Football transfer crowdfunding? No thank you!
Update: This article has been amended following feedback from GiveInSport. They've since clarified they will refund money, less fees, in the event that a club does not accept donations. They've also updated their progress bars, which now show the proportion of the suggested target reached (as of 10 December, the most funded club had received 0.03% of its goal. Finally, the company has confirmed it will charge VAT on its fees, but it is reviewing how this is charged after Moneywise pointed out they are overcharging on the tax. I remain unconvinced of the value of the service, and have new concerns that the site's terms and conditions have been amended without notification on at least one occasion.
Sharing technologies are on the rise. Uber is turning the screw on traditional taxi drivers, AirBnB is disrupting the hotel and B&B space, and projects such as Kickstarter are threatening to undercut traditional investors in start-up companies.
Indeed, crowdfunding platforms are springing up all over the place, so quickly that you might worry we’re in the middle of a fad.
Step forward, new sports ‘crowdfunder’ GiveInSport.com – which looks distinctly fad-like. The company’s mission is allow football supporters to “play an active role in the transfer market by supporting their club financially.”
GiveInSport will – for a 10% fee – take your money and your transfer list, and pass it on to your football club, providing it meets GiveInSport’s criteria. Yes that’s right, you can give your hard-earned cash away to your football team and receive a big fat zero back in return, except for the fact that your ‘donation’ might have gone towards buying a player. Talk about burning your cash.
What’s worse is that the website’s terms and conditions state that cash handed to a club should be used to buy new players or retain existing ones. So your cash could simply be going in the back pocket of players already at the club, whether you rate them or not. As if the likes of John Terry, Rooney et al aren’t paid enough already.
But do clubs need it? I doubt it. The money that could be raised through donations is a drop in the ocean compared to the money that’s already pouring into the game. Plus, it’s not even clear whether clubs will take your donations as there’s a lot of paperwork for them to do to earn a relatively small amount. When questioned, GiveInSport’s spokesperson admitted just one football club has signed up so far. The company has been two years in the making.
As for the fans, well, consider that Gareth Bale was bought by Real Madrid for a reported £77 million, on a six-year contract. Even ignoring wages, that works out at £24 a minute, based on his playing record at the time of writing. For £50 then, you could get a replica shirt, a ticket to almost any match in the country – or a warm and fuzzy feeling that you’ve paid for two minutes of Gareth Bale’s transfer fee.
Moreover, this way of gifting money to your club looks expensive – the site takes 10% of all cash raised, to cover transaction costs, VAT and GiveInSport’s cut.
The site looks sketchy – funding bars that look like the ones you’ll find on Kickstarter have a completely different meaning to on the more established crowdfunder. Instead of saying what percentage of the target has been reached, they “indicate likelihood” of receiving funding. The site says there is an 86% chance that Manchester United will raise £70 million pounds. I'd put the true likelihood at about 86% less than that.
Is it legal? The company does say it’s approved by the French regulator. Which just makes me wonder what aspect of the company has been approved.
After you have donated, the club needs to fill out a detailed report to receive any donations from GiveInSport. If the team doesn’t, GiveInSport.com will refund donations, but reserves the right to keep its fees.
This is madness in my eyes. The economics of football has never compared well to most industries, with the only real winners being the players and their agents. Asking fans to hand their cash to rich clubs that are already squeezing fans through inflated ticket prices and over-priced merchandise strikes me as cynical in the extreme.
There might be a minor argument for helping tiny clubs (perhaps the lowest leagues in the UK and non-league teams) through donations but this is not the way to go about it, as the better-supported clubs will get the lion's share of donations, while the less popular ones will feed on the scraps – making an uneven playing field even more unbalanced.
If you want to help your football club, why not treat yourself to a ticket or an official shirt or scarf, rather than handing your hard earned money to a third party that will skim off 10%.