How the sports business can use NFTs
What are NFTs? What's behind this trend? And why does it offer great opportunities for the sports business?
All over the internet, NFTs are being touted as the latest big thing. But what actually is an NFT? This abbreviation stands for “non-fungible token” and describes as non-replaceable object that is protected digitally. That’s probably as clear as mud – so here’s an example: imagine you're a passionate collector of stickers for a Bundesliga album. There are a thousand Hertha BSC Berlin logos and you could easily swap your logo with an identical Hertha one. This would mean the sticker was “fungible”, or able to be replaced. However, there is just one Robert Lewandowski sticker, so no matter what sticker you swap it with, you’d always get something completely different. That means this Lewandowski sticker is irreplaceable, or “non-fungible”. As the owner of this unique sticker, you have a certificate stating that you own it and that there’s only one of it.
Mara Kottke
Published on October 12th, 2022
In this Insight:
And what exactly is that?
In other words, an NFT is a certificate that proves you own the item, that there’s just this one original of it – and that everything else floating around online is merely a copy. The information about this is stored in a decentralised directory known as a blockchain (this easy-to-read article reveals what exactly this is and how it works).
“The great thing about NFTs is that ownership is so transparent. Thanks to blockchain technology, it’s a breeze to verify who the owner is,” explains Saorabh Sharma, Director of Global Business Development at SPORTFIVE. He and his colleagues have spent a long time exploring NFTs and the blockchain and are bona fide experts in the field.
The trend is growing... and generating record figures
Google searches for NFTs have rocketed since early 2021. In February, the most expensive NFT to date was sold via auction house Christie’s: “Everydays: the First 5000 Days” by digital artist Beeple depicts numerous tiny versions of his digital images. It made just shy of 69.3 million US dollars, putting Beeple in the top three most expensive living artists.
The well-known Doge meme was sold by the dog’s owner as an NFT in June for slightly under 4 million US dollars, with some of the proceeds donated to various charities.
And what does this mean for sports clubs?
Sport has discovered NFTs, too – but you don’t need to be a millionaire to get involved. NBA Top Shot is one of the most successful cases. This American basketball league worked with blockchain game developer Dapper Labs to create a kind of card collecting game where you can buy highlight videos from NBA matches.
These “Top Shot” moments are available in packs (like the collectors’ packs we had as children) or on the online marketplace where users can sell their moments. As with collecting football stickers, some clips are very rare and very sought-after as a result. Selling for just below 230,000 US dollars, a moment depicting LeBron James in the 2020 finals is the priciest video clip sold to date. At present, 1.1 million users are registered with Top Shot. According to Dapper Labs CEO Roham Gharegozlou, NBA Top Shot has seen turnover of 700 million US dollars in less than a year.
The trend is moving into sport
Growing numbers of sports clubs and football teams are jumping on the NFT train. Young Boys Bern, for example, is the first football club in the world to sell digital autograph cards as NFTs via its own merch shop. Fans don’t need cryptocurrency for this – they can buy them like regular merchandise. Once you've collected particular sets or even all the cards, you can enjoy rewards such as tickets to games.
Similarly, SPORTFIVE has already concluded deals in the NFT domain. For example, this agency brokered an exclusive licencing agreement between NFL star Christian McCaffrey, running back at the Carolina Panthers, and the new NFT platform NFTSTAR. Together, McCaffrey and NFTSTAR will develop collections and sell them to fans.
And what's the future looking like?
NFTs also hold appeal for rights holders: “The digital space is endless. There are no laws of physics, no gravity – nothing. You can do anything you want. The only limit is your own creativity, and not having any limits is what makes NFTs so unique,” says Saorabh Sharma.
Alongside these limitless possibilities, there is also the financial aspect to consider. According to a study by consulting firm Deloitte, NFTs in the sports sector will see sales of more than 2 billion US dollars in 2022. Up to 5 million fans around the world will own an NFT. In other words, the future is bright for all rights holders and brands looking to step into this new field of business.
"Even if you don't personally want a shift towards blockchains and NFTs, it’s going to happen – it’s already in full swing. And it’ll change our entire lives."
Sorabh Sharma, Director of Global Business Development at SPORTFIVE
