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Funding: Crowd control

At a time when public sector budgets are under pressure and grants are wrapped in red tape, crowdfunding offers an attractive option for clubs, individuals and teams who need capital investment

by Tom Walker, Leisure Media | Published in Sports Management 07 Mar 2016 issue 115
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Tifosy founders Fausto Zanetton (left) and Gianluca Vialli
Tifosy founders Fausto Zanetton (left) and Gianluca Vialli

An increasing number of athletes and sport clubs and organisations – from grassroots to elite level – are turning to crowdfunding when facing a big plan and a small bank balance.

In the past two years, money pledged online by the general public has sent athletes to the Sochi 2014 Olympic Games, funded facility projects for professional sports clubs and secured the future of community clubs by providing improved spaces.

The types of crowdfunding available are divided into four categories. Donation crowdfunding provides a straightforward financial contribution to a project, while reward crowdfunding – perhaps the most popular among sports projects – offers donors something tangible in return for their money, such as a piece of memorabilia, a product or an exclusive experience with an athlete or club.

There are also financially incentivised methods. Loan-based crowdfunding allows a club or organisation to borrow money from people by paying interest, while equity-based crowdfunding offers a share or stake in the business in return for investment.

While most of the major crowdfunding platforms – Kickstarter, Indiegogo and Crowdfunder – all welcome sports projects, there are now a number of sports-specific platforms to consider: Pledgesports, Rallyme, MakeAChamp, Dreamfuel, Pursu and Tifosy.

VALUE CREATION
The global crowdfunding market is now worth more than US$30bn (€27bn, £21bn) annually (according to research by Massolution). The UK is a clear market leader in Europe in the sector and of the total US$2.5bn raised through crowdfunding across Europe in 2014, nearly US$2bn was generated in the UK.
“Crowdfunding has gained huge momentum,” says Irish entrepreneur Richard Pearson, who launched the PledgeSports.org platform in February 2014. “Equity crowdfunding in the UK alone tripled to reach £84m in 2014 and there’s no ceiling to this industry.”

GOING POMPEY
For smaller professional clubs which lack the financial riches of a Manchester United or Chelsea – but match them for ambition – a crowdfunding project can provide a vehicle for success. One of the largest ever UK projects was completed by English League Two club Portsmouth FC. The club raised £270,000 through crowdfunding, enabling it to build a permanent home for its youth academy in 2015 and increasing its ability to attract and develop young talent.

Using the specialist football funding site Tifosy as its platform, the club went down the crowdfunding route in response to feedback from fans for the organisation of more fan-funded projects.

“We kept fans up to date all the way along and made sure the interest never waned ,” says Portsmouth FC’s Colin Farmery, who project managed the initiative. “Our campaign was perfect for crowdfunding because it was a clearly defined, concrete project.”

Portsmouth’s campaign also proved that, while clubs can always rely on passionate supporters to put their hands in their pockets, contributions to a worthy cause can also come from unexpected sources.

“We received contributions from 39 countries for the Portsmouth campaign,” says Fausto Zanetton, co-founder of Tifosy. “It shows that football fans care deeply about the game and will often choose to help out another club in need.”

GRASSROOTS
For community clubs, a successful crowdfunding project can be transformative. The Bury Broncos Rugby League Club in Manchester raised £3,800 on crowdfunder.co.uk to help convert an old cricket pavilion into a new sports hub. The amount needed was too small to warrant a funding bid, so a crowdfunding campaign was deemed the best option.

According to sports marketing consultant and academic Alan Seymour, crowdfunding is a great way for smaller clubs and community groups to get projects off the ground. He points out, however, that in a crowded space, a project has to stand out to have any chance of success.

“Crowdfunding is all about awareness, connections, networks and – above all – distinguishing yourself from the crowd,” he says. “You need a strategic plan for your crowdfunding. First impressions count, so it should be approached as if making an elevator pitch.

Seymour suggests making the rules of engagement clear from the start. “The key is succinct summaries of who you are, what you need, where you’re going and how it benefits all stakeholders,” he says. “Creating a win-win scenario is the priority."

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