Smart Contract Transfer Exchange Platform: Player Transfer

If the smart contracts described in the Player Ownership section could be implemented the next logical step would be to put a workflow in place that would allow for the transfer of a player’s registration from one club to another in exchange for payment. The nuances of how this occurs can be complicated, which is something to be discussed in the specific case studies, but fundamentally the transaction boils down to a simple exchange of a players registration for cash.

Let's look at an example of how this could happen if Chelsea were to want to buy Steven Gerrard.

Step 1: Initial Status

The initial status of the transaction would be the same as detailed in the Player Ownership section where a smart contact agreement exists between Liverpool and Steven Gerrard.

However if we factor in another club in Chelsea we can look at how the ledger would work across teams onboarded on to the platform.

Smart Contract View:

SCTP Ledger View:

Here we can start to see how the level of information that is made available to the ledger can now be used to create a digital transfer market where Chelsea can use the ledger to make an approach for Steven Gerrard.

Step 2: Chelsea Make Offer

For the time being, and to be concise about the interaction between clubs here let's take the FA out of the picture.

We now have 3 parties in play with different levels of information.

  1. Liverpool

  2. Chelsea

  3. Steven Gerrard

The next step in this scenario would be for Chelsea to make an offer to Liverpool to assign the player's contract to them with updated terms in exchange for payment.

This could be done via Chelsea initiating a new type of smart contract that we can refer to as a Transfer Contract.

A Transfer Contract would be structured differently to a Player Ownership Contract. This contract would be a proposal from one club to another that would follow the following workflow (using extremely vanilla scenario to demonstrate):

  • Chelsea create smart contract

  • Liverpool accept offer

  • Contract goes to player for acceptance

  • Player accepts and contract completes

  • On completion the existing Player Ownership Contract between Liverpool and Steven Gerrard is archived and a new Player Ownership Contract between Chelsea and Steven Gerrard is created.

Chelsea create a Transfer Offer smart contract which lets Liverpool know that they would like to buy Steven Gerrard.

Liverpool have an accept, reject or update option to respond to the contract.

At this point we can start to look at the potential benefits of a smart contract platform if we think about how would this contract appear to Steven Gerrard himself.

Should he see this offer? Is this a level of transparency he should have?

Technically Chelsea should ask permission to speak to Steven Gerrard but as we know this is where transfer activity gets murky.

The question here is, if a system like this was to be designed, would an offer like this be intentionally not shared with the subject player? And if the answer to that is (as I suspect it would be) 'yes', the follow up is, why?

Without wanting to digress too much, let's assume the offer itself is not shared with the player in this example until its accepted by Chelsea.

It's also worth pointing out that the offer does not necessarily have to be a cash offer, it could be something like a request for permission to speak to the player. Again, without wishing to digress too much at the endless potential options within the details, in this example, let's assume it's cash.

Step 3: Liverpool accept the offer from Chelsea.

This completes the transfer offer contract and creates a new smart contract to allow Steven Gerrard to negotiate personal terms with Chelsea. This workflow would follow the following process:

  • Liverpool Accept Offer

  • Transfer Offer contract is completed, on completion two new smart contracts are created:

    • Player Club Smart Contract between Chelsea and Steven Gerrard.

    • A Payment Contract between Chelsea and Liverpool.

Step 4: Steven Gerrard and Chelsea Negotiate Terms

Chelsea and Steven Gerrard will have the ability to negotiate on (amongst other things) the salary details via a propose/accept mechanism.

This would work as follows:

  • Chelsea propose a salary of £50,000 per week and Steven Gerrard would have the ability to accept, reject or counteroffer.

  • On making a counteroffer the contract changes status and the accept, reject or counteroffer options become available to the original party, Chelsea.

Step 5: The Transaction Completes

On the completion of the new Player Club Smart Contract 3 things happen:

  1. The status is updated on the original contract between Liverpool and Steve Gerrard updating it with the logic that Steven Gerrard has accepted a new agreement thus closing the contract between Steve Gerrard and Liverpool.

  2. The status is sent to the Payment Contract as an approval of the payment to be sent. Provided both clubs have also approved this contract it can trigger an off ledger payment, the ledger will reflect reflect the transfer of cash has been made.

  3. The new Player Club Contract assumes its position as the current status of the relationship of Steven Gerrard and Chelsea and we are effectively back at the first stage.