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Should Athletes’ Contracts Live on the Blockchain?

Last Updated: July 5, 2023
Sports organizations may have hundreds or thousands of active contracts with athletes, staff, sponsors, and beyond — let’s explore how blockchain tech can streamline all of it.

Blockchain technology has the potential to transform a wide range of industries. Due to its efficiency, immutability, and transparent nature, businesses and individuals alike can take advantage of a new paradigm of transacting and transferring information for any number of objectives.

In sports, some of these use cases have already been widely explored, from NFT ticketing to fantasy and sports betting to the physical/digital pairing of memorabilia and collectibles.

But there’s another possible application that’s stirring up conversation among leagues, teams, and the athletes they employ: the ability to leverage blockchain technology for athletes’ contracts.

In essence, other than their magnitude in many cases, professional athletes’ contracts aren’t so different from the kind we’re familiar with in our own everyday lives. Before an athlete is employed by a team, an agent or representative typically negotiates the contract with the respective team or organization in charge regarding base pay, length of commitment, incentives, etc. From there, the athlete goes out and performs just like we’re expected to at our jobs. As they perform, then they get paid, and if they reach certain established goals or milestones set within the terms of the contract, then they are also able to receive additional bonuses.

Obviously, the contract structure can vary slightly from sport to sport, but you know the drill.

Since there are certain considerations that must be met and fulfilled by both parties throughout any given season, however, that can sometimes complicate the agreement between teams and players and create inefficiencies along the way. Leagues and teams also have relationships with various brands, media partners, and local and community organizations, a web of associations that requires a ton of data collection and management day-to-day.

Through its decentralized structure and immutable attestation across its networks, blockchain technology provides a path to making these agreements less cumbersome and can help these relationships to operate more effectively. 

With so much at risk , stakeholders in the world of sports should always be looking at the best methods to ways to streamline success for everyone involved — let’s talk about a few key benefits they can reap with an assist from the bleeding edge.

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Why sports teams should put their athletes’ contracts on the blockchain

1. Automatic execution of payments/bonuses when conditions are met.

Regardless of the sport, most athletes have specific incentives embedded within their contracts which can determine the max money they’re able to earn in any given competition year. When these incentives are met (winning major awards like MVP, winning postseason games, achieving statistical milestones, etc.), athletes can get paid sometimes massive bonuses.

Leveraging blockchain tech, teams can automate these payments using smart contracts — quite simply, once an athlete reaches a particular bonus benchmark, they can get paid right away. This method can also help mitigate contract disputes between players and teams where there might be slight discrepancies regarding interpretations of legal fine print, as a blockchain network’s protocols are unanimously acknowledged and protected.

2. The ability to distribute payments in different currencies (i.e, Bitcoin, Ethereum, or USDC)

Throughout the past few years, many athletes have elected to take payments or bonuses in Bitcoin or other cryptocurrencies. For example, Odell Beckham Jr., Russell Okung, Stephen Curry, and Cade Cunningham are just a few examples of notable athletes who have taken some portion of their salaries in cryptocurrency, but converting fiat to crypto can also come with challenges at times.

With blockchain, distributing payments digitally becomes a much easier process that enables athletes to elect to get paid directly in whichever currency they choose without the need to process a conversion. This is especially beneficial for the next generation of athletes who are digitally native and have an inherent interest in new technology. It also aids international athletes who might experience issues with exchanging funds for their native currency or waiting long periods of time to get paid due to organizational instability.

3. Better management of players’ IP (data, NFTs/collectible “Moments,” etc.)

Every athlete on any given professional sports team isn’t just an employee; they’re businesses unto themselves within a larger enterprise. This means all of the information pertaining to their health, intellectual property, and statistics is critical to everyone involved, including fellow athletes, teams, leagues, and sponsors. On a blockchain, all of this can be recorded permanently on a digital ledger to which all parties can have incorruptible access. In theory, this allows teams to manage and organize all data related to any given player for themselves and third parties much more seamlessly.

For example, players can have all of their performance statistics, physical assessments, and brand assets unified within one unchangeable ledger. This also would help ensure that there is no illegal access, scrutiny, or replication/theft of the player data other than for individuals like coaches, general managers, trainers, and franchise owners that the blockchain’s protocols specifically designate.

Will we see this across all sports and other competitive leagues?

So far, the relationship between blockchain technology and major sports is still new and emerging.

Conceptually, implementing decentralized technology to manage contracts in every organization across all major sports would be a game changer in the way business is conducted. Nonetheless, accomplishing this comes with a number of hurdles and systemic changes, as it constitutes a paradigm shift in how we process, depict, and store massive amounts of data.

It must be noted as well that, at least traditionally, sports leagues have been slow to adopt new technologies. And given that there is still a ton of skepticism around Web3 as a whole, it could take a while before we see any of the possible use cases implemented across all sports and leagues.

That being said — there is still a strong interest in the industry as we’ve seen an increase in the number of NFT, metaverse, and crypto partnerships in sports which is optimistic, and innovative startup leagues like Fan Controlled Football are making experimental strides on this front that, if successful for the long haul, are sure to be emulated by the world’s major sports organizations in some form or fashion.

All told, blockchain has the potential to empower individuals and groups. Whether it’s athletes, artists, or other creators, the format grants more control and more privacy over personal information and the ability to create and exchange digital assets. As sports and technology become more intertwined, it’s perhaps only a matter of time before blockchain starts to permeate the space — and authenticating and attesting contracts wouldn’t be a bad place to start.

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About The Author
Malcolm Lemmons
Malcolm Lemmons
Malcolm Lemmons former professional athlete turned author and entrepreneur. He is the founder of The Hype Report, a newsletter providing the latest stories and insights at the intersection of sports and web3. He is also a two-time author via "Lessons from the Game" and "Impact Beyond the Game." Malcolm has previously contributed to The Huffington Post.