and championships that lead up to the Abu Dhabi Championship. However, over the last 5 years, there have been many athletes that have raised money on crowdfunding platforms and used the Abu Dhabi events as a reference but then these athletes never showed up and that’s why the federation and sports council is looking for better solutions,” he says. 

Cases like these happen when there are no structures in place to verify and track how funds are being used by these athletes. This makes it easy for athletes to raise funds for personal purposes other than actually stated on the crowdfunding platforms. 

This lack of transparency is one that should be keenly addressed, and better lasting solutions be developed to ensure accountability and authenticity.

How Blockchain Can Foster Transparency in Crowdfunding

Blockchain technology is one tech that can be incorporated to create a framework that provides transparency and can keep track of funds crowdfunded for athletes and what they are used for. Makris who is also the Co-Founder of  EX-Sports, believes blockchain can help create an authenticity solution that checkmates the lack of transparency. 

Via blockchain based digital IDs, EX-Sports has created an effective solution to properly track athlete funding and how the funding is used. Blockchain technology ensures that the crowdfunding process from raising capital to distribution is transparent. When funds are raised, the total amount and sources are securely recorded on the blockchain. Likewise, when the funds are distributed, every transaction is recorded on the blockchain. This way, crowdfunders can keep track of how the funds are being distributed - in this case to athletes.

Speaking on how this platform will ensure compliance and athletes actually use the funds for intended purposes, Makris says, “We are currently working with the International Federation of Jiu Jitsu and Abu Dhabi to launch it by November for the upcoming World Championship in Abu Dhabi. First of all we will work closely with the federation to ensure that all of these athletes are members of the federation and even qualified to participate at the events. Then we will structure deals with our commercial partners to make sure that they incorporate our service (airlines, hotel partners, restaurants etc). These partners normally contribute cash to the event but now we are bartering the deals to receive more of the services that we can then offer to the athletes.” Blockchain technology in other words will bring a form of standardization to crowdfunding as all the transactions carried out are digitally recorded making more convenient and easier to track compliance. This stands to be beneficial to all parties involved. 

Decentralization and a distributed ledger framework is a laudable first step towards facilitating transparency in the crowdfunding business. The is why blockchain plays a vital role in ensuring this. When transparency and accountability are guaranteed, the confidence of donors will be further boosted as the fears of whether they’re donating to a right cause will be eliminated. Also, athletes who crowdfund are held accountable for the funds they raise. 

Solutions like these are what the sports industry needs for a more sustainable means of raising funds without unnecessary scandals.

Source from: Forbes China