Could a DAO buy a sports team?

“DAOs are gonna be the  NFTs of 2022”…says a lot of buzz in the crypto world. Is it true though? While I’m not here today to tell you about trends for 2022, I have written about them if you’re interested. I want to talk specifically about DAOs, and whether they could buy a sports team. Looool.

Now, if you know anything about me, you know I don’t give a rat’s ass about sports. For one, they’re too sweaty, for another, they’re too politicized, and lastly they’re probably rigged. But whatever, you can like sports if you want. Regardless of how dumb I think they are, a DAO buying an NBA team would be perfectly hilarious and yet cool at the same time. Hear me out.

How DAOs work

Maybe you didn’t just alight on God’s green earth knowing what a DAO is. It’s okay because no one older than five did. The first decentralized autonomous organization was created and called The DAO in 2016. Since then, with the rise of DeFi, people have begun to see that decentrally structured and governed organizations can operate in a much more democratic way than traditional, top-down structures. And it’s not just lip service. Smart contracts and governance tokens actually enable distributed control—unlike the CEO who says, “This is a horizontally structured organization!” all the while making unilateral decisions.

DAOs work by stakeholders buying in at varying levels through NFTs, governance tokens, or other kinds of tokenized membership. They can then participate in the guiding, decision making, and the overall direction of the organization by voting and participating in the community. The finances of the organization are also collectively controlled. 

There are different types of DAOs with different goals, but an interesting use case is collectively owned assets—like an NBA team, for example.

Collectively owned and managed

Until now, you’d have to be a billionaire to own a sports team. I have heard that there are some teams owned by multiple people, but again, I’m no sports expert. The point is you need to be disgustingly rich to own a professional sports team like an NBA team. But here’s the vision of DAOs: collectively owned and managed organizations.

The little guy could reach beyond fantasy sports to group buying power and owning an actual stake in their favorite teams. This collective ownership wouldn’t just have to apply to things like sports teams, though. ConstitutionDAO tried to buy a copy of the US constitution. You could also buy a Super Bowl ad to promote NFTs or a golf course. The sky’s the limit, theoretically. The only question yet unanswered is whether one of these DAOs will actually pull it off.

How would a DAO buy a sports team?

You may be wondering exactly how it would go down, this buying of an NBA team. Luckily, Decentral Publishing CEO, Michael Hearne, sat down to talk with Commodore, the Co-Creator of Krause House DAO, which is masterminding a plan to buy the Memphis Grizzlies.

Commodore explains that  the reason they want to do this is to give the little guy “Real ownership and real control of assets that traditionally have been really for a very, very select amount of people.” Commodore describes several key steps that he and the rest of the Krause House DAO are trying to accomplish.

Raise $2 billion 

First of all, by decentralizing and harnessing collective buying power, DAOs are leveling the playing field. Fans buy “Ticket” NFTs to gain membership and provide funds to the DAO. It will require a butt-ton of money. A few billion to be exact. Oof, that’s a tall order, even for crowdfunding. One of the most publicized projects, ConstitutionDAO, only raised $47 million, which is well short of TWO BILLION. Just saying.

Build trust

The next thing Krause House needs to do is build trust. Just because DAOs have decentralized governance doesn’t mean it’s majority rule. It’s not a tyranny of the majority in properly working DAOs, according to Commodore. The best DAOs have a dynamic hierarchical structure with sets of individuals in charge of certain things and authority in their sphere. Not only does the community need to build trust with each other, they also need to build trust in the sports world and in the eyes of the NBA powers that be.

Get educated

Speaking of NBA gatekeepers, there is definitely a question about whether the NBA Board of Governors would even approve the proposition of a DAO buying a sports team and maintaining collective ownership and management through community governance. Even if the DAO has enough buying power, running a successful sports team isn’t just about money—it requires knowledge and expertise. Crypto-minded people can often be skeptical of “experts,” but harnessing collective knowledge and education is crucial to success.

Get small stakes

Commodore also says part of the plan is to create sub-DAOs in a parent structure to work on other projects that will build credibility and gain smaller stakes in other, smaller sports teams. For example, a sub-DAO could buy a local soccer team and manage it, or a partial stake in a professional team to begin building trust and experience. These smaller stakes assets that still operate on collective ownership can demonstrate the governance model.

Rally the fans

By expanding the ability to buy-in and participate in a sports team that you like, the fanbase for any given team could expand exponentially. Instead of a geographically limited fanbase, teams could generate loyalty from anyone participating in the DAO’s governance, anywhere in the world.

Roadblocks

While Krause House has lofty dreams that would be unprecedented if it can pull them off, there are still some big hurdles to overcome. In addition to the possibility of the NBA rejecting a proposal out of hand, and the difficulty of raising the money, there are others. Structuring a dynamic DAO in theory is easier than doing it in reality. We’ll see if it happens. Plus, the fans might revolt. Just because there are crypto fans who are sports fans doesn’t mean all sports fans are crypto nerds. Until the concept is proven and people become used to it, there will likely be cultural pushback and skepticism.

Conclusion

It’s no secret that I could care less about sports. But I think things like buying an NBA team with a DAO that allows collective ownership, increased buying power for the little guy, and community governance is an interesting idea. I also think it will require a lot of coordination, planning, and maybe a bit of luck. We don’t know yet if any DAO, Krause House or otherwise, can pull this off, but if they do, I’ll be watching.