The Future of NFTs in Sports: Revenue, Retention, and Fan Engagement
What’s next for NFTs in sports? We’ve got some ideas…
Whether it’s a video of Aaron Judge’s 62nd home run or a Kobe Bryant-inspired digital art collection, NFTs in sports are here to stay. Fans, players, and professional leagues have embraced NFTs as a new way to engage with each other and create content around their favorite sports.
On the practical side of things, NFTs create a potentially unlimited revenue stream for sports teams and function as an engagement tool for fans. Read on to learn more about what the future holds for NFTs in sports (spoiler alert: It’s looking pretty bright).
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What are NFTs in sports?
NFTs in sports are non-fungible tokens that represent anything from an exciting moment during a game to ownership of a jersey. NFTs are a blank canvas upon which a sports figure or brand can paint their ideal vision of fan service. As any sports fan will tell you, chasing those rare collectibles — whether it’s a rookie card, piece of equipment, or player autograph — has long been a core part of the hobby. As with physical collectibles, NFTs appeal to fans due to their one-of-a-kind nature and connection to a franchise or player. Sports fans love memorabilia, special perks, and exclusive content, and NFTs can encompass all of those things. Trading cards, clips of noteworthy moments, player jerseys, even pre-game interviews can be minted into NFTs to boost fan retention, engagement, and revenue for sports teams.
In short, NFTs in sports have enormous potential, both as a revenue generator and an engagement tool, not to mention an exciting new avenue for fans to nerd out about their teams.
What’s next for NFTs in sports?
Industry analysts predict that NFTs for sports media will generate more than $2 billion in transactions by the end of 2022, and that number is likely to grow in the coming years.
In fact, sports teams are already tapping into the NFT market. Topps, the world’s premier baseball card trading company, launched its own NFT marketplace in spring 2021. And in 2018, the NBA partnered with Dapper Labs to create NBA Top Shot, which mints NFTs of replay-worthy moments (think LeBron James… doing pretty much anything, to be honest).
But trading cards and replays are likely just the beginning. Exclusive content for season pass holders, tokenized ticket stubs, and virtual access to special events are in the forecast for sports teams looking to engage fans in Web3. Here are just a few ways you can expect to see sports brands use NFTs going forward.
Virtual access tokens
Sports teams can pair NFT purchases (such as an NFT game ticket) with exclusive virtual access to pre-game chats, locker room passes, or unique footage, like viewing the game from the coach’s perspective with special commentary. They can also create footage, like an interview with a player or an inside look at a training session, and mint the video into an NFT, which can then be sold on the marketplace for fans that want an exclusive look.
NFTs for season ticket members
Die-hard fans expect additional perks and selling NFTs that unlock special experiences (either at the game or virtually) is an easy way for sports teams to reward fans for coming back season after season. For example, teams can offer collectible NFTs to attendees of one specific event (e.g., a playoff game, the Super Bowl). Making the NFT available to a limited pool of fans creates excitement and builds the value of the NFT in the marketplace. Sports teams can also choose to tokenize tickets and special moments or tie the sale of an NFT to a physical reward or experience (e.g., courtside seats, extra tickets, etc.).
NFTs also have a role to play in fantasy leagues. The NFL recently partnered with Mythical Games to create NFT Rivals, an NFT-based game where players can assemble their dream rosters with NFTs of their favorite players. Similar adaptations that are either entirely based on tokens or incorporate NFTs (perhaps as a special reward or a way to draft a desired player) are almost inevitable.
Collecting memorabilia is a treasured activity for sports fans and NFTs are an exciting new extension of this timeless hobby. While some collectible NFTs can be entirely digital — like a clip of a home run — by far the most lucrative collectibles will likely be physical-backed NFTs.
A physical-backed NFT is connected to a physical object, like a trading card or a player jersey. Sports teams can partner with a tokenization service to mint the physical object as an NFT and sell it on the marketplace.
The tokens can be sold as a single unit or fractionalized, where each buyer owns a part of the original item. This tactic makes high-value sports NFTs more accessible to everyday collectors. When the NFT is traded on the marketplace, the sports team (or the owner of the physical object) receives a royalty fee.
Tokenizing physical collectibles does two things: It gives existing memorabilia a new life and opens a secondary market for new physical collectibles. Both new and old physical collectibles can earn revenue for sports teams when minted in NFTs.
At Dibbs, we ensure all physical collectibles are verified and stored in a temperature-controlled vault, while providing clients access to a dashboard where they can track NFT activity and revenue on any NFT marketplace. If you’re curious about how Dibbs works, contact us for a demo.
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Potential impact of NFTs on sports teams and fans
NFTs in sports may not change the game itself, but they are game-changing when it comes to revenue and fan engagement. At their simplest, NFTs are a new tool to generate income and reach the fanbase. Beyond that, sports fans and teams can throw the playbook out the window and experiment with new ways to enjoy their favorite games.
Tokenizing collectibles is an innovative way to engage fans and earn passive revenue from your existing memorabilia, but it’s a technical process that requires finesse. Dibbs walks brands through the entire process, from securing your physical collectible to minting to executing a well-timed drop on any NFT marketplace. If you’d like to learn more about our process, schedule a demo.