NFTs offer a method for IP owners and creators to engage more deeply with their fans. Sport is no different. Randy Ginsburg explores how this $500 billion industry can use NFTs to drive engagement and create value for fans across the world and throughout the event lifecycle.
Since flirting with mainstream adoption in 2021, NFTs have demonstrated their ability to transform creative industries from music and art to publishing and fashion. By successfully bypassing traditional, entrenched industry gatekeepers, NFTs are putting more power and money into the hands of consumers and creators. Their impact on the sports industry will be no different.
While not obviously creative, sport is one of the purest forms of self-expression for both players and fans. Fandom runs deep and is highly emotional, creating a sense of loyalty and brand affinity that no other industry can match. Often passed down through generations, the fan-team (or fan-player) relationship is unbreakable and in many cases serves as an extension of one’s identity. No one ever switched teams because their rival's shirt was on sale.
Meanwhile, the commercial implications are enormous. The global sports market is worth over $500 billion, with much of the leagues’, teams’, and players' value tied up in intellectual property. Leveraging this IP with web3 technologies like NFTs unlocks additional revenue streams for players, organisations, and major sports leagues around the globe. And thanks to the power of secondary royalty structures that can be irreversibly tied into smart contracts, these new revenue streams function in perpetuity. But more important than ROI, NFTs give the sports industry the opportunity to foster deeper fan relationships for the long term, letting fans get closer to the action and more connected to the game than ever before.
Today, web3 technologies are being adopted by the industry's biggest players to change sport as we know it, embracing new opportunities in ticketing, merchandise, fan communities, and longer-term fan relationships.
The significance of NFTs for ticketing is made possible by the ability of blockchains to verify proof of unique ownership. Because of the blockchain’s decentralised and distributed nature, no one individual can edit its records. This immutability makes it impossible for records to be faked and provides a timestamped ledger of ownership, tracking exactly who owns what and when it switches hands.
Major sports leagues like the NFL and NBA, have begun experimenting with NFT ticketing to increase ticket value, drive attendance, and ultimately improve the fan experience. So far, NFT ticketing has taken two forms: digital tickets and ticket-dependent collectibles.
With digital tickets, fans receive an NFT ticket upon purchase that is minted on a blockchain. Last year, the NFL announced a partnership with Ticketmaster to mint tickets as NFTs, whilst blockchain ticketing platforms are also used by football teams like West Bromwich Albion in the UK and AFC Ajax, the Netherlands’ most successful club, as well as in the UK’s largest cricket venues, like Old Trafford, amongst many others.
Because these ticketing solutions can leverage smart contract technologies, sports organisations can use them more dynamically than existing solutions, such as influencing secondary markets to prevent ticket gouging. WBA used their tickets to mitigate Covid risks with tickets that only activated upon the self-certification of a negative test, whilst UEFA’s blockchain-enabled tickets for Euro 2020 only activated when the holder was near the stadium, to prevent copying.
More experimentation has occurred around ticket-dependent assets, NFTs which are activated upon scanning tickets at the game. Once a ticket is scanned, fans receive a commemorative NFT which can serve as a digital proof of attendance token that can be used as an access token and a channel through which IP owners can create more value for their most committed fans.
“Let's say Luka [Doncic] has a 30 assist game," explains Mark Cuban, owner of Dallas Mavericks basketball team, in an interview with Forty-Eight Minutes. “There are going to be 500,000 people that say they were there, right? But the reality is, the people who are actually there are the ones who get the NFT commemorating that game.”
Ultimately, Cuban added, the whole idea is to reward the fans for coming. “You can't just buy a ticket and not go. What gets you the NFT is that you actually scan your ticket. And if you go to 10 games ... there will be rewards for that,” he said. The Mavericks have experimented with both options, recently gifting fans with pixelated avatars, called MetaMav Legends, once their home-game tickets were scanned.
NFT trading cards are responsible for the largest example of mainstream adoption of web3 technologies in sport, and one of the best web3 product experiences to date. A brainchild of Dapper Labs, NBA Top Shot is a blockchain-based trading card platform built in partnership with the NBA. Top Shot allows users to collect, buy, sell, and trade NFTs of NBA highlights, called Moments. Similar to traditional sports cards, Moments vary in rarity and can be purchased individually or in packs.
Top Shot quickly became a global phenomenon after launching in October 2020, reaching $45 million in trading volume in a single day at its peak. A poorly executed flood of supply rocked the market last year, but the market should be seen as a major success of web3 technologies, and a breakout use case. The market has recently crossed $1 billion in total sales and forged a historical partnership with Magic Johnson.
Today, web3 technologies are being adopted by the industry’s biggest players to change sport as we know it.
For Johnson, it was Dapper Labs’ innovation and the opportunity for players to profit off their on-court greatness that led him to partner with Top Shot. “They’re really finding another revenue stream for these players, with their image, likeness, and plays, (so) that they can make money. That’s what I really love too — it’s not just for myself, but for all, whether that’s current or retired guys; they’re able to make some money off of the plays and different pictures that they created in their NBA careers,” he said in an interview with The Athletic.
