In his monthly crypto tech column, Israeli serial entrepreneur Ariel Shapira covers emerging technologies within the crypto, decentralized finance (DeFi) and blockchain space, as well as their roles in shaping the economy of the 21st century.
Die-hard sports fans first got a taste of how digital assets could become the next sports memorabilia phenomenon back in June 2020, with the launch of Dapper Labs’ NBA Top Shot Moments nonfungible token (NFT) collection.
Since then, the pro sports industry has actively capitalized on the NFT craze. That’s not at all a bad thing, considering NFTs solve the digital ownership question once and for all. There’s no reason sports shouldn’t enjoy the democratization this technology brings. There is also the potential, however, for sports giants — franchises, leagues, organizations — to take advantage of fans the way crypto companies have profited from naive investors in the past. That kind of opportunism should be stopped before it becomes the norm.
More likely than not, fans simply won’t tolerate it.
Exploiting fan loyalty
Major sports franchises and leagues are valued at billions of dollars, and the industry as a whole is worth $620 billion. The foundation of this massive amount of wealth is built on the backs of die-hard sports fans, who have deep emotional connections with players, teams and the sports themselves. From $15 beers to $1,000 tickets and expensive cable-sports packages, fans are long used to having their loyalty monetized. Monetization is a normal and healthy part of business, but it must be within the bounds of honorable business, not the kind of profiteering we’ve seen in other crypto trends until now.
The New Jersey Devils became the first National Hockey League team to try and milk the NFT hype last year by launching their own NFTs commemorating their past championships. The Devils, as one of the NHL’s 32 franchises, were able to benefit from that credibility and recognition. Selling branded merchandise such as a sweater jersey commemorating past championships is more than acceptable and has long been the norm. But when billion-dollar pro sports organizations create NFTs that play on fans’ emotional connections by tapping into their past glory without providing any utility, it has the potential for coming across as hype-beasting in poor taste.
Leveraging NFTs to make more money, of course, makes total sense from a short-term business perspective, but taking it too far could damage relationships with fans in the long term, especially considering the reputation NFTs have after it was revealed that 80% of NFTs were scams or fraud, according to leading NFT marketplace OpenSea.
NFTs with real value
So, what does “going too far” mean in the context of sports teams issuing NFTs? Probably the best answer is “you’ll know it when you see it.” When the Chicago Bulls begin selling an NFT of some ridiculous ape wearing a jersey for half a million dollars, most fans might think of that as a brazen cash grab. The best way to avoid that perception is launching NFTs that offer tangible value or utility to fans beyond a trophy. Just like for other crypto projects to succeed, the key is to actually solve a problem, not just release a product that does literally nothing other than looking nice and being on the blockchain, and then sell it for an absurdly inflated price.
Italian soccer club Como 1907 found a way to leverage NFTs that actually provides its supporters with an experience. By partnering with Mola, an Indonesian over-the-top media service specializing in live sports, Como 1907 auctioned off an NFT that included a pair of lifetime season tickets to watch its home matches, two first-class flights to Como from anywhere in the world, and a three-day trip complete with tours, Michelin-star dining, a theater night and more.
With such initiatives, the NFTs actually reward fans for their loyalty with a discount, quite in line with the vouchers and coupons used across industries in the last few decades. NFTs used this way are monetizing loyalty, yes, but in a way that is tactful and respectful — and perhaps most importantly from the business perspective, much more scalable because they don’t capitalize on short-term hype.
Pro sports teams have endless opportunities to utilize NFTs that don’t involve trying to take advantage of their fans’ passion. A creative and completely different approach to leveraging NFTs teams could employ in the future involves scouting youth talent. As youth sports organizations continue to increase their levels of competition to prepare young athletes for the professional levels, platforms such as Leap may be tapped to expedite the process and reach a larger pool of talent.
The youth sports discovery platform features social and gamification elements to help young athletes, especially those from disadvantaged backgrounds, showcase their skills and gain recognition and potentially endorsements from talent seekers by leveraging NFTs.
As NFTs seep into more and more industries, their use cases within the vast world of sports will inevitably grow. And it is essential that professional sports institutions don’t shoot themselves in the foot by overstepping their fans’ limits for what they will tolerate.
Die-hard sports fans will never fully abandon their team loyalty because their favorite team or league is exploiting a trend to make a little extra revenue that tries to capture a nostalgic feeling from a team’s past. However, if an NFT project is done in bad faith, the fan base’s voice will be heard, and the team or league’s pockets will be impacted.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.