The real opportunities for NFTs in Sports

Hi everyone, Welcome to Issue #3 of Sports 3.0 👋

Thanks again to everyone who has subbed so far, thats now over 200 brands, rights-holders, athletes and agencies interested in the future of the Sports Industry!

Welcome everyone 👊.

If you haven’t yet subbed, use the link below, and if you think a friend or colleague may be interested - please feel free to forward on!

And with that, on to this weeks issue 👇

The real opportunities for NFTs in Sports

One of the most common questions I’ve had in this space over the past 18 months is “What can NFTs actually do?”.

So for todays issue of Sports 3.0, what are the opportunities for NFTs in Sports?

Let’s start with a handy little image 😁

I’ve categorised NFTs for Sports into 3 buckets: Collectibles, Utility based & Virtual Identity.

(Note, NFTs can be combinations of these buckets, for example holding a Bored Ape Yacht Club NFT is predominantly an identity play, but also unlocks utility to Bored Ape holder only discord channels and exclusive events)

There is a lot to go through so this will be a three part series, over the next 2 weeks we’ll talk about Utility and Identity.

We'll be discussing opportunities in these areas, potential watch outs and some handy examples - At the end of this article I even give away an idea, for free, that every rights-holder and brand should be considering!

Let’s start with Collectibles.

Collectibles

Some considerations and watch outs on collectibles:

• For rights holders, collectible NFTs could form a new category of sponsorship inventory.

• Being able to issue Art, Moments or Trading Cards as an alternative to signed memorabilia should 100% be part of your future thinking.

• Particularly where Physical to Digital Jerseys is concerned (Do message me if you are interested to hear more - I think this can be a big play)

• Issuing NFT collectibles allows access to secondary market revenues, currently not controlled with existing physical collectible agreements.

• However do note NFT collectible markets can operate in a similar way to physical equivalents, and in that sense can be more illiquid - particularly when it comes to art & photography.

• Community is still a critical factor. One common thread throughout successful examples across the collectibles space, is the power of community. Community solves the initial Cold Start Problem faced by many collections. Sorare and Top Shot would not be the successes they are today without a strong community foundation.

• As with everything in this space, always view this through the lens of 'What problem am I solving for our fans'.

• If this isn't going to add value to fans {This doesn't have to be all fans, but even a targeted segment}, reconsider the right route.

• Do not try and force certain digital collectibles upon your fans if it is not already part of the culture of the sport - it makes no sense.

Let's take a brief look at each collectible type:

Art: Generative art has been a movement in the Web 3.0 world, led by collections such as Art Blocks. Be wary if you want to create NFT art, you really need to be targeting this to an art collecting audience.

If you already know who to target within your fanbase, bingo!

🚨 Top Tip: Be wary of how many people will really care about your NFT art, no matter the sport.

I've seen many sports properties issue art based collectible NFTs, and the resale markets tend to be rather stagnant so make sure you are thinking about this.

Trading Cards: Of course for sports like Baseball and Basketball, trading cards are very much part of the culture, and likewise sticker book collections for football.

If collecting trading cards does not already form part of the culture of your sport treat this area with caution.

Instead consider how to fuse Trading Cards with gaming and/or Fantasy Sports. This can be a perfect conduit to bring this opportunity to sports where normal trading cards do not make up much of the culture.

This also creates a sticky product, ensuring users are incentivised to buy and sell player cards.

I’m a huge fan of Sorare, which is a great example of this. For a breakdown on how Sorare works, I’ve written one previously here.

🚨 Top Tip: Consider collection sizes and rarity gradings carefully - this mix is critical to driving conversation and growing liquidity in your secondary market.

Some other projects to be aware of:

- Hattricks is another Trading Card solution yet to launch but backed by OneFootball.

- Of course Panini have also developed NFT equivalent collections to their sticker books!

Highlights/Moments: Made famous by NBA Topshot, utilising ‘Moments’ enabled a dynamic take on Trading Card culture.

