Here’s what it means for the crypto market

Over the past month, FC Barcelona – one of the longest standing and largest sports clubs in the world – has made several bets on cryptocurrency, the metaverse and Web3 in general.

FC Barcelona is a member-owned club controlled by more than 144,000 members, rather than the traditional billionaire. Basically, it is a DAO in the real world.

The club arranges votes for members to decide things like club president, council and approval of asset sales. In the last votes, held at the end of July, Barcelona did something that most other Web3 and Web3-curious companies do not: support the technology.

Of course, that means Barcelona made history and actually held the vote on the blockchain. From a crypto standpoint, it’s pretty great to see a company not just releasing a few NFTs, but actually using the technology in a way that isn’t about making a quick buck.

Unfortunately, the excitement of the Barca Web3 development may end here.

Economic levers

When the pandemic hit, it was devastating for the fan-owned club. Years of high wages and underperformance collided with a drastic drop in revenue due to stadium closures, which brought the club dangerously close to bankruptcy as debts exceeded €1.3 billion.

As wages quickly began to exceed revenue, Barca were forced to part ways with the club’s – and arguably the sport’s – best ever player, Lionel Messi, as financial regulations prevented the club from retaining their star.

This forced the football DAO to vote and then adopt so-called “financial levers” by selling parts of the club to private companies.

Two of the four levers that Barca have pulled so far were with Web3 companies Socios and Orpheus Media. Separately, FC Barcelona sold each company a 24.5% stake in their currently unprofitable “Barca Studios” – which can be considered the club’s digital content arm.

The great unknown

The other levers, which resulted in the sale of TV rights for half a billion euros, were quite easy to understand and could be thought of as “selling out the family silver” to raise money in a flash.

But Barca Studios is an unprofitable unknown.

The media arm brought Orpheus and Socios into the club to find “new formats that can have a commercial route through other global operators”, as well as producing audiovisual content and supplying content to the local Barca TV channel and the global streaming service Barca TV+.

This could be huge for Orpheus and Socios, as well as crypto as a whole, as a big, well-known entity finally takes a real deep dive into Web3.

But that’s only if they can strike gold in the unknown.

Barca’s Web3 future

Barca’s future as a decentralized club operating at the forefront of the decentralized blockchain unknown has a few simple applications for raising money, but will mostly have to focus more on the unknown side of crypto.

Sure, there will be a lot of NFTs and maybe extensions with Socios and what the existing Barcelona fantoken is doing, but it’s hard to imagine a total investment of two hundred million euros based on these two. And maybe they will copy their bitter rivals and start using the blockchain for tickets.

The Barcelona fan token, along with the countless other fan tokens that have been issued by Socios, have fallen in value after experiencing an initial surge. Meanwhile, NFTs are all but dead as volume and interest quickly fell off a cliff as Crypto Winter ensued.

Barca’s recent joint trademark application with rivals Real Madrid regarding metaverse activities showed some of the likely roadmaps. The activities include a crypto wallet, virtual goods and “virtual reality software” – which can represent everything from metaverse stadium visits to games.

This brings me to my biggest concern about what will come out of these deals.

Barcelona are clearly backed up against the wall and need quick cash. Meanwhile, all expectations from this deal are growth-related – meaning the outcomes are not so short-term.

My concern is that things are rushed, expectations are too high, and these Socios and Orpheus end up looking foolish as their combined 49% doesn’t put them on true equal footing with their cash-strapped partner.

If there is pushback on these products – which by all means are trial products, unproven products – as there has been in the gaming environment of NFT cash grabs, they could very quickly lose the opportunity to prove the value of the technology and be stuck with 24.5% of something that develops away from them.

A Socios representative told Forbes, “The club has now mandated Barca Studios to roll out their Web3 vision and with $BAR at its core.”

I’m not sure that new technology that hasn’t yet been adopted is something you can just snap on and make it work. Especially when at the heart of it is a token that has dropped from $53.64 to near the ICO price of $6.30.

As sports continue to seemingly dominate the use of Web3 applications, it seems that crypto-related companies are finally getting the chance to prove all their boldest claims.

While a seat in one of the biggest sports clubs in the world has the potential to be a massive catalyst for crypto and accelerate the adoption of the technology, the mismatch between Barca’s huge need for funds now and the metaverse’s current position as a rather small niche spells out the potential for a very public failure.

While failures are nothing new in cryptos or markets more generally, this would be one of (if not the) first failures where a crypto firm was brought in openly to do whatever it wants, to prove its ability to lock up revenue streams.

This type of failure can further worry companies about the technology and slow adoption of the technology in more traditional industries.