The Value Xchange’s view on the world of NFT’s and the Sports industry

The old analogy of you will rarely hear a seasoned gambler talk about their losses, is the same as an early NFT collector. Innovators and (very) early adopters bought non-fungible tokens that were unique, minted on blockchain technology, changed their picture profile on social media channels to mirror their NFT image, wrote a couple of blogs about why web 3.0 will change the world for the better (their own vanity and bank balance being the main good cause). They then sat back for a couple of weeks and waited for FOMO early adopters to start getting twitchy…and if you were one of the 10,000 last April that bought up Bored Ape Yacht club in just 10 hours for c$190, you will be undoubtedly be wallowing in smugness given they are now trading between $328k - $2.3m.

Fast forward what seems like only days and everyone with an influencer sized social following is minting their own NFT collection to be bought on exchanges like Opensea, Binance et al. My first impressions of the exchange platforms are akin to shopping in the middle aisle of Lidl, you can buy a cartoon cat for $4,000, a Digital Cannabis plant, the entire works of the John Terry collection (monkey in a Chelsea shirt. Must have spent hours dreaming that up!) and a video file of Kate Moss sleeping. It’s simply crazy but at the same time compulsive viewing, watching trends play out in real-time.

I am not and never have been, known as an early adopter, so am hopelessly unqualified to comment about the future health of NFT investments, the press are revelling in writing stories about John Terry’s collection falling 90% or that certain high profile sports stars have had their fingers burnt because their NFT’s currency has crashed in value and, as a by-product, so has the value of their collection. If the NFT is linked to crypto, then it’s currently unregulated and all currencies are highly volatile, but that’s half the fun, right? 

Of course, NFT providers that accept payment in normal (FIAT) currency mitigate the risk for fans and open the market beyond crypto speculators. And is that also the point, that NFTs are heralding a broader change in digital ownership - and currently no one really understands where this will land in the medium/long term? You can certainly see how developing simpler, more fan-friendly models (e.g., trading card style) allows you to tap into an accepted model - without the real need of understanding NFTs - the very name of which will switch off most fans. The important thing rights owners should remember is that their fans, aka customers, want different things so the NFT’s they offer need to reflect that. 