Everywhere on the web you hear about NFT as the latest hype. But what is that actually? The abbreviation stands for Non-Fungible Token and describes an irreplaceable, digital protected object. That doesn’t really help to make things easier to understand, so here’s an example: Imagine you’re a passionate collector of stickers for a football album. The logo of Manchester United is available a thousand times and you can easily swap the logo you own with another, identical ManU logo. This sticker would therefore be “fungible”, i.e., replaceable. However, the sticker of Robert Lewandowski only exists ones and no matter with which sticker you would swap, you would always get something completely different – this makes this Lewandowski sticker irreplaceable, i.e., “non-fungible”. As the owner of this unique sticker, you have a certificate that says it is in your possession and that it’s existing only once.
An NFT is therefore a certificate that proves that the object belongs to you and that it only exists once as an original and that everything else floating around on the net are just copies. The information about that is stored in a decentralized directory called blockchain (what that is exactly and how it works is explained by Reuters in this article). “The beauty of NFT is that ownership is so transparent. Blockchain technology makes it very easy to verify who owns what”, says Saorabh Sharma, Director Global Business Development at SPORTFIVE. He and his colleagues have been working with the topic of NFTs and Blockchain for a long time and have in-depth knowledge about it.
You can find more about blockchain in sports in this article by us.
Since the beginning of 2021, Google searches on NFT have risen rapidly. In February, auction house Christie’s sold the most expensive NFT to date: “Everydays: The First 5000 Days” by digital artist Beeple features numerous tiny images of his digital paintings and has been sold for nearly 69.3 million US dollars. This auction put Beeple in the top three of the most expensive living artists. The famous “Doge” meme was also sold as an NFT in June by the owner of the dog for just under 4 million US dollars, with part of the proceeds donated to several charities.
Sport has also discovered the business with NFT – but you don’t have to be a millionaire to participate in the hype. One of the most successful cases is NBA Top Shot. Together with blockchain game developer Dapper Labs, the American basketball league has created a kind of trading card game in which you can buy highlight videos from NBA matches.
These Top Shot Moments are either available in packs, which resemble the trading card packs from childhood, or on the online marketplace, where users can sell their moments. Like with football stickers you can collect, some clips are very rare and therefore extremely sought-after. At just under 230,000 US dollars, a LeBron James moment from the 2020 finals is the most expensive video clip sold to date. Currently, almost 1.1 million users are registered and according to Dapper Labs CEO Roham Gharegozlou, NBA Top Shots has recorded sales of 700 million US dollars in less than a year.
Sorare is another case. The French blockchain start-up is a kind of football manager game where you can buy and sell players’ cards as NFT using the cryptocurrency Ethereum. “In this case, classic trading cards have been digitalized and connected them to a game, which makes it more attractive and fun to invest in NFT.
Users can also win prizes and reach higher and higher levels. The more money you spend, the better cards you get and the more likely you are to win – real money even”, says Sharma. Currently, 198 officially licensed clubs are participating, including Borussia Dortmund, Bayern Munich and Real Madrid. The players are divided into different classes: there is Common, Limited (with 1000 cards of a player per season), Rare (100 cards per season), Super Rare (10 cards per season) and Unique, in which players such as Erling Haaland or Robert Lewandowski are only available once a season. You can also resell you cards for top prices at Sorare: in March 2021, Cristiano Ronaldo’s “Unique” card changed hands for just under 265,275 US dollars.
More and more clubs are jumping on the NFT bandwagon. Young Boys Bern, for example, is the first football club in the world to sell digital autograph cards as NFT via its own merch shop. Fans don’t even need cryptocurrency for this but can buy it like classic merch. Those who have collected certain sets or even all the cards can expect rewards such as tickets to matches.
SPORTFIVE has also already brokered deals in the NFT business. The agency has facilitated an exclusive licensing agreement between NFL star Christian McCaffrey, running back for the Carolina Panthers, and the new NFT platform NFTSTAR. Together, McCaffrey and NFTSTAR will develop exclusive collections and sell them to fans.
But what exactly makes NFT so interesting for rights holders? “Digital space is infinite. There are no physical laws, no gravity – nothing. You can do anything you want, the only limit is your own creativity. And having no limits is what makes NFT so special”, says Saorabh Sharma.
Besides the limitless possibilities, there is also the financial aspect. According to a study by consulting firm Deloitte, NFT in sports business are expected to turn over more than 2 billion US dollars in 2022. Up to 5 million fans worldwide are expected to own an NFT by then. Therefore, great perspectives for all rights holders and brands who want to enter the new business.
As with any other technology, there are ups and downs that make critics doubt it. But in the end, Saorabh Sharma is sure that NFT and blockchain will prevail: “I believe that this new technology will have the same impact as mobile phones and smartphones did back then. It has completely changed our culture: how we behave, how we talk, how we interact – how we use the world.” This development will not only affect the art market and the sports business. You can already buy real estate and land as NFT, musicians present their music in the metaverse and even luxury label Gucci is selling virtual sneakers.
“Even if you personally don’t want this shift towards blockchain and NFT”, says Sharma, “it will happen and is in full swing right now. And it will change all our lives.”
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