Currently, the vast majority of non-fungible token (NFT) purchasers are accustomed to the fluctuating fortunes of the turbulent cryptocurrencies community.
This has left a vacuum in which critics are querying what the long-term use cases actually are for a digital asset that, while being represented by a unique code on a blockchain, can ultimately only exist in a digital space.
But while multi-million-dollar digital artworks and gaming avatars have dominated the headlines this year, the sports industry is beginning to offer signposts for a future in which NFTs become a seriously exciting fan engagement proposition for rights-holders.
Two of the most established brands in the sports NFT sector currently are football-focused Sorare and NBA Top Shot, supported by Dapper Labs. Both Sorare and Dapper Labs, which has since struck partnerships with LaLiga and the NFL, completed nine-figure funding rounds earlier this year, and both are accessible to the average sports fan.
Through NBA Top Shot, NFTs can be snapped up with US dollars, rather than crypto, essentially as collectables for fans. In September, Dapper Labs chief executive Roham Gharegozlou revealed most NBA Top Shot customers use their credit card, rather than crypto, and the majority of the transactions on the marketplace are for less than $50.
Meanwhile, with Sorare, gamification plays an important role, with the trading cards of individual footballers used in a fantasy sports set-up.
Over-emphasising these arguably softer use cases of these NFTs, though, ignores the role that simple fan passion can play in ‘owning’ a special, once-in-a-lifetime sporting moment or image.
For example, Capital Sports Media chief executive Tim Mangnall ponders: How much interest would be generated among Leicester City fans for an NFT clip of the team being presented with the English Premier League trophy following their ‘5,000-1’ miracle triumph in 2016?
Capital Block, a division of the Capital Sports Media agency, has built on an initial partnership with Galatasaray by teaming up with a number of other Turkish and European sports clubs and brands to help launch NFT initiatives.
According to Mangnall, while the opportunity of additional income for rights-holders such as sports clubs and leagues is clearly attractive, it merely scratches the surface.
“It should not be viewed as solely a revenue-making opportunity, although it is a new income stream at zero cost for clubs,” he says. “The real opportunities for rights-holders lie in fan engagement. It is about looking at the digital assets that can be offered and then creating a chance for a fan to own something unique.
“Of course, you can make a digital copy of an NFT, but there is only one truly unique version of it on a blockchain. It is like test-driving a Rolls Royce versus owning one.”
For a rights-holder, the process of creating an NFT begins by working with an agency like Capital Block to review and identify assets that could be converted into such items – including images and footage under the club, league or organisation’s intellectual property.
“We do a deep dive into the assets they have – and what could be turned into NFTs – and discuss a number of different projects. Then we will explore the best marketplaces that can support the launch, promotion and execution in the best possible way,” Mangnall adds.
“Different blockchains offer slightly different benefits, but that is where we come in as an agency, as we can find the right fit. We work with the rights-holder to identify whether they are seeking revenue, legacy, engagement – or perhaps just want to reward members or VIPs. Then we are in a position to create the NFTs, making it as seamless and hassle-free as possible for them.”
Capital Block typically does not charge an up-front fee as part of the NFT creation process, but rather takes a cut of the sales value of the NFTs, although the rights-holder retains the “lion’s share”.
Given their tradeable nature, the clubs and Capital Block secure percentages of future sales of the same NFT. Sellers’ fees often range from between 1% and 10%, depending on the marketplace and, while NFT values can go down as well as up, there is a clear potential for long-term incremental revenues.
“When we speak to clubs about their engagement strategies, we implore them: remember these are fans, and not merely customers,” Mangnall adds. “That should be behind the thinking of these NFTs being created – and clubs, leagues and organisations need to think about their promotional strategy surrounding and beyond the drops.
“The benefit for the fan is engagement and involvement that is far beyond their wildest dreams. It allows them to own something that is part of the history of their passion.”
Crucially, the concept of NFTs appears to have increasing buy-in from sports rights-holders themselves, and sports stars past and present have become investors in the technology. Sorare’s backers include famous football names such as France national team star Antoine Griezmann, Spanish ace Gerard Piqué and ex-Germany international André Schürrle. NFL legend Tom Brady is the driving force behind Autograph, a sports celebrity-focused NFT platform.
Mangnall believes there are significant NFT opportunities in terms of ticketing for sporting events, as well as kit launches and digital matchday programmes, with the prospect of virtual experiences for fans – as part of the ‘metaverse’ – in the years to come.
“Sport is a completely natural fit, but we are still a while away from mainstream adoption,” he says. “In the coming years, I’m sure you will see the next Amazons, Googles and Microsofts emerge from this space.”