Sorare and the Championship - Gambling or Investment?

[ExiledAjax]

Sorare, a French company that has created an online digital trading card game (and marketplace) has just announced that it has brought 5 Championship clubs on board. Watford, Burnley, Coventry, Norwich and our weekend opponents Millwall have all recently joined the platform. Sorare will clearly be looking to sign up the whole of the Championship, and that obviously includes our own fine club.

In doing so they allow Sorare to create digital trading cards of their players. These cards are then bought and sold online, at reactive prices, using either cold hard cash (or credit), or Etheruem cryptocurrency. The purchaser can then use those cards to compete in fantasy football style competitions on Sorare's platform. Crucially it is also possible to trade cards between players, in doing so offering the potential to make a profit if you bought a card low and sell it high. The cards are NFTs which means that Sorare can control how many of each card is produced, and so can manufacture rarity and manipulate their market. Therefore some cards cost £10, others are trading at north of £2,000, and some are trading at truly mind-boggling levels of hundreds of thousands or even millions of pounds. A nice way to get rich quick you might say...but there's literally only one Haaland card on the system, and if you want to buy it then it's current owner is asking £580,000. A very small number of people will make a lucky packet, the vast majority will probably lose money, or at least spend money in order to take part in the games.

In many ways this is not so different o the old physical Panini and Merlin stickers I used to collect. Those companies also manufactured rarity, they produced special shiny cards, and limited production of the biggest players in order to drive you to by more packets of stickers as you tried to complete your collection. Indeed, a secondary trading market emerged in school playgrounds as well, in which cash was sometimes traded for cards, and cards were regularly swapped. Crucially however, Merlin and Panini did not control that market, did not take a cut of that market, and did not use that market to bolster the value of their Ethereum holdings. Merlin and Panini also did not encourage users to compete - and also offer a method of paying to win by buying better players - with the stickers. You collected stickers as a small pass time, spending pocket money and then chatting to your mates about it.

You can also apply to be an "affiliate" where you promote the platform and get 10% of the revenue generated by people you introduce. So that's like the 

The five Championship clubs to join up have all released identikit press release promising that "By combining a free-to-play fantasy game with digital collectibles - underpinned by non-fungible technology to create digital scarcity for each card - Sorare brings fans closer to the game they love. Sports collectibles have long helped fans celebrate their love of football and with Sorare. [INSERT CLUB NAME] fans can now experience a new world of online fandom where they can own and manage cards of their favourite players and hone their passion for the game."

Only Norwich have included a disclaimer stating that fans should "Please note that the value of Sorare’s digital player cards are forms of non-fungible tokens and that their value is variable and can go down as well as up."

Sorare talks a big game about "fan engagement" and offering clubs a revenue stream, but I fail to see where the true fan engagement is? You don't have to be a fan of Watford to buy the Ismaila Sarr card, and once it's bought there's no further reason for you to look at Watford. 

Ultimately I don't have a massive issue with this idea. People have money and they might want to spend it, that's broadly fine. What gets me is the implication that this is a sensible investment, and the promotion of it by the clubs involved. It's really little more than a pay-to-play gambling scheme dressed up as "fan engagement". I suspect City will sign up for it soon enough, and I just hope if we do then we properly explain it to our fans and make it clear that it is a game, not a financial investment plan.

[Monkeh]

It's just another version of that NFT crap, 

[Unan]

Load of rubbish, that Football Insider (that sponsored Rovers) done this, and then went bust rendering all 'investments' worthless.

[IAmNick]

Scam scam scam, please stay away from this stuff.

These markets are basically unregulated and an incredible amount of wash trading goes on (so one person selling the "asset" to themselves or friends repeatedly to drive up the price and create the illusion of demand).

All you would own is a link to an asset (probs just an image) hosted somewhere only - with no guarantee for how long it'll even be active. You'll probably be the proud owner of a dead link in a year or two.

The difference from cards before is that people weren't buying a pack at their local shop hoping to flip them for tens of thousands - they were interested in the physical cards, swapping them, and building a collection. I virtually guarentee that the only people buying these things will be trying to grift, cheat, lie, and flip them for a profit.

Crypto is dying, and NFTs are basically already dead, and not before time.

I highly recommend the outstanding documentary here if people have any interest in this stuff: 

 

  

42 minutes ago, ExiledAjax said:

You can also apply to be an "affiliate" where you promote the platform and get 10% of the revenue generated by people you introduce.

This bit should also ring alarm bells. As with so many crypto things it's a pyramid (or sometimes Ponzi) scheme in disguise. Just stay away from this crap.

Edited October 13, 2022 by IAmNick

[chinapig]

Kieran Maguire covers this in today's Price of Football podcast.