Top Shot were able to crack the formula of experience (it looks great) x community (creating a highly engaged audience) x culture (an innovative take on trading cards) = compelling collectibles project.

As with Sorare, Top shot realised they needed to gamify the experience so integrated challenges as part of the utility of Top Shot collectibles.

Owners of Top Shot, Dapper Labs are executional experts and are now rolling the formula out to La Liga and UFC with more properties certain to be leveraged in the future.

🚨 Top Tip: Highlights/Moments can naturally be highly visual, are there ways which you can help fans flex their collections in online and offline environments?

Photography: This is a category yet to be fully explored across the sports space, but does hold traction across the digital collectibles world and I do believe there is an opportunity here - think iconic stadiums, fans across the globe, capturing sports as a vehicle to inspire and unite.

Take a browse in Opensea's Photography category for inspiration, the 'Skateboarding Culture collection' and 'Where my Vans go' are a couple of my favourites.

🚨 Top Tip: Photography collections tend to be much smaller mint sizes - when the community size is this small it goes without saying the market will be the most illiquid of all digital collectibles.

Consider if further utility can be baked into your collection which just isn't possible with physical photography purchases.

Whilst the target audience could be slightly smaller, photography collections within sports could be very effective for engaging within a certain portion of a fanbase.

Jerseys:

Within many sports, collecting Jerseys already forms part of the culture, and with this I think there is great opportunity.

Companies such as Genuino have been executing well in the space with official licenses and fusing physical with digital.

Fan Curve and The Football Club are others who are jumping in to create digital sportswear, but also fusing metaverse fashion and gaming respectively.

🚨 Top Tip: A little story on how collectible jersey NFTs could increase the value of sponsorship inventory.

When I first started to get into the world of NFTs, this was one of the areas in which I got most excited.

I think it's because I'm a bit of a geek for football jerseys, but with my passion and experience of partnerships I also noticed a chance to solve a real world problem around sponsorship inventory.

Every season, sponsors across the world are receiving signed jerseys from rights-holders as part of their sponsorship inventory.

Along with match tickets, signed jerseys typically form one of the major engagement opportunities for sponsors with fans, employees or CSR depending on objectives.

However in my experience, often these jerseys can be criminally undervalued.

Aside from a certificate of authenticity, there is not much to distinguish these items from the vast quantity of other memorabilia on the market, and saturation easily occurs.

I've seen a charity auctions where a genuine signed shirt of a Premier League club (This isn't a club i've worked for or done work for I should add) go for little about the normal jersey retail price.

The inventory is being devalued.

Physical to digital jersey collectibles solves this.

Through NFT tech you pair the physical signed shirt inventory with an NFT equivalent, which makes the seasonal inventory transparent and because of this more valuable.

Do I want to win or buy a signed shirt of "Premier League Club A" that says it's 1 of 1,000 on a signed certificate, OR of "Premier League Club B" which is paired with its immutable NFT and I can literally see how many are in the collection for that season and which issue mine is.

I'll take the latter.

Ironically, the value of the asset increases for both the partner and the rights-holder by being on chain.

You can also bake in the secondary market revenue benefits mentioned earlier.

It's nerdy but if you are a rights-holder and you aren't exploring how digital collectibles can be used to enhance sponsorship inventory you are missing a trick.

{If anyone if interested in exploring the above do let me know!}

A Final Thought

You'll notice throughout this I've been deliberate in not framing the play in this collectibles market as 'how much initial money can be extracted from the fans'.

Of course by all means consider how you can make compelling collections to maximise secondary market revenue, but a great product which is engaging and genuinely for fans should be your primary objective.

That's all for this week! I'll see you next time where we will break down Utility based NFTs!

If you enjoyed this insight please feel free to share with like minded friends and colleagues.

Thanks & see you next week,

Richard Johnson

P.S I'd also love your feedback. Vote on your thoughts below to help shape the Sports 3.0 content that's helpful to you 👇