With these learnings in hand, Dapper has inked deals with the NFL and UFC to bring these leagues to the forefront of digital collectibles and is working with the Spanish football team Real Madrid – current European champions – to “create a whole new experience layer for fans,” according to Michael Sutherland, the club’s Chief Transformation Officer. “Real Madrid is giving our fans the opportunity to invest in themselves, collect exclusive digital items, and own a piece of the online world,” adding, “it's fundamentally game-changing for the fan experience.”
Meanwhile, the sports collectibles platform Sorare has partnered with leading football sides including Bayern Munich and PSG, and recently announced a partnership with the Spanish football league LaLiga to launch digital trading cards, reflecting the quick acceleration of NFTs into the mainstream.
“It’s fundamentally game-changing for the fan experience.”
— Michael Sutherland, Chief Transformation Officer at Real Madrid FC
Looking to the future, digital wearables are likely to resemble a large opportunity for sports teams. A concept already validated beyond the sports industry by the likes of Epic Games, who sold 3.3 million wearable units in their game Fortnite, grossing over $50 million. Nascent companies like Fancurve are currently racing to define the sector in around digital sports apparel and lifestyle collectibles. As we begin to spend more time in virtual environments, the same way that fans love to rock their gear in real life should be expected to cross over to the digital world, as a way to feel involved in communities they care about and illustrate their allegiance.
Much of the beauty of sports lies in its ability to bring people together. And while the internet already made it possible to connect with fans all over the world, decentralised autonomous organisations (DAOs) are taking sports-based communities and fan clubs to new level of engagement. By making it easy for people with a shared vision to pool their resources, many DAOs have been created to change the way that the traditionally gate-kept sports industry functions.
We are already seeing DAOs take shape as modern-day fan clubs, but instead of fans watching from the sidelines, DAO members want a seat at the table. Krause House is a leading example. Sitting broadly at the intersection of sports and Web3, Krause House is a DAO on a mission to own an NBA team. With a community of 5,000 members, ranging from high-ranking tech executives to former agents, owners, and players, Krause House has already made its presence felt in basketball circles.
Most recently claiming a partial stake in the BIG3 Ball Hogs team, the DAOs assets include a sports and crypto accelerator, a venture capital fund, and sports media arms. To fund these various operations, the Krause House turned to NFTs. Through the primary sale of 2,050 NFTs, each with various degrees of scarcity and holder perks, the DAO raised a 1000 ETH war chest to tackle its biggest ambitions (around $4 million at the time of mint).
LinksDAO is built on the same idea, built on and united by the mission to buy a Top 100-calibre golf course and transform it into a modern-day country club. To fund this goal, LinksDAO sold 9,090 memberships, raising over $10 million dollars. In addition to the governance rights in the DAO that give holders the right to vote on decisions and rule changes, LinksDAO NFT holders will receive membership rights to the first LinksDAO course, discounts with partners like Five Iron Golf and Ship Sticks, and access to member-exclusive events in real life and online.
Similar to that of DAOs, many sports leagues are using NFTs as access tokens for unique IRL and digital fan experiences. The most innovative in the space is Fan Controlled Football, the world’s first professional sports league controlled by fans. Fan Controlled Football (FCF) is an American football league where fans call the plays and make key in-game decisions in real-time. Recognising the potential of NFTs as access tokens, the FCF released The Ballerz Collective NFT to enhance the digital interactivity between fans and players.
Under the Ballerz Collective, there are four separate NFT collections, one for each team. Each team-specific collection consists of 8,888 NFTs, serving as governance tokens that allow owners to vote on bigger team decisions, like their name, logo, and even who to draft. Ballerz Collective NFT holders will also gain access to future league initiatives like collectible digital wearables and a play-to-earn mobile game.
American football legend Tiki Barber explains just how game-changing this is. “As the league grows and the number of participants increases, having these early tokens gives fans power — from team management decisions to priority in-game mechanics. Where else can a fan have that kind of influence and impact?,” he asked Decrypt.
Web3’s integration into sports is still early, but the excitement around its potential is palpable and justified. Between the new revenue streams, use cases, and intimate fan engagement, NFTs and web3 are gamechangers for the sports industry, and the game is only just kicking off.
The rise of extended reality has prompted new hope for high street retailers, with brick-and-mortar stores racing to implement new ways to reach their customers. Randy Ginsburg investigates the technology promising to transform how we shop.
AI-generated models are storming the fashion industry, but what happens when the images that shape our social norms are made by algorithms? Randy Ginsburg explores what AI fashion models mean for human uniqueness, the future of niches, and how the fashion industry plans to keep up.
When a Harvard Senior Fellow told Mark Fielding that every university dean was a fan of the metaverse, he had to find out how they're using extended reality to reinvent university education. What he learnt was how classrooms without walls can transform the university experience.