Crowdfunding for sports

Crowdfunding is a financing opportunity that expresses its potential in very diverse economic sectors, and for the past few years this has included sports. The crowdfunding for sports proves to be a valuable tool to address the chronic lack of funds that many sports associations experience, to fund specific projects, to rethink the business model of sports teams, but also to redefine the link between clubs, associations and their supporters and fans.

Sports and community

Sports is an area that particularly lends itself to crowdfunding dynamics because of some of its inherent characteristics.

Sports is yes competition and physical performance, but it is also a means of social gathering and inclusion as well as entertainment. In the age of digitization, moreover, the participatory component of sports is magnified out of all proportion, because one can feel part of a sporting event and support a team even from home.

The level of involvement that sports are capable of eliciting has few equals. The fans and followers of a sport can undoubtedly be called a community, and of the most loyal ones. Fans of a certain sport and fans of a specific team are willing to go to great lengths to provide support, to enjoy the sporting event, to express their preference. They empathize with the athletes, feel strong emotions in relation to their performances, emulate them. And all of this plays a decisive role in the success--even economic success--of a sport, a team, or an athlete.

What we have just described is also The sketch of the perfect crowdfunding investor: a person who follows and admires the company's activities, feels directly involved in them, and wants to be a part of them and talk about them with other people.

Fans as investors

As we know, customers or potential customers of a company are its best potential investors. Fans are "customers" who independently express a desire to have a direct connection with their sports club or athletes of choice. Hence the great opportunity of the crowdfunding for sports: engaging them to make them actively contribute to the achievement of their club's goals.

Not only that, this Active involvement of sports communities can also be useful in generating a more positive and participatory impact on the area in which sports clubs operate. 

Crowdfunding for sports: examples

Crowdfunding models applicable to sports are many: the different types of crowdfunding 

offer several options to meet the specific needs of sports teams and associations. The growing demand for this type of operation is evidenced by the success of Tifosy, the first professional platform dedicated to the sports crowdfunding, born in England but also active in Italy.

Donation crowdfunding

Donation crowdfunding, based on voluntary contributions with no expectation of financial return, is perfect for initiatives related to social or nonprofit causes, such as youth programs, athletic scholarships or social inclusion projects through sports. But that's not all: the Irish men's field hockey team launched a donation campaign to raise the resources needed to participate in the Rio Olympics in 2019, while German club Kickers Offenbach used a donation-based crowdfunding platform to raise funds needed to cover financial debts and avoid bankruptcy.

Reward crowdfunding 

Reward crowdfunding, in which supporters receive rewards or benefits in exchange for their contribution, is a model Unsuitable for funding sports activities, because in these operations there is no physical product to be produced. For projects that are limited in scope and/or based on well-defined target communities, however, it can be an option, which is hybridized with Donation crowdfunding: for example, the Estonian soccer team Rumori Calcio, founded by an Italian to establish an expatriate team in Estonia, where many Italians and people of numerous other nationalities live, has resorted to it. The Canadian women's field hockey team, on the other hand, has raised funds on the Wemakeachamp platform to succeed in the 2020 Tokyo Olympics, offering supporters rewards from autographed postcards to professional field hockey sticks.

Lending crowdfunding

The Lending crowdfunding in the world of sports, as well as in other sectors of the economy, is most suitable for companies that are already structured and capable of sustaining debt. Many soccer teams have taken advantage of it, especially in the form of the Mini bond. Here are some examples:

• Frosinone Calcio in 2017 raised 1.5 million euros in loans by placing 5-year mini bonds with a coupon of 8%, with the aim of renovating its stadium.
• Genoa Calcio did the same in 2023, raising over 5 million euros and offering a 9% coupon.
• Two English rugby clubs, Harlequins and Wasps, have raised £15 million and £35 million, respectively, through Minibond placements.

Serie A teams such as Inter and Milan have also resorted to Mini Bonds to clear their debts, although not using the crowdfunding tool.

Equity crowdfunding for sports

Equity crowdfunding allows fans to buy a stake in the team or club, becoming a shareholder. It is a fast-growing solution, especially for professional soccer teams, and it is the most congenial for sports companies. Indeed, the involvement of followers is maximum, and for a fan the idea of being able to literally own a piece of his favorite team is a great boast. Equity crowdfunding, therefore, represents a powerful way to Raise capital and strengthen fan loyalty at the same time, without any loss of governance for the company.

The model of theequity crowdfunding for sports now has numerous examples, especially in the world of both Italian and foreign soccer:

• AFC Wimbledon in England has raised more than £2.3 million for the construction of a new stadium.
• English club Watford has raised about £4 million in equity crowdfunding to support its growth and aim for the Premier League.
• Abruzzo's L'Aquila 1927 soccer team from 2018 to 2024 launched and successfully concluded multiple equity crowdfunding campaigns, mobilizing the local community first to save itself from bankruptcy, then to grow and move up the ladder, now reaching Serie D.
• La Veneto Clivense soccer team between 2021 and 2023 raised more than 720,000 euros from about 600 investors with the first equity crowdfunding campaign and about another 200,000 with the second campaign. The goal was to promote soccer based on the authentic values of sports to re-energize fans for healthy involvement and achieve promotion to Serie D (goal achieved).

The inspiration, on the other hand, comes from a model already applied by teams that are anything but minor: in the German Bundesliga, 50%+1 of each club's shares must be held by different partners in order to maintain independence from large outside investors. Here then is the Bayern Munich, for example, sees 75% of its shares in the hands of more than 300,000 members, including a large number of team fans.

The rewards of sports crowdfunding

In the crowdfunding campaigns for sports i reward take the form of awards that stimulate fans' desire for closeness with their favorite teams and athletes:

• Autographed t-shirts
• Merchandising
• Discounts on tickets and subscriptions
• Meet&greet with teams and athletes
• Participation in retreats or trainings
• Name of supporters engraved in sports centers.

Benefits of crowdfunding for sports clubs and associations

Sports teams and associations are increasingly struggling to obtain bank credit and sustain themselves with revenues from sponsors, tickets, television rights, and merchandising-this applies to the smallest as well as the largest. The crowdfunding for sports offers sports companies benefits that go even beyond financing. Here are the main ones:

1. Diversification of income

Traditionally, teams have relied on sponsors, television rights, and public contributions. Crowdfunding adds a new dimension, allowing access to funds directly from fans, reducing reliance on traditional sources.

2. Community involvement

Supporters are no longer limited to being passive spectators, but become active participants in the project. This strengthens the sense of belonging and stimulates emotional involvement that can turn into long-term loyalty.

3. Visibility and marketing

Well-designed crowdfunding campaigns attract media attention, amplifying the reach of projects and the notoriety of those promoting them. This allows the fan community to grow and consequently further increase revenues. Marketing and sales strategies implemented during a crowdfunding campaign also become an asset for companies: a good example of this is the fan engagement strategies.

The crowdfunding for sports, in conclusion, is gaining more and more popularity and can become a real game changer, not only in soccer, but also for other sports that enjoy less popularity and therefore less economic support. This can help build a more diverse, inclusive and profitable sports landscape for both sports clubs and their followers.