The bottom line is that the value of your investment will almost certainly go down, quite possibly to zero.

Yet according to Maguire both the PL and the FA are looking at more schemes like these.

I sincerely hope our club will not be going in this direction.

[ExiledAjax]

9 minutes ago, chinapig said:

Kieran Maguire covers this in today's Price of Football podcast.

The bottom line is that the value of your investment will almost certainly go down, quite possibly to zero.

Yet according to Maguire both the PL and the FA are looking at more schemes like these.

I sincerely hope our club will not be going in this direction.

Yeh, and that's where I heard about it. I then looked it up further, including reading all 5 indentikit press releases.

I wouldn't touch it with a bargepole tbh, but I'm not as against it as @IAmNick might be. As I say, if the card games move online and if NFTs are used to code those, that's not an issue for me. But it needs to be sold as a simple game rather than an unregulated investment market. NFT and Blockchain tech does have useful applications, but not as investments. Yes you own only a license to use a link stored on a server, but that is little different to Spotify, iTunes, or Steam. I've bought video games for years on Steam, I don't get a CD, but I don't call that a scam. A shame maybe, but I know what I'm buying there and that's fine. Same applies here imo.

I do take issue with the trading side of it, and the fact that some "cards" are unique (or at least unique until the company decide to mint more of them). Look at Football Index for an example of how these companies go bust dramatically and quickly.

[IAmNick]

11 minutes ago, ExiledAjax said:

Yes you own only a license to use a link stored on a server, but that is little different to Spotify, iTunes, or Steam. I've bought video games for years on Steam, I don't get a CD, but I don't call that a scam.

So what does the NFT / blockchain stuff add here exactly? We can already do it fine with the above as you've said so it's an unnecessary step in my view.

I don't want to know how much my Steam library is worth, but it'll be well into 4 figures...

11 minutes ago, ExiledAjax said:

NFT and Blockchain tech does have useful applications

I've yet to find one

Blockchain maybe the odd use case at a stretch, NFTs I'm yet to hear a single good argument for - but that probably doesn't belong on the football forum.

I do strongly recommend the video I linked above though if you have a couple of hours spare.

13 minutes ago, ExiledAjax said:

I do take issue with the trading side of it, and the fact that some "cards" are unique (or at least unique until the company decide to mint more of them). Look at Football Index for an example of how these companies go bust dramatically and quickly.

Me too - it's creating artificial scarcity where it doesn't need to exist, just to attract traders in my opinion.

The old shinies were rare but you'd still probably know a few people who had the cool ones. It wasn't literally one or two in existence and that's it.

[Leveller]

11 minutes ago, IAmNick said:

So what does the NFT / blockchain stuff add here exactly? We can already do it fine with the above as you've said so it's an unnecessary step in my view.

I don't want to know how much my Steam library is worth, but it'll be well into 4 figures...

I've yet to find one

Blockchain maybe the odd use case at a stretch, NFTs I'm yet to hear a single good argument for - but that probably doesn't belong on the football forum.

I do strongly recommend the video I linked above though if you have a couple of hours spare.

Me too - it's creating artificial scarcity where it doesn't need to exist, just to attract traders in my opinion.

The old shinies were rare but you'd still probably know a few people who had the cool ones. It wasn't literally one or two in existence and that's it.

But I’d regard Panini etc as a bit of a cynical business operation too, to be honest. They’re basically encouraging little kids to spend their (or their parents’) money on worthless little pictures of footballers that have no intrinsic value. A full Panini album would cost a lot of money to put together, while a regular book printed with all the pictures would cost little to print or buy.

Same goes for a lot of collecting, mind! I’ve got a Penny Black somewhere.

[ExiledAjax]

1 hour ago, IAmNick said:

So what does the NFT / blockchain stuff add here exactly? We can already do it fine with the above as you've said so it's an unnecessary step in my view.

Saves on production costs, transport costs, storage costs. Allows the company - for better or for worse - to combine the "cards" with a game. If that stays as a simple fame then that's fine for me. I play fantasy football using the draft method, there's one copy of each player in the game I play with my mates. That's fun, it adds a dimension to the game, we enjoy it. But we don't trade players for money, and we don't spend money on it. it's harmless, it's a pastime. There's nothing fundamentally insidious or evil about NFTs, crypto or blockchain. There is sometimes something fundamentally insidious about the people using and marketing them.

1 hour ago, IAmNick said:

Blockchain maybe the odd use case at a stretch, NFTs I'm yet to hear a single good argument for - but that probably doesn't belong on the football forum.

Agree, I recently had a client who say they are going to use blockchain and crypto to revolutionise...dog walking. This is clearly bollocks, and is actually aimed at them monetising dog walking. Is nothing sacred anymore?

