Alpine’s ‘Fan Token’ – A Risky Strategy?

by Martin Blessing

Formula 1 sponsorships have come a long way from the days of cigarette manufacturers, such as Marlboro and Rothmans. Nowadays, sponsorships broadly follow a less contentious route (barring the ‘guerilla’ style advertising, as witnessed with Mission Winnow from Ferrari). Formula 1 cars are awash with logos from oil companies, cyber-security firms, software brands and even watches.

But lately, a very specific type of sponsorship is gaining traction in the Formula 1 world. Cryptocurrency.

We’ve seen a number of cryptocurrency companies, affiliating themselves with certain teams in recent years. Ranging from the cryptocurrency itself (Tezos with McLaren and Red Bull) or an exchange platform (Crypto.com with Aston Martin). We’re starting to see the phenomenon take a firm footing within the sport.

The latest partnership in the crypto-racing-sphere is between Alpine and Binance. Binance is the largest cryptocurrency trading platform in the world (by way of daily volume). Certainly a coup for Alpine and a strong branding statement.

So what makes this different from the other sponsorship arrangements in place?

Alpine have announced that with this sponsorship, they will be creating a ‘fan token’. What is a fan token? I hear you ask.

A fan token is a relatively new concept, aimed at giving fans the opportunity to feel as though they have a slice of equity from their favoured team, as well as being involved in decision making processes by way of exclusive surveys. Barcelona football club, would be the best example to use.

For The Fans

Back in 2020, Barcelona announced they would be offering a fan token available for purchase. The concept was simple. Offered at an initial ‘flash sale’ price of €2 per token, there was a supply of 600,000 up for grabs in the first phase. After this initial sale period was over, the fan token would then go live, available to buy on varying trading platforms. The price would then be dictated as per supply and demand. There is an ultimate supply of 40,000,000 of tokens available. An example of the benefits of owning a token, would be the opportunity to cast votes on things like the goal celebration song used.

Another concept used by Barcelona, is ‘burning’. This would entail ‘burning’ a number of tokens, based on events that occur within a match. For example, 20,000 tokens would be ‘burned’ for every goal scored during a game. The benefit of this, is if more tokens are lost from the ultimate supply, the more valuable the purchased tokens are, due to rarity.

Binance Trading Platform

So how would this work for Alpine?

The concept would be relatively similar to that of the Barcelona token. The initial ‘flash sale’ will be offered over Binance’s Launchpad. An initial supply of 400,000 will be offered at a rate of 1 Alpine token equal to 1 US dollar. A maximum supply of 40,000,000 would then be available, after the initial offering.

It would then likely be assumed, there would be an element of engagement and decision making from the token owners. It is also yet to be seen whether Alpine would adopt the ‘burn’ method, based on their qualifying and/or race performance.

Responsibility

On the face of it, die-hard Alpine fans will see this as an interesting way to feel engaged with their team. In an era where NFT’s (Non-Fungible Tokens) are growing in popularity, the opportunity to own some form of equity, with a price based on performance, would feel like a no-brainer.

But what if the price slides the other way?

Alpine 2021 Formula 1 Car

We’re living in a world, where certain vices should no longer be advertised for good reason. Cigarettes, alcohol and gambling are no longer promoted in the way in which they once were. The reasons? Health implications being the main driver. Cigarettes and alcohol need no introduction in to the lack of health benefits they offer. Gambling is also problematic for it’s addictive nature and serious implications to someone’s money management.

Which is why I’m now surprised cryptocurrency has been given the green light, in a fairly unchallenged way. Sure, there are numerous advisories when entering the world of trading cryptocurrencies. Various waivers and checks to ensure you’re comfortable in partaking in this world. But then again, the same could be said for gambling? So infusing the world of cryptocurrencies and these fan tokens, opens up the prospect that many fans may be getting in to this risky venture, for little more than a want and desire to be a hardcore fan.

If I were a fan, interested in purchasing an Alpine fan token, I would take serious time and consideration to understand what I was signing up for. This is essentially a stock that’s being purchased. There is no clear difference between purchasing a fan token, or a share from a company listed on the FTSE 100. There are considerable monetary risks in venturing in to something as stock purchasing, not to mention the increased volatility that the cryptocurrency market brings.

Related Posts

Leave a Comment