NFL team Denver Broncos are up for sale with a price tag of around $4 billion. A group of crypto enthusiasts is looking to use a decentralized autonomous organization (DAO) to pull the funds together to purchase the club.
DAOs often work similarly to cooperatives and crowdfunding with all the money in cryptocurrency and decentralized governance structures.
The idea behind “Buy the Broncos” started with a group of attorneys, accountants, software developers, and athletes. The movement has received moral support from the state of Colorado’s governor Jared Polis, a crypto enthusiast himself who is supporting a change for Colorado to accept crypto for tax payments by the end of the Summer.
“We know it sounds a bit crazy, but it’s also a bit badass,” said Sean O’Brien, an ex Cisco lawyer who is one of the leading figures in the project, talking to CNBC. “The purpose essentially is to establish an infrastructure so that fans from all walks of life can be owners of the Denver Broncos.”
If the project is successful and enough people get involved, the Denver team could become fan-owned. Forty million might be doable to raise funds from the crypto crowd, but with a price tag of $4 billion, it will be the largest sports franchise sale in American history. If whale investors don’t get involved, the chances of success are slim. And there might not be enough Broncos fans willing to get into crypto to purchase a stake in the club. Another possibility being explored is raising 25% of the funds through the DAO and then partnering with traditional investors who would own the rest of the team. But even raising $1 billion is a big ask.
CNBC gave the example of BitDAO, which has $2.1 billion in crypto assets. However, that’s more like a fund, and has a backer in cryptocurrency exchange ByBit that contributes roughly $2 million a day from its transaction fees. Its current contribution rate annualizes at $700 million per year. So it might be considered a whale. If Buy the Broncos managed to attract a crypto exchange to do something similar, that would give it a head start.
The plan is to create a cooperative to hold the team stock and issue non-fungible tokens to fans. However, it remains to be seen if these NFTs might be considered securities.
Functioning as a fan-owned team has a lot of implications for the management of the team. Fellow NBA team, the Green Bay Packers has been fan-owned since 1923. It has won the Super Bowl four times and made the playoffs 15 times out of the last 20 seasons. Day-to-day decision making is not that decentralized with a regular board of directors. However, it’s the fans that get to elect the board members.
Animoca and Delphi Digital recently invested in a fan controlled football platform where fans can influence playing decisions in American football games by purchasing non-fungible tokens (NFTs). The game strategy decisions are made virtually, but the game is real. These developments highlight how blockchain can help fans get real control over team and league developments.
A Mexican soccer team also explored the topic by offering 1% of the club to fans as an NFT security.
Meanwhile, the NFL is launching NFT video moments with Dapper Labs, and the NFLPA launched NFTs in the metaverse.
