The NFT market has become huge in the last few years due to several factors. If you’re unfamiliar with NFTs, they are non-fungible tokens. This means that the assets are not like for like with another asset and may have increased value due to rarity.
To understand fungibility, let’s use an example of the United State One Dollar bill (USD). One USD can be traded for another, which is the definition of fungibility. Both hold the same currency value and can be spent the same way. NFTs are designed to be different in appearance and unique. Some well-known NFTs include Crypto Kiddies and Bored Apes.
Some of these unique tokens are selling for thousands of dollars because they are unique or due to scarcity. This is a new concept not normally associated with digital pieces. Scarcity has helped drive the prices of NFTs higher to make them more collectible and sought after in the Web3 world. The goal with scarcity for NFTs is to increase demand for these collectible digital assets, which are highly valued when associated with a specific player due to their relatively short tenure on a pro team.
How NFTs Are Used In Sports?
NFTs have been used in various applications, including tokenizing different types of securities or assets. These assets include fractional ownership of the real estate, rare physical artwork, and even barrels of 25-year-old Scotch whisky. Athletic apparel companies such as Nike and Adidas have created tennis shoes with corresponding NFTs to show ownership or provide access to future limited product releases. Professional sports teams have found value in promoting teams with NFTs. This new avenue of promotion helps create a stronger bond between a fan and their favorite team as they don’t want to miss out on ways to feel closer to the organization.
International soccer teams have been the first and have had the most prevalent use of NFTs. These include AC Milan and Paris ST. Germain, an Arsenal. AC Milan considers NFT loyalty tools that allow the owners and fans to participate in unique events and fan experiences.
NFTs from the Warrington Wolves, a team that plays in an English Professional Rugby Team league, is being used to send personal messages from players to the NFT owners and will throw a physical t-shirt in as part of the perks of owning the NFT. Multiple players from the team create the NFTs that allows the fan to create a collection and even perform trading of the NFTs, like the trading of the physical playing cards. Professional sports teams have seen that creating NFTs can raise as much as $130 million dollars and create new revenue streams.
One example of a successful NFT program in professional sports is the National Basketball League (NBA), based in the United States, and its partnership with Dapper Labs. In March 2021, the sales of the NBA’s Top Shot NFTs totaled $45 million. These NFTs consist of video reels that may be footage of a slam dunk or a wild three-point shot and are associated with a unique identifier.
Each team in the NBA only releases a limited number of these NFTs to create scarcity. The minted video reel NFTs are assembled into packs and sold as a series. Gamification is also an element of the Top Shot NFTs, as fans can use them to compete in challenges and win more NFTs or physical products such as t-shirts and jerseys.
The video reels that are transformed are normally the most current season, but as the years go on, the older NFTs become more valuable with time. An example of a sought-after reel is a three-point shot that Carmelo Anthony completed when he placed for the Portland Trail Blazers. The NBA has a large collection of video footage that can be used to mint these NFTs.
Another example of a professional sports league utilizing NFT technology is the National Football League in the United States. In 2021, the NFL decided to team up with Dapper Labs, that same NFT marketplace the NBA utilizes. This NFT program is called NFL All Day.
The NFL has taken the use of NFTs to other levels; as with the video reels that the NBA has created, the NFL has done the same and has named “moments,” plus has categorized each of these moments as common, rare, legendary, and ultimate.
With each one of these categories has a smaller number of NFTs minted per classification. For example, a Common moment may have as many as 10,000 NFTs minted per classification, equating to about 90% of all NFTs minted on the platform. As opposed to an Ultimate moment may only have a mint count as low as single digits.
The NFL has also started minting collectible tickets in partnership with Ticketmaster to pay tribute or commemorate specific games. Some of these games include the season opener, which usually drives a lot of excitement and anticipation since there is a significant amount of time between the end of last season and the new season. This allows the fans to have a collectible that will last forever on the blockchain and possibly prevent the destruction or loss of the same physical ticket.
NFTs Attached To Specific Athletes
NFTs have netted a large number when they represent professional athletes or teams. An NFT that was an action photo of Lebron James is valued well over $20 million and will give the owner unfettered rights to it as long as they own it.
NFTs have evolved to become very sought-after items for fans and collectors of sports memorabilia alike. NFT marketplaces have seen valuations grow into the millions, and there is still an enormous thirst for more.