Liga MX clubs do not have any legal impediment to create and sell non-fungible tokens, also called NFTs, for their acronym in English. These products, which are already a reality in elite competitions such as the NBA, are not illegal in Mexico and any team can profit from them as long as it owns the image rights and clearly stipulates the rights and obligations of both the buyer and the seller. .
“Today, (in Mexico) there is no regulation beyond the intellectual property rights regarding the brand or denomination that is going to be used in the NFTs or in terms of specifying the rights and obligations that it acquires. the buyer, as well as the general obligations (of the seller) so that there is no deception, but they are generic issues in contractual and intellectual property matters. If you are looking where the figure of the NFT is regulated in our Mexican legislation, you will not find it because it is not regulated ”, Juan Francisco Torres Landa, partner of the international law firm Hogan Lovells, explains to El Economista.
Torres Landa, who serves as legal advisor to the new foreign investors of Necaxa, led by Al Tylis and Sam Porter, emphasizes to this newspaper that the fact that until now there is no regulation on the issue of NFTs in Mexico does not mean that are illegal.
“The fact that it is not regulated does not mean that it is illegal, in our legal system there is a principle of legality marked in articles 14 and 16 of our constitution that says that individuals are allowed to do everything that is not prohibited, then, It is possible to innovate in many things, such as NFTs (…) This is part of a principle of contractual freedom and business development for individuals ”.
Necaxa opened the door to this issue by auctioning an NFT for around 1.3 million dollars, a new form of business that Chivas has also joined. Being a recently created issue not only in sports, but in general, there are still no legal regulations in Mexico, but the Rayos decided to clarify their situation because it involves a property sale.
Necaxa: buying the NFT does not make you an owner
Necaxa is the first team to put the issue of NFTs on the table in Mexico. At the beginning of June he announced on his website that he was auctioning 1% of the property, however, the lawyer clarifies that whoever buys this percentage will not have any direct legal relationship with the club, so he cannot be called an owner.
“It will not be because Necaxa will not have any legal relationship with that person, the relationship will have it with the (foreign) partners, with the American entity, so it is an indirect relationship. If that person (whoever buys the NFT) decides to come to our country and see the team, they will surely give him a ticket in a box or something like that, but legally speaking there is no relationship (direct with Necaxa) ”.
It all started six months ago, describes Torres Landa, considered one of the 13 most influential lawyers in Mexico by the magazine Poder y Negocios. At that time, conversations began between the US investment group led by Tylis and Porter and the Tinajero family, owner of Necaxa.
The investment group, which includes Tylis, Porter, Eva Longoria, Mesut Özil, among other characters, is called NX Football LLC (limited liability company) and formally acquired 50% ownership of Necaxa as of June 1, although this situation was approved by the assembly of Liga MX from May 24.
Hogan Lovells advised the foreign group, while Galicia y Abogados, as well as Ana María Salazar, advised Necaxa (Salazar is the club’s lawyer). Torres Landa describes that it was a six-month process “with meticulous care” that included a series of steps: a legal audit, corporate and regulatory studies on how to carry out the transaction and do everything “in strict adherence to the legislation applicable to our country.” .
Since the sale was finalized and announced by Mikel Arriola, president of Liga MX, it is when the NFT portal arises that auctions a 1% property for about 1.3 million dollars with a form of payment in conventional money and not in cryptocurrencies, Hogan Lovells assured this newspaper.
But Torres Landa clarifies that 1% of Necaxa shares are not being sold, but 1% of 50% of the shares of the American investment group, which is why he emphasizes that the buyer will not have a direct legal link with the club, much less may be called co-owner.
He explains that the entire sales process will be carried out in the United States, so Mexican laws have no interference and that, in addition, the purchase of that 1% “will not damage that 50-50 structure owned by the Necaxa in Mexico ”. In other words, whether the NFT is sold or not, the legal owners will continue to be the Tinajero family and the NX Football LLC group in equal percentages.
He also assures that the issue has already been clarified before Liga MX, which released a statement the same day that the announcement of the sale of 1% was made, stating emphatically that “the shareholding of a club is not subject to any type of exchange. or purchase by any means or form of payment other than those recognized in our regulations ”, that is, a new owner was not allowed through an NFT sale.
In this sense, Torres Landa points out that the Liga MX statement is right, but clarifies that in the case of Necaxa there will be no new owner via NFT, since the new ones are those that have already been approved by the assembly, the NX group Football, and even adds that the Tinajero will continue to be the operational directors and who will represent the club in future meetings of the league or the Mexican Soccer Federation (FMF).
Faced with this explanation, the lawyer confirms that the MX League will not be able to prohibit Necaxa from selling this NFT: “No, and it is not a matter that there had been a negotiation (with the league), it is simply that the regulation does not apply because it does not it has an extraterritorial effect on what the foreign company does. Someone could say that there is a change of control that affects the original authorization under which (foreign) investment was allowed, but this is not the case, there is no impact whatsoever and the FMF has no major objection ”.
Those interested in the NFT of Necaxa
According to statements by co-owner Al Tylis (cited by Sportico), in the first 10 days of the 1% auction, more than 400 people from 11 countries have registered their interest in buying Necaxa’s NFT: “This is a new class of assets in which we are creating the first of its kind ”, mentioned the businessman, who also has shares in DC United of the MLS and in Swansea City of the second division of England.
Although the process will be carried out in the United States, there is no rule that prevents a Mexican (or Mexican company) from acquiring the Rayos NFT, highlights the lawyer:
“They can do it as long as they abide by the rules that are provided in the call, so that there is no misinterpretation that this is a Mexican offer. It is not, it is not forbidden for Mexicans, but if they want to participate they have to submit to a procedure abroad and therefore to the laws that regulate these issues in the US, because this is not an offer under the terms of the law of the stock market in Mexico ”.
According to Tylis, Necaxa’s NFT website has received more than 50,000 visits in its first 10 days, sparking interest in an unpublished token that could raise its price (to around $ 1.3 million) in just a few years.
The lawyer Torres Landa, who has closely accompanied Tylis, Porter and the rest of the Necaxa investment group, guarantees that these actions are “100%” within the framework of legality: “They are people who are in the middle, they do not come to improvise, his idea is to take advantage of all that experience and his contacts for the benefit of the team and, therefore, of the investors themselves ”.
He adds that a potential market of 35 million first, second or third generation Mexicans in the United States promoted the purchase of investors with 50% of the Rays:
“It is a matter of growing synergies and adding so that both organizations (NX Football and the Tinajero family) push for the best performance of the team and that will result, which is legitimate, in increasing the value of the investment with better rating and market penetration. American (…) The Necaxa fans will also benefit because their team will have a better projection, better signings and perhaps, in the future, a championship ”.
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