BitcoinLast week, the Sacramento Kings announced their intention to begin accepting Bitcoin, a digital currency, for game tickets and team merchandise purchases made via the club’s online store. The move is part of what majority team owner Vivek Ranadivé calls ‘NBA 3.0’, i.e. the league’s focus on next-generation global technology

[1].

What are the pros and cons of adopting technology like Bitcoin, and what does the Kings decision to do so mean for professional sports?

The Good

One of the major benefits of adopting a platform like Bitcoin is the positive PR that comes with being perceived as a forward-thinking organization. Sport business doesn’t have a reputation of being particularly cutting-edge when it comes to technology, which has enabled the Kings to carve out an enviable niche for themselves as an innovative, “next generation” club by introducing their acceptance of Bitcoin, their use of Google Glass, etc.

Another “plus” to the club’s Bitcoin adoption may be financial. Rather than charge a percentage fee for each transaction, Bitcoin charges a flat fee, which could be advantageous for the Kings if use of the currency becomes widespread[2].

The Bad

There are few major downsides to the Kings choice to begin accepting Bitcoin. Though there are detriments to Bitcoin overall – lack of loss-prevention mechanisms, potential technological hurdles, slow acceptance by major companies, etc. – none of these present a significant issues for the Kings.

However, one potential negative could be cost vs. benefit. The Kings are implementing BitPay technology to enable Bitcoin payments, and if very few customers elect to utilize the system, the time (and money) spent implementing it may not result in a meaningful profit for the Kings. Even this is a minimal issue, though, as use of Bitcoin will likely increase over time, thus resulting in a slow but eventual positive financial outcome for the Kings.

Another more significant issue could be the potential for negative PR. For example, Charlie Shrem, the CEO of major Bitcoin reseller BitInstant, was just arrested on money laundering charges directly linking Bitcoin resales with the Silk Road, an online drug marketplace [3] . If legal issues like Shrem’s begin popping up with increased frequency, the public may begin to question the system more intensely, and wonder why the Kings were eager to get involved with a questionable enterprise.

The Future

It seems unlikely that dozens of professional US-based teams will rush to follow the Kings example and begin accepting Bitcoin tomorrow.  For one thing, it’s quite possible that many team executives have never used Bitcoin, and may not even understand what Bitcoin is/how it works. As such, the implementation and acceptance of the currency likely isn’t a top-of-mind focus.

Also, Bitcoin has only recently begun to get accepted by major retailers (Overstock.com became the first “mainstream” adopter just last week)[4]. Once it gains a bit more traction and consumers can pay at Macy’s or Target with Bitcoin, the tide may turn.

And finally, the recent negative PR surrounding Bitcoin (and tying the currency directly to enterprises like the Silk Road) may make even those interested in the concept hesitant to become early adopters until the perception of Bitcoin improves.

Down the road, use of Bitcoin in sports will likely become more of a story. As payment options continue to evolve, teams will have to evolve too, and take the steps necessary to make it as easy as possible for their customers to pay for goods and services in whatever method they most prefer. For now, though, Sacramento will likely remain the “king” of Bitcoin in the US sports business landscape.