4 Successful Brands Capitalizing on Tokenization in Sports

As NFTs grow more and more popular, forward-thinking brands across numerous industries are warming to the revenue possibilities these digital tokens represent. Each industry benefits from its own particular advantages and tokenization in sports is a prime example. By taking real-world objects and tying them to NFTs, brands can more deeply engage fans even as they open up new revenue streams.

Here in the early stages of tokenization, innovation is the name of the game. Here are four brands using tokenization in sports to drive fan engagement and revenue in novel ways.

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What is tokenization in sports?

Arena Club

Takeaways

Topps Timeless Series

Takeaways

Nike & RTFKT

Takeaways

Adidas Into the Metaverse

Takeaways

What is tokenization in sports?

Tokenization in sports refers to taking something from the real world — a game ball, a rare trading card, or some other piece of memorabilia — and creating an NFT to represent it. Any physical good can be tokenized, creating a digital collectible that parallels the physical one. When someone sells the NFT of their item, ownership of the physical product transfers, as well. The NFT of the item can never degrade in quality and keeps track of its sales history, making it easy to establish provenance and verify authenticity.

Tokenized assets can also be tied to specific brands, as every transaction on that token requires a royalty payment to the original creator. As an NFT undergoes its natural life cycle of trades, it will continue to generate revenue for the brand that minted it, creating a new passive revenue stream.

To learn more about how your brand can use tokenization to its advantage, schedule a demo with Dibbs.

Arena Club

Former Yankees star, Derek Jeter, heads up this venture, which appeals to collectors old and new alike. Arena Club combines NFTs with old-school trading card collectibles by offering to grade, store, and tokenize those collectibles. Collectors send Arena Club their cards to verify their quality, paying a flat fee per card. The cards are then stored in Arena Club’s high-tech vault, and NFTs are made for each one. The collector can then sell from their collection or buy from others’ collections without dealing with the complications that arise from physical collectibles.

Arena Club launched in September 2022 as a private company, so hard numbers are difficult to come by, but its marketplace is full of active users trading and selling collectibles.

Takeaways

Because tokenization provides digital proof of ownership, the collectibles never have to leave a secure environment. There’s no waiting for the item to arrive, no worrying about whether it will survive its trip through the mail, and no stress about perfectly controlling the temperature in the storeroom. NFTs make collecting faster, easier, safer, and more convenient. That makes collectors more likely to trade, and more trading means more revenue for the rights holder behind the NFT.

Topps Timeless Series

Topps has dealt in trading cards since the 1950s, but 2022 saw the brand push its approach into the future with the Topps Timeless Series. In March, Topps created a digital version of a 1952 Mickey Mantle card, minting a brand new NFT. When it auctioned off its creation, it further incentivized bidding by offering the winner a 30-minute interview with Mickey Mantle’s sons. The auction ended with the NFT selling for $471,000 on OpenSea, netting Topps a significant, low-overhead windfall and positioning it to repeat the process with further entries in the series.

Takeaways

Experiences can be as valuable to collectors as the items they collect. The chance to win a one-of-a-kind NFT is obviously compelling, but it’s made all the more enticing by the addition of an opportunity to interact with some living aspect of that history. Whether it’s meeting a celebrity or visiting some famous site, experiential incentives can drive significant value for brands looking to capitalize on tokenization.

Nike & RTFKT

In 2021, Nike acquired the popular NFT brand RTFKT and leveraged its expertise to create hybrid virtual and physical collectibles backed up by digital tokens. The first drop included an NFT of the AR Genesis hoodie that customers could then “forge” (redeem) for a physical version of the garment. A follow-up collection called CloneX similarly allowed customers who purchased NFTs in the collection to receive corresponding physical goods. The NFTs ensure scarcity and legitimacy for each of the physical products, making them that much more exciting for customers.

The partnership between Nike and RTFKT reportedly made $185 million in revenue in 2022; $93.1 million of that came from primary sales, and $92.23 million came from the roughly $1.3 billion in secondary sales that took place over the eight months following the release of the first collaborative NFT item.

Takeaways

Nike may be a major player in sportswear, but its expertise doesn’t extend to the blockchain. Rather than pour resources into handling its tokenization efforts in-house, it leaned on a pre-existing expert in the space. For Nike, that meant acquiring RTFKT. For other brands looking to make a mark with NFTs, that could mean a simpler (and likely less expensive) partnership.

Adidas Into the Metaverse

Adidas partnered with several NFT brands (Bored Ape Yacht Club, Punks Comics, and Gmoney) to create a multi-phase NFT play it calls Into the Metaverse. In Phase 1, customers could buy purely digital items designed in collaboration with the partnered brands. A few months later, Phase 2 allowed those users who purchased the digital goods to exchange them for physical items. Further phases will continue to develop Adidas’ NFT strategy and will tie the brand ever more closely to the metaverse and Web3.0.

The Phase 1 drop brought in a reported $6.2 million in direct sales, and secondary sales generated another $4.74 million in royalties revenue for Adidas.

Takeaways

By partnering with established NFT brands, Adidas ensured a baseline level of consumer confidence in its own tokenization strategy. That confidence allowed it to enter the space with a purely digital offering and the promise of physical goods to come. Brands able to generate similar levels of confidence could do the same, building excitement in the NFT phase and cashing in on that excitement when the physical counterparts arrive further down the road.

Tokenization in sports is a diverse field, and the number of approaches can be intimidating. But the potential for fan engagement and revenue generation is undeniable, and Dibbs is here to help you tap into that current. Check out our site to learn more.