But I do see applications for blockchain in document storage, replication, and verification. Things like project bibles, the Land Registry, even Companies House, could be made secure using blockchain, and then copies of documents could be verifiable via NFTs. That is unsexy, and wouldn't be linked to a proprietary cryptocurrency, and so wouldn't artificially inflate someone's crypto holdings. There is also a very legitimate question to be asked which is - do we need to bother? I can understand if your answer to that is "no".

1 hour ago, IAmNick said:

Me too - it's creating artificial scarcity where it doesn't need to exist, just to attract traders in my opinion.

The old shinies were rare but you'd still probably know a few people who had the cool ones. It wasn't literally one or two in existence and that's it.

Totally agree with this.

To be clear, I absolutely do not endorse or encourage Sorare. I posted this as an interesting and very relevant story that may very soon impact our own club. I don't want our club to sign up to Sorare as I don't think there's any point. I don't think it will drive fan engagement, I don't think the revenue is going to benefit the club much - although I don't know exactly how much the club gets from this. You mentioned money laundering. Yeh there's a huge risk of that, and I suspect it is not one that the clubs have considered here. The fact that only Norwich issued any kind of investment disclaimer tells us that Sorare don't require that element of the press release, and that's shitty of them.

[BigAl&Toby]

2 hours ago, ExiledAjax said:

Sorare, a French company that has created an online digital trading card game (and marketplace) has just announced that it has brought 5 Championship clubs on board. Watford, Burnley, Coventry, Norwich and our weekend opponents Millwall have all recently joined the platform. Sorare will clearly be looking to sign up the whole of the Championship, and that obviously includes our own fine club.

In doing so they allow Sorare to create digital trading cards of their players. These cards are then bought and sold online, at reactive prices, using either cold hard cash (or credit), or Etheruem cryptocurrency. The purchaser can then use those cards to compete in fantasy football style competitions on Sorare's platform. Crucially it is also possible to trade cards between players, in doing so offering the potential to make a profit if you bought a card low and sell it high. The cards are NFTs which means that Sorare can control how many of each card is produced, and so can manufacture rarity and manipulate their market. Therefore some cards cost £10, others are trading at north of £2,000, and some are trading at truly mind-boggling levels of hundreds of thousands or even millions of pounds. A nice way to get rich quick you might say...but there's literally only one Haaland card on the system, and if you want to buy it then it's current owner is asking £580,000. A very small number of people will make a lucky packet, the vast majority will probably lose money, or at least spend money in order to take part in the games.

In many ways this is not so different o the old physical Panini and Merlin stickers I used to collect. Those companies also manufactured rarity, they produced special shiny cards, and limited production of the biggest players in order to drive you to by more packets of stickers as you tried to complete your collection. Indeed, a secondary trading market emerged in school playgrounds as well, in which cash was sometimes traded for cards, and cards were regularly swapped. Crucially however, Merlin and Panini did not control that market, did not take a cut of that market, and did not use that market to bolster the value of their Ethereum holdings. Merlin and Panini also did not encourage users to compete - and also offer a method of paying to win by buying better players - with the stickers. You collected stickers as a small pass time, spending pocket money and then chatting to your mates about it.

You can also apply to be an "affiliate" where you promote the platform and get 10% of the revenue generated by people you introduce. So that's like the 

The five Championship clubs to join up have all released identikit press release promising that "By combining a free-to-play fantasy game with digital collectibles - underpinned by non-fungible technology to create digital scarcity for each card - Sorare brings fans closer to the game they love. Sports collectibles have long helped fans celebrate their love of football and with Sorare. [INSERT CLUB NAME] fans can now experience a new world of online fandom where they can own and manage cards of their favourite players and hone their passion for the game."

Only Norwich have included a disclaimer stating that fans should "Please note that the value of Sorare’s digital player cards are forms of non-fungible tokens and that their value is variable and can go down as well as up."

Sorare talks a big game about "fan engagement" and offering clubs a revenue stream, but I fail to see where the true fan engagement is? You don't have to be a fan of Watford to buy the Ismaila Sarr card, and once it's bought there's no further reason for you to look at Watford. 

Ultimately I don't have a massive issue with this idea. People have money and they might want to spend it, that's broadly fine. What gets me is the implication that this is a sensible investment, and the promotion of it by the clubs involved. It's really little more than a pay-to-play gambling scheme dressed up as "fan engagement". I suspect City will sign up for it soon enough, and I just hope if we do then we properly explain it to our fans and make it clear that it is a game, not a financial investment plan.

When it comes to making an investment I ask myself 2 questions.

Firstly would Steve and Maggie do? If it’s something that they’d consider then it passes my first investment selection criteria.

