What are Socios?
The concept of the Chiliz platform itself may be a new one, but the foundation we’re building off of — our belief in the intrinsic power of creating ‘fan controlled’ & ultimately even ‘fan funded’ organizations in sports and esports, isn’t.
To be honest, its not even close to being new. The football world — specifically La Liga — has been doing it for more than a century with their club Socios system of team ownership. We just know how to run with a good idea. After all, Real Madrid — collectively owned by its 90,000+ ‘Socios’ — holds the distinction of being the most valuable team in any sport globally. Full stop.
How Socios became a ‘thing’, and how it all works:
In the early portions of the 20th century, when modern football was just forming in Spain a majority of teams in the region opted for Socios based ownership. Which makes sense. It’s a great way to spur fan engagement and develop a fan base for teams that are just starting out.
Real Madrid was no different. In fact in this team’s case — Socios ownership meant that things like the board of directors were elected and set before the club itself was officially founded. This was bottom-up fan control.
1992 brought with it an end to the wide practice of having sports clubs registered as member-owned non-profit organizations. According to spanish law all professional football clubs were forced to re-register as privately owned PLCs.
There was one loophole though — any clubs that could auditably prove that they’ve been operating at a profit for 5 years running would be exempt. Only 4 made that cut: Real Madrid, FC Barcelona, Athletic Club Bilbao and Club Athletico Osasuna.
The system is simple but giving credit where credit is due, the good folks at sportskeeda have already done a great rundown of how the Socios themselves do business, looking at Real Madrid: Check out the full story here:
Our bullet points for a quick re-cap below:
- Socios pay 123 euros a year for the privilege of membership — but those in the club for 50 years or more get a free pass.
- To be considered for induction, a nominee must be vouched for by 2 active Socios.
- Membership gives Socios voting rights in the team (in practical terms meaning they can vote in club president & club board elections) & easier access to tickets.
- Voting is done strictly democratically — with popular voting held to elect both the board and the team’s president.
- There’s rules — and Socios can be penalized for not following them.
Where Chiliz plans to build on these types of foundations — a short and incomplete list:
- Tokenizing voting rights takes away the infrastructural overhead traditionally enacted ‘fan control’ schemes can fall victim to.
- Chiliz is attaching monetization methods for sports/ esports organizations based on trading of their Voices (their tokenized voting rights changing hands between fans). This mitigates one of the central drawbacks to the Socios system — of more popular teams being able to get a significant financial advantage over newcomers and smaller organizations.
- The Chiliz platform is open to inter-organization liquidity. Teams don’t just need to depend on the size of their direct fan base to create an active voting base. All they need to do is exist within their own competitive ecosystem & hold their own on the battlefields of their virtual vertical. Being on the chiliZ platform means they are exposed to every user (aka potential fan).
- Chiliz plans to offer direct fan funding to both emerging and established esports and sports brands. This means fans aren’t just responsible for helping to manage their favorite organizations. In the future they can be active actors in making those organizations come to life in the first place — and reap voting and ownership benefits as a result.