How Sports DAOs Can Offer Fans a Piece of the Action

It’s a company run by everyone at once. It’s a group chat you buy into with crypto. It’s the future of business. It’s free to create and scale at internet speed. It’s a decentralized autonomous organization: a DAO.

Whatever your level of understanding of DAOs, what makes or breaks one is its mission, vision and community engagement.

Adam Miller is the CEO and founder of MIDAO. This article is part of Culture Week.

It’s not just companies that achieve greater success with a stronger, clearer vision. The construction of the “why” and its achieved alignment with its target audience is what makes some DAOS live on and some DAOs fail.

A DAO lives and dies by its first 100 to 1,000 members who connect with its vision so deeply, it becomes a part of them. It’s these “superfans” who light the fire that leads to the DAO scaling.

Where else do we see superfans acting as the fire pushing something skyward? In sports, of course. From Bayern Munich to Paris St-Germain to National Basketball Association teams such as the Golden State Warriors to National Hockey Leagues teams including the Boston Bruins and beyond, it’s the twelfth man that rules.

Without fans, these sports teams would not even exist. We refer to them as “we” or “us” as if we are truly a part of them. Studies have shown that our self-esteem is linked to how our favorite teams are doing.

Sure, we are not on the field with them. Still, we react as if we are, feeling so proud of wearing our favorite team jerseys or distancing ourselves from the team when things aren’t going well. In the end, it all comes down to our most basic need to belong. Sports teams give us a natural community to be a part of, just as social clubs do – and now with Web3, DAOs do, too. But with one major difference.

Despite our deep connection, we have no meaningful say in what our favorite sports teams do. We don’t vote on what players they acquire in the offseason. We don’t decide when coaches get replaced. And, importantly, we don’t share in any financial upside.

Using DAOs, all this can change. We seek out ways to get more skin in the game, and now a tool has come along that can practically make us part of the teams we love. The future of sports is fan-run, and DAOs can help make that happen. Even so, we’ll have to start small. Most of the world doesn’t even understand why DAOs matter as an organizational paradigm, let alone as the future of fandom.

To date, we’ve seen BuytheBroncos and Krause House, both of which were created to buy sports teams and make them truly fan-run. Karate Combat announced it launched a DAO for fans and handed team governance over to the DAO. However, while these DAOs are still operational, none has managed to reach its goal just yet.

The reason why is simple. Before we can have fan-owned teams, we need the organizations running the teams to understand what DAOs are and how they can benefit from them. In order to achieve this end, it can be useful to learn from other DAOs that have been successful in their on-the-ground efforts thus far, and that have begun to establish standards and frameworks for education that can provide us with useful templates.

Ukraine DAO offers one such example. Its mission is clear: “Help Ukraine win the war against Russia.” As the group has expanded, it has built out a powerful library of onboarding materials for those interested in joining its efforts. And the kicker? Essentially no crypto knowledge is required for entry. Translators, disinformation experts, donors and, most importantly, any Ukrainian interested in working directly to save their country are welcome.

Because of their success in attracting non-crypto individuals, numerous other DAOs are seeking to emulate their approach. From the social impact space to the future of sports teams, the more that we seek to put crypto on the back end, the more widely used and successful DAOs will be.

To do that, we’ll have to develop industry-standard frameworks for different types of DAOs, such as investment DAOs, service DAOs and, of course, sports team DAOs. In other words, we need DAOs-as-a-service, but before that we need accelerators, cohorts and meetups focused on educating those with zero crypto knowledge.

This means individuals and institutions need to get involved.

The more we educate the world on why DAOs matter, the wider the potential market of DAO participants becomes.

As DAOs scale, it’s not too off-base to hope for a day when we’ll be able to vote on whether or not to sub out a struggling player or whether or not to go for the gold when the game is down to the wire. Just as the Ethereum network continues to show us the way toward a fairer internet, DAOs will show us the way toward the future of being a fan.

For the teams themselves to buy into greater fan involvement, they will have to see DAOs not as a threat but as an opportunity to increase their engagement of their fanbase and, potentially, their long-term success. Before we have fully fan-run teams, we will have teams in which fans simply have direct voting power through DAOs over certain issues, such as perhaps what vendors to choose for the stadium or what newly designed jersey to wear.

A common retort to the vision for sports team DAOs is, “You think fans can make good decisions for the team? There is no way a democratic vote can produce the same outcome as professional management!” And these skeptics may have a point.

But the point is that by allowing fans to have more skin in the game, they can take ownership of whatever the results may be – for better or worse. And in the meantime, the team will be able to attract more fans to its base, win or lose, simply because by giving democratic-like power over management to fans through a DAO that team will be more engaging and more fun. I would even expect it to start drawing support away from other teams.

Just as people would rather live in a democracy than in an autocracy, fans will want to support teams that are more democratic. Sports team DAOs are coming.