NFTs and Fan Token: how blockchain will disrupt football
With major sporting events being postponed or taking place without a public audience, the pandemic has pushed the sports industry to find new ways to make money and connect with fans.
Plus, while cheering on your favorite team live in the stadium will probably never be replaceable, blockchain-based tokens have allowed a new wave of fan support.
What if you could get exclusive offers or have a vote in team decisions? These are just two examples of what so-called “fan tokens” can do.
What are fan tokens?
With Fan Token, we refer to cryptocurrencies (falling into the category of utility tokens) that provide access to goods and services related to the club on behalf of which they are issued.
These goods and services usually consist of discounts on tickets and merchandise, as well as the possibility, for token holders, to give their opinion on some marginal decisions of the club such as the choice of the new team uniform.
Issuing fan tokens allow football clubs to retain and monetize their fan base without making any changes to their corporate structure and without falling into the legal (and economic) burdens that would entail the issuance of financial products
In Italy, currently, Milan, Rome, Juventus, and Novara Calcio have made use of this type of cryptocurrency. To achieve this result, they signed a partnership with Chiliz, a tokenized fan engagement platform with a registered office in Malta, to launch their fan token on the Socios.com fan engagement app.
But fan token offerings have been around for a while. The trend really took off last year when major football team FC Barcelona launched their token in June 2020. They were sold out within two hours, generating revenue of €1.2 million.
FC Barcelona said the partnership deal with Chiliz was part of its global expansion strategy and it firmly believes that the initiative will significantly promote engagement between the club and its global audience.
After Barcelona other teams have decided to adopt the same strategy and, as of now, more than 20 football teams offer fan tokens, and the list is growing.
The opportunity for NFTs in the sport industry
Non-fungible tokens (NFT), crypto certificates for digital works, have already shaken up the art market. Now they’re setting out to conquer the sports world. While the NBA is currently selling digitally signed video clips of game highlights for hundreds of thousands of US dollars, Nike is planning to sell digitally certified sneakers to verify the authenticity of shoes, which they call CryptoKicks.
NBA Top Shot: the future of the trading card market
NBA Top Shot is a blockchain-based platform that allows fans to buy, sell, and trade numbered versions of specific, officially licensed video highlights.
In a joint venture that began in July of 2019 between the National Basketball Association, the NBA Players Association and Dapper Labs have come together to create NBA Top Shot, a revolutionary new experience in which the best plays and unforgettable highlights become collectibles that you can own forever.
How it works
The NBA cuts the highlights and then Dapper Labs decides how many of each highlight they are going to sell and number them. They place each highlight into digital packs, just like regular trading cards, and sell the packs on the official NBA Top Shot website for prices ranging from $9 to $230. The pack prices depend on the quality of highlight, the stardom level of the player, and the exclusiveness of the card. Once you purchase a pack, those highlights go into your encrypted, secure highlight wallet to be “showcased” or re-sold on the NBA Top Shot Marketplace.
One might wonder, but how many people actually exchange these collectibles online? Well, the numbers are staggering.
The market frenzy of the beginning of the year brought NBA Top Shots sales volume in February around $219 million, up 400% on the previous month. A steep decline followed in the next few months, but volumes are still above the $34 million marks.
The same trend in volumes was experienced by average sales for NBA Top Shot collectibles. After staying below $50 for each month during 2020, they reached a peak of $180 in February. Again, they saw a decline from May and are now trading around the same level as of December 2020.
The most expensive NBA Top Shot NFTs are for LeBron James moments, particularly the “From The Top” set. On March 21, one sold for $210,000, setting a new record.
In addition to NBA Top Shot, other very successful NFT projects are the OG Ethereum NFT, CryptoPunks, a collection of 10,000 artworks depicting pixelated punk-heads, and Sorare, a fantasy soccer game using NFTs to represent individual players.
As NBA Top Shots, CryptoPunk sales have gone parabolic during the first part of the year. The average sale has gone from $12,000 in January to $69,000 in March. And monthly sales of CryptoPunks, which were in the low thousands for most of 2020, skyrocketed to $96 million in February.
Sales volume dropped more than 80% in June (hovering around $ 10 million) but still remains a notable milestone for pixelated faces.
However, it must be noted, CryptoPunks has a very small user base. Most months, fewer than 100 people purchase these crypto collectibles against more than 50 thousand people for NBA Top Shot. This is understandable given the origin of the two products.
After basketball and digital art, NFTs spread also in soccer. Launched in March 2019, Sorare is a fantasy soccer game using NFTs to represent individual players. Each week, you build a lineup of players, with their real on-pitch stats translating into in-game points; your goal is to beat other users in the leagues by amassing the most points each week.
Activity on Sorare started picking up in the last few months of 2020, breaking above 1,000 monthly buyers in November. This growth rapidly accelerated this year, rising significantly in both February and March with volumes exceeding $15 million with more than 8 thousand monthly users.
The new frontier of collecting
As you may have already understood, the whole experience can be compared to collecting stickers. The only difference is that everything happens in digital format.
We’ve all collected something once in our lives and it’s hard to forget the thrill of opening a package, hoping to find the rarest piece in the series. The new generations will be less and less attracted to physical goods (like it or not) and it is presumable that collectibles can become a completely digital experience.
If we think of traditional physical sports cards, we have known the huge and crazy US market for years. Last year, almost 5 billion dollars were reached on eBay alone, in the trading of sports collectibles, obviously, the NBA’s collectibles are among the most exchanged ones.
These very new technologies are looking for and finding fertile ground right here for their technological development and an increasingly possible mass adoption.
At the moment the tokens’ prices and trading volumes have declined, raising questions on whether the NFT frenzy was simply a bubble. It is too early to draw conclusions, what is certain is that the seed has been planted and the market will determine how this phenomenon will evolve.
