The company Haalo Technology wants to transform the sport digitally and earn money with it. Tens of thousands of crypto investors and the SG 09 Wattenscheid as a flagship project are meant to support this venture. With the help of a million-dollar investment and technology, the SportsTech start-up wants to lead the fourth division football club into the Bundesliga and make it the most digital club in Europe. Is this just crazy or one of the most exciting sports business cases in Germany?
The DNA of Haalo Technology GmbH lies somewhere between Hawaii, Hamburg, Wattenscheid and the wide, difficult-to-grasp world of crypto currencies. The following story shows how this all fits together, which could become one of the most exciting SportsTech cases in this country.
The name Haalo is originally from Hawaii and means sport. The tech company Haalo Technology was founded in Hamburg by Peter Jaeger his three co-founders. The computer scientist and business economist worked in various management positions for IT and technology companies during his career, including Hewlett-Packard (HP), IBM and most recently for Microsoft for six years. As a member of the executive board of Microsoft Germany he helped to build up the sports business for Microsoft. Partnerships with various Bundesliga clubs were concluded under his leadership, one of them with Hamburger SV.
Jaeger is not only an IT expert and business economist, he is also a football fan and has a season ticket for HSV, whose home games he regularly visits with his two sons. He knows the Volksparkstadion and he knows what works in German Bundesliga stadiums — and what does not.
Like so many digital managers in his profession, Jaeger is “convinced that sport is becoming more and more entertainment”. And in his opinion you should not have to queue at a sausage stand or at the security check for minutes before the game. Likewise, he cannot understand that decision-makers of football clubs want to ban beer runners or wifi in the stadium, because they fear that the actual product — football — could be in danger. For the former Microsoft man, the competitors of a Bundesliga club are not the other clubs in the league, but Netflix, Xbox or Sky. He says, “This way of thinking is better internalized in the US. Here in Germany it is often a bit dreamy. “
Four digital business fields
Jaeger is convinced that technology and digitization can fundamentally change sports. But he also knows that “the sport is only at the beginning of digitization”, and that’s exactly what he wants to use for his business.
Haalo has set itself the goal of supporting sports institutions, i.e. clubs, associations, but also sponsors holistically in the digital transformation. The agency concentrates on four business areas, two of them being “Fans” and “Venues”. For example, the questions include: How can sport be made tangible for fans on the ground, but also for people who are not in the stadium? How can comfort be improved in order to attract new target groups? For women and children for example, there are not a lot of reasons to go to the stadium with their husbands or fathers anymore.
Jaeger believes that digital products can help solve these problems. “Nowadays, the fan always gets the same information and advertising messages,” he says. “Whether he comes by car, public transport, by bike or on foot to the stadium. Whether he is an away or a home fan or whether he is watching the game at home on the couch on Sky or on the ‘sports show’. “At this point, Haalo wants to start. Instead of communicating the same message to all fans via LED boards, cam carpet or commercials, clubs and their marketers will be able to send personalized messages and offers to their target groups using data-driven marketing.
In a healthy digital world of football, a club knows that the fan sitting in block B, row 5, seat 12 has just became a dad and is therefore planning to buy a new car. Due to this knowledge the club presents this fan the right offer of the respective car partner of his club on his smartphone. The same thing works not only with a fan in the stadium, but also one in front of the TV — at home, as well as abroad.
“Gainchanger” is the name of this product, which is also the first technology the start-up has previously programmed. When applied, Haalo benefits from a marketing share of sales that the customer achieves through technology.
Similar to “Gainchanger”, Haalo’s other business units (“Team”, “Venue” and “Clubs”) are based on Big Data, data that has been collected over a long period of time, used intelligently and individually displayed.
In the “Venue” area, for example, Haalo wants to bring (permanent) cardholders, who always have the same travelling habits for home games, to their place with the help of an app for the optimal, most convenient route to the stadium and through the arena. Because a club knows the individual consumption behavior of a single fan through the collected data, it can ask him before the game or in the half-time break by push message, if he wants to place the same order as in the past five home games. If the customer agrees, the next catering station will be assigned to him and the exact pick-up time will be communicated.
