NFTs have taken the world by storm in industries such as art, finance and sport. But what exactly is an NFT and why should we care?
NFTs are known as non-fungible tokens and share some similarities with cryptocurrencies like Bitcoin. But whereas a bitcoin is like a dollar bill – insofar as each one is worth as much as every other (making them fungible) – NFTs are individually unique.
For example, if an artist uploaded the same image as an NFT twice, the two would be distinct entities on the blockchain, which is, of course, the decentralised (and therefore unalterable) online ledger that tracks and verifies transactions in the cryptocurrency world.
One of those identical-looking NFTs could be worth more than the other by virtue of, say, the order in which they were produced, for example.
What’s the link with NFTs and sport?
NFTs are a new player in the sports arena and beyond. These are tokens that athletes, sporting organisations, artists, celebrities and influencers not only issue and sell but also use to give their fans unforgettable experiences.
Any sports fan, no matter if they admire a team, an athlete, or anything in the sports industry loves to collect merchandise and memorabilia that interests them and they won’t miss a chance to attend a meet and greet event. Dedicated sports fans and sports collectors are becoming more interested in NFTs.
Basketball has been a pioneer in the world of NFTs. In the United States, the NBA created Top Shots in 2020, which offers NFT-based clips of slam dunks and other game highlights that can be traded in an online forum.
More than $US600 million has changed hands on the NBA Top Shots marketplace; in 2019, a particular LeBron James dunk sold for $US387,000.
In Australia, a growing number of sports are looking at NFTs to increase and diversify revenue, not just for clubs and leagues, but for athletes themselves.
Which Australian sports have joined the NFT world?
The AFL, Cricket Australia, the NBL and Tennis Australia are all determining strategies around crypto and NFTs. While speculating on digital artworks has dominated headlines, for the big sporting codes, blockchain technology offers new ways to engage with fans by providing unique experiences while helping to monetise sports’ strong brands.
According to a report by Deloitte, between 4 million and 5 million sports fans globally will have purchased or have been gifted an NFT sports collectable by the end of 2022.
Deloitte estimates NFTs relating to sports media will generate more than $US2 billion ($2.7 billion) in 2022, around double the figure of last year.
“It is a pretty exciting time for the industry as a whole as this represents an entirely new revenue stream for the sports,” said NBL commissioner Jeremy Loeliger.
“I think sports will use collectables as a relatively simple first step to dip their toes and understand the technology. Then I think you will see innovative, entrepreneurial sporting teams and rights holders start to flesh out a compelling strategy for what the technology can unlock in the longer term.”
At the Australian Open last January, Tennis Australia sold NFTs to fans during the tournament. It involved selling NFTs which correspond to a unique virtual square on the real tennis court; when a winning shot landed in the spot, the holder of the NFT won the match ball. Tennis Australia described it as a fun way to engage new fans.
Greg Oakford, one of the holders of the tennis NFTs said it “enhanced the spectator experience all around the world” and was a fun game to participate in.
Oakford said the NFT representing the spot where Ash Barty’s winning shot landed to take the women’s Australian Open title could become valuable in its own right.
Sports stars are also working out how NFTs could support their individual brands.
In the AFL, dual Brownlow medallist Gary Ablett Jr and former Australian cricket great Adam Gilchrist are working with a company called Pickstar to create NFT collectables.
Formula 1 driver Pierre Gasly is working with Fantom and Australian crypto advisory firm Trovio, and last year dropped some NFTs redeemable for exclusive merchandise including signed helmets or VIP access to meet the man himself.
Former Wallabies coach Michael Cheika is an adviser to Trovio, where he will work with athletes to help them create NFTs to enhance their brands.
The NFT market is evolving quickly as more and more athletes and sporting organisations from all over the world join the trend.
NFTs provide a way for athletes to promote their own names and unlock new opportunities and ideas for interacting with fans.
For sports fans, this is a chance to get their hands on digital collectibles and unique physical items and even meet their most admired sports star.