Then I ask myself can Kwasi touch it or say something that’ll **** it up. If the answer is yes then that trumps the first.

Upon reflection I think I’ll give them a wide berth…..

[IAmNick]

1 hour ago, ExiledAjax said:

Saves on production costs, transport costs, storage costs. Allows the company - for better or for worse - to combine the "cards" with a game. If that stays as a simple fame then that's fine for me. I play fantasy football using the draft method, there's one copy of each player in the game I play with my mates. That's fun, it adds a dimension to the game, we enjoy it. But we don't trade players for money, and we don't spend money on it. it's harmless, it's a pastime. There's nothing fundamentally insidious or evil about NFTs, crypto or blockchain. There is sometimes something fundamentally insidious about the people using and marketing them.

You've just described a database though - nothing to do with crypto or blockchain.

I think NFTs certainly, but also to a lesser degree blockchain is a solution looking for a problem. It's been around for over 15 years now (as we currently think of it anyway, so bitcoin basically) and is slowly dying.

1 hour ago, ExiledAjax said:

Agree, I recently had a client who say they are going to use blockchain and crypto to revolutionise...dog walking. This is clearly bollocks, and is actually aimed at them monetising dog walking. Is nothing sacred anymore?

But I do see applications for blockchain in document storage, replication, and verification. Things like project bibles, the Land Registry, even Companies House, could be made secure using blockchain, and then copies of documents could be verifiable via NFTs. That is unsexy, and wouldn't be linked to a proprietary cryptocurrency, and so wouldn't artificially inflate someone's crypto holdings. There is also a very legitimate question to be asked which is - do we need to bother? I can understand if your answer to that is "no".

The issue is there is no way to tie a physical asset to the NFT. You have a physical document, and you have a separate NFT on the blockchain - how do you know your document compared to my identical forgery is related to that NFT? Maybe you mean ditching the physical stuff entirely like for these cards I guess.

Blockchain is not inherently more secure than anything, it's just immutable and sort of (but often not really) decentralised. In fact I would say it's pretty insecure, and has massive privacy problems - I think we're at over $200m stolen in crypto this week already (https://web3isgoinggreat.com/ is a great site).

NFTs are still basically just a link (which anyone can access and is publicly available) to something hosted online. The main argument I get is the decentralised nature of blockchain, but as I said - that's immediately lost when you need to validate something, as you need some trusted centralised organisation to be the validator, or when you are relying on your thing being hosted by some other company. If I lose the key to my crypto wallet, or someone steals it they now own my house or my company. That doesn't sound ideal to me! If we have some central authority who can override that situation - then why have this immutable decentralised database?

I see no way to verify anything physical via NFTs currently and absolutely no benefit above a database, which we already have for things like Companies House.

I work in software and it's quite amusing having seen the number of CVs containing a load of blockchain references, and spoken to people at conferences about it - and now it's almost a complete reversal. Nobody wants to talk about it any more.

I reckon places like this just dumb these words in to a) attract the crypto pump and dump spectulator crowd to drive engagement, and b) appeal to people who don't know anything about it but have heard the terms mentioned as something cool and techy.

 

Edited October 13, 2022 by IAmNick

[ExiledAjax]

30 minutes ago, IAmNick said:

Maybe you mean ditching the physical stuff entirely like for these cards I guess.

Yes. For example verifying digital copies of passports. We use those for AML purposes. I never see a physical passport or photocopy, I get sent a pdf scan of a piece of paper certified or notarised locally by some solicitor that I never meet. There is there some scope for an application that can allow me to verify that. Currently thought AML regs don't require it, and are happy for me to proceed based on what I describe. That is fine, but could change in the future. Likewise these cards aren't tied to anything physical.

30 minutes ago, IAmNick said:

I work in software and it's quite amusing having seen the number of CVs containing a load of blockchain references, and spoken to people at conferences about it - and now it's almost a complete reversal. Nobody wants to talk about it any more.

All I can say to this is that I work in law, and we still see plenty of queries, questions and new clients interested in blockchain/crypto. Companies being formed, funds being launched, ICOs and the like. Some of those do come from people who don't understand it and want to make a quick buck (see the dog walking) but some are from serious investors and business people who see real-world application.

I agree though that much is just marketing fluff and overcomplicating solutions for problems that don't really exist. Specifically on Sorare, if the question is "should EFL clubs sign up to it and promote it their fans" then for me the answer is a resounding no. I did not intend to defend them at all, but as I've said the problem for me is not the existence of Sorare, nor that they sell digital trading cards. The problem is their promotion of an unregulated trading marketplace and the manufacturing of scarcity that drives it, and that this is then promoted by football clubs to fans who will not fully understand the risks.

Edited October 13, 2022 by ExiledAjax