Haalo’s reasoning: Because the food and beverage order has already been paid for via the app, it does not only reduce the waiting time of the fans and thereby increase customer satisfaction, but it can also increase the catering revenue of a club. Many fans do not have a drink or a sausage in the half-time break because of a lack of time and because of long queues.
The examples can be continued in many areas: Regarding the “Team” area, Haalo promises to improve the performance of players or an entire team by using performance data (speed, run or pass data). Thanks to a corresponding application, transfer and personnel decisions should also be data-supported and thus made easier.
This product is called “Haalo Scout”, which is based on the fact that over a long observation period, data is being collected from the club´s own youth players as well as information about a large number of external players. Haalo also wants to work with streaming services such as Sporttotal.tv, using artificial intelligence to analyze the moving images and collect millions of performance data.
Jaeger explains: “A scout cannot be at all pitches. If a machine automatically collects relevant data for the scout, then that is a business model.” The computer scientist is convinced. “The longer the observation periods, the better the information. And as a result, a club has to rely less on their gut when they make decisions. The question mark gets smaller. “
Crypto financing: million-dollar ICO
Haalo wants to finance itself in the first year as a classic start-up. It had a capital increase of approximately half a million euros, due to various entrepreneurs who acquired shares in the new company. Among other things, this basic financing will cover technology, personnel and other operating costs.
Compared to the main funding, the startup financing is a joke. Haalo intends to raise a total of between 25 and 100 million euros from the crypto market, primarily within the Asian and American tech communities, through a global initial coin offering (ICO). At first, this amount sounds astronomical. But if you look a bit more closely at this financing option, the plan becomes more realistic, for example, when you consider that the last large ICO in Germany (Savedroid) had around 50 000 small investors contributing almost 40 million euros.
In principle, an ICO works like a normal IPO. The company defines its currency and the number of its coins for sale. Investors who find a business idea — here by Haalo — lucrative, buy one or more coins and thus real money flows into the account of the company. As in the venture capital market, there are also coin exchanges and exchange rates in the crypto market. An investor can also sell his coin and trade with it.
The biggest difference to a traditional stock exchange: no company shares are traded. Or to put it another way: none of the Haalo Coin investors own shares in Haalo. Basically, in a mirrored, virtual market, bets are made on a company’s ability to succeed. Be it through functioning products like “Gainchanger” or through other applications.
Jaeger says, “The successful companies are the ones that will add value to their coin. Many companies cannot do that. If I cannot do anything else with my coin, then it will be useless.” So a coin must also be applicable to other things. The more applications there are for the coin and the more attractive these are, the more the coin is worth.
A field of application can be, for example, a football tip game that Haalo wants to launch on the market — exclusively for cryptocurrencies. If a user wants to participate, he has to buy a Haalo Coin. Another thought is to finance the development of a player who today still plays in the youth of Wattenscheid 09 for example, but should become a professional player in the long run. This development can also be financed by crypto investors. Any investor who invests a portion of his or her coins in the player will benefit from him becoming a professional, be it by a share part of his transfer proceeds or a share of his salary.
The new Wattenscheid 09
Haalo intends to launch its ICO in the third quarter of 2018 and it is expected to be completed by the end of December. Until then, Haalo and Wattenscheid 09 are working on a common organizational structure. At the center of it is the Haalo Technology Holding, a limited liability company of which SG 09 Wattenscheid e. V. holds 13.5 percent through an investment company. The remaining shares of 86.5 percent are held by the four Haalo founders and external investors.
The basis for bringing the project to life and investing money in the club is, however, a spin-off of the licensed player division of Wattenscheid 09. There is already a resolution by the supervisory board for the spin-off. In order to found the new “09 Soccer GmbH”, however, 75 percent of the club members have to vote for a spin-off within the framework of a general assembly. This should happen when the ICO has been successfully implemented. Jaeger leaves no doubt that the spin-off will work. He says: “At the general assembly of all club members in July 2018 we received a tremendous positive response to the joint project.”
