Cryptos, Tokens, & NFTs are becoming prominent in the sports world
Digital currencies and sports are becoming ever more connected. From Crypto.com’s recent $700m deal to acquire naming rights at the LA Lakers’ Staples Center, right down to numerous individual teams accepting cryptocurrency payments.
More and more examples are emerging, and with many other industries remaining standoffish with regard to digital tokens over concerns of volatility, these connections in the sports world are beginning to stand out.
Let’s have a look at some rationale behind sports’ embrace of various forms of digital tokens.
Professional sports by their nature don’t necessarily rely on stability; risks must be taken, particularly with assets. The young player scouts have spent countless hours and dollars developing can be lost to injury; an expensively assembled “super-team” can dissolve because of one star’s discontent. Teams have to adjust to situations like these on the fly, knowing nothing is ever guaranteed to work. Athletes too, must take risks and bet on themselves in contract negotiations; do they sign long-term for less annual salary, or take shorter, more lucrative deals with confidence that they’ll get even better ones down the road?
In 2020, we saw the first major league athlete being paid in crypto: Carolina Panthers offensive tackle Russell Okung requested that half of his $13 million contract be in the form of bitcoin, and the team acquiesced. It’s unclear if he still “HODLs” (crypto-speak for “holds”) the funds. But given that bitcoin was trading at roughly $23,000 when Okung signed in December of 2020 and nearly $57,000 by April 2021, he’s likely feeling good about the deal.
24/7 media coverage has driven elite sports ever more global, both in televised and live capacities. NFL games in London frequently draw crowds upwards of 60,000, and it’s become common for top European soccer teams to play preseason exhibitions in the U.S. for sellout crowds. Fans from all over the world want to feel connected to their teams –– even if in many cases, they’ll never actually visit home stadiums or see their favorite players live.
Fan tokens are unique blockchain items. They can be tradable like cryptos, and the teams behind them revenue from their sale. In return, fans may be given access to exclusive offers from the team shops, priority access to ticket purchases, or access to polls regarding anything from uniform choices to stadium music. The concept of fan tokens has taken off quickly in the soccer world, where supporters are getting used to the idea of buying digital currencies and commodities representing their favorite clubs. Italian soccer giant Juventus was the first major club to launch these tokens in early 2019, and now organizations across Europe are getting in on the action –– with teams and organizations in other sports beginning to follow suit.
NFTs, or Non-Fungible Tokens, are expected to be part of a $300 billion market by 2030. They’re a little different from cryptos or fan tokens. As their name suggests, they’re not tradable on exchanges, and are sold as single, one-of-a-kind assets –– much like original works of art. Can that asset go up or down in value? Absolutely. NFT values fluctuate according to public interest in the artist or subject at any given moment. Partially because of this though, these strange digital commodities have become extremely appealing to sports fans.
What we’ve seen even in the early days of NFTs is that they’ve essentially revolutionized the concept of high-value sports cards. Digital cards and even highlights are marked as one-of-one NFTs and then sold and traded for enormous sums of money. Already, more than $230 million has been spent on NBA highlight NFTs alone (as of last February).
Professional sports, to a large degree, go where the money is. And now it seems that athletes, organizations, and fans are collectively realizing that this means embracing digital currencies and tokens.
Written by Jem Raegan