Non-fungible tokens (from now on NFT’s) are starting to appear in a variety of industries including the sport industry, but how can NFT’s influence the sport industry and why would the sport industry be targeted. This article will try to answer these questions.
First, a short introduction on NFT’s. A non-fungible token is essentially a token which someone can buy. However, the person is not really interested in the picture or image itself, but the buyer is interested in buying the rights of the digital pixels. The non-fungible token exists only on the blockchain which make the NFT business transparent to its users.
For over decades sport enthusiasts have been collecting items from all over the globe, varying from football shirts to match-tickets and the fan favorite card collecting. It was only a matter of time with the introduction of NFT’s, that card collecting would be available digitally. Now, there are multiple platforms offering online trading card games. Traditionally, these trading card games were made of plastic or paper, but from now on they are NFT’s. Platforms like ‘NBA’s top shot’ or ‘Sorare’ have grown rapidly over the last couple of years (Zaucha and Agur, 2022).
In this article, the focus will be on the platform Sorare. In Sorare it is possible to purchase football, baseball, and basketball cards (these cards being NFT’s) with Ethereum, a cryptocurrency which is the only currency allowed on the platform.
The platform does offer 5 varieties in cards. There are: ‘Common cards’, ‘Limited cards’, ‘Rare cards’, ‘Super-rare cards’ and ‘unique cards. The cards value depends on its rarity. This means that a Unique card is far more valuable than a Limited one. The Unique card of Erling Braut Haaland (a very talented football player) sold for over 600.000 dollars (Niggli, 2022). In other words, NFT’s in the sport industry is a serious business.
On the platform it is possible to win rewards with your purchased NFT’s. Every week Sorare hosts a variety of competitions where its users can compete to each other, based on the score of your NFT’s you can win rewards (cards or Ethereum). This way the platform interacts with its users and gives value to the NFT’s. At the end of the day, you can win money with the cards.
Could this development hurt the sport industry? The answer here is yes, it definitely could. The market on these platforms is highly deregulated and are vulnerable to all kinds of Ponzi schemes (Bartoletti et al., 2020). Thereby, there is plenty of opportunity of insider trading. Value of cards can heavily drop due to injuries or speculations in the sports world.
In the end, the trading card games are no longer as harmful as in the past and are being transformed into a big money business. There are high risks involved regarding these trading card games. In the long run, it will become clear if these kinds of platforms are really going to hurt the sport industry in negative ways.
References:
Bartoletti, M., Carta, S., Cimoli, T. and Saia, R. (2020). Dissecting Ponzi schemes on Ethereum: Identification, analysis, and impact. Future Generation Computer Systems, 102, pp.259–277. doi:10.1016/j.future.2019.08.014.
Sutlive, T.P. (2022) ‘Not Your Grandpa’s Trading Cards: Understanding NFTs in Professional Sports and Why Some May Be Considered Securities’, North Carolina Banking Institute, 26, 249+, available: https://link.gale.com/apps/doc/A700250871/AONE?u=erasmus&sid=bookmark-AONE&xid=c4b5100f [accessed 29 Sep 2022].
Zaucha, T. and Agur, C. (2022). Newly minted: Non-fungible tokens and the commodification of fandom. New Media & Society, p.146144482210804. doi:10.1177/14614448221080481.
Thank you Robin for your insightful article on the NFTs and how it is affecting the sport industry. I have recently heard about Sorare in a podcast about successful French startups so I think it is very nice that you used it as an example. I also think it is quite easy for everyone to understand and relatable as well if you are a minimum interested in football. I believe you forgot to mention that the price of each card is regulated partially by the virtual quantity of the card. For example the supply of “rare cards” is lower than “limited cards”. I think that Sorare in particular would be less subject to high volatile prices because the company secured deals of exclusivity with the clubs they are working with in Europe but also in the US more recently.
I am quite enthusiastic with the use of NFTs in the sport industry because one of its applications (as you mentioned) is for ticketing. Thanks to the blockchain technology, I think it will reduce drastically the problems of fake tickets, from which many football fans are victims every year.