Haalo Holding intends to acquire 25.1 percent of the voting and financial rights of the 09 Soccer GmbH and, in return, intends to spend two million euros initially. In addition to this initial investment, Haalo plans to contribute another million euros annually — regardless of the league the club plays in — to help 09 to become successful again.
This plan is not unrealistic — at least until the 2nd Bundesliga. In comparison: The total budget of the two Regionalliga-promoted clubs RW Oberhausen and Energie Cottbus in the 2017/18 season was just over one million euros. Even the players’ budgets of ambitious traditional clubs such as Karlsruher SC or 1. FC Kaiserslautern in the 3rd league are not higher than five million euros.
The new money should not only be invested into players. In Wattenscheid great things are to be created and various subsidiaries are to be founded for this purpose.
• For example, a new youth academy will be built. The newly founded Campus 09 Building GmbH is responsible for the construction together with Cree GmbH (by Rhomberg). The construction company will finance the project, which will cost around twelve million euros, and then rent it out to Campus 09 Building GmbH. A sustainable construction is planned, including wood and renewable fuels and passive ventilation systems.
• In addition, Wattenscheid 09 could benefit from a project by the city of Wattenscheid and the state of North Rhine-Westphalia. The plan is to modernize the existing home ground (Lohrheidestadion) for around 20 million euros. In order for the site to retain its status as the Olympic training center for athletics, it is intended, among other things, to build multi-storey car parks and VIP grandstands, which could then also be used by the new campus for its own purposes.
• Upon completion, the new 5000 to 6000 square meter campus will be home to all youth players of Wattenscheid 09 and all eSport teams. The new Campus 09 GmbH will include a boarding school as well as a school offer, which will include not only classical schooling and tutoring but also digital topics, entrepreneurship and values. An important role is played by Wolf-Dieter Hasenclever. The founding member of the German party “the Greens” advises Haalo as an educational politician and develops a pedagogical concept.
• It is also planned to set up a dedicated eSport team, which will be integrated into the new subsidiary eSports 09 GmbH. Teams will be built for the most popular eSports games “Counter-Strike”, “Fortnite”, “League of Legends”, “Dota 2” and “FIFA”.
• Haalo Tech GmbH serves as an investment company and incubator, a kind of Rocket Internet for SportsTech. In this venture, all ideas, applications and products developed by Haalo will be gathered.
Europe’s most digital club
In order for the SG 09 Wattenscheid to become a best practice example for Haalo, the Hamburg start-up wants to use all its products at Wattenscheid 09: in the stadium, in the youth academy, in the training of the first team, within the eSports teams and throughout the office. Similar to the sporting as well as the financial goals, Haalo pursues a noble goal: “Within the next five years we want to make Wattenscheid 09 the most digital club in Europe”, says Jaeger and adds: “We want to have a bigger digital reach than the FC Barcelona.”
How ambitious — critics would say unrealistic — the goal is, the numbers show: FC Barcelona has a cumulative reach of over 170 million followers on the social media platforms Facebook, Instagram, Twitter and Youtube. By comparison, Wattenscheid 09 currently has 5,800 fans on Facebook, just under 200 followers on Twitter and just under 1,600 subscribers on Instagram.
Nevertheless, Jaeger does not want to be diverted from his plan. He says: “If one assumes 60,000 people invest in an ICO, then Wattenscheid 09 has 60,000 new followers in one instance. And this range will continue to spread virally. “A great leverage in his view is the eSport with the help of which he promises “fast worldwide reach”.
Digitally the most innovative club in Europe or not — Haalo’s approach is unique in the sports business: a start-up financed by a cryptocurrency trying to push a low-class club in a digital and athletic way so that it can be used as an example to get their own business up and running.
So far, Haalo is just beginning. For the business model to work, some barriers have to be overcome in the first instance. For example, the financing of an ICO, but also the spin-off at Wattenscheid 09. Above all, Haalo has to convince the first football clubs and win them as customers. If this succeeds, it could become a success story. A success story because software like “Gainchanger” is not only applicable in football but also in motorsport, basketball or tennis and therefore the company’s products can scale. And maybe Wattenscheid will play in one of Germany’s highest football leagues.
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