Football and Cryptocurrencies

Abstract

This article investigates the emerging segment of the cryptocurrency market related to football fan tokens (FFTs)—digital assets used for engagement with professional football clubs around the world. More specifically, the authors study the investability of FFTs from the perspective of risk and return. They find that FFTs generate a whopping 150% return on the first trading day. This return is significantly larger if the FFT market cap is higher, the FFT offer price is lower, the football team displays better historical performance, and the team is located in a relatively small metropolitan area with a high GDP per capita. They also find that in the long run, FFTs severely underperform all major crypto benchmarks, including NFT, DeFi, Meme, and bitcoin. Moreover, the returns to FFTs tend to be highly volatile (160% annualized). Intriguingly, they show that the real-life performance of football teams does not affect the contemporaneous market performance of their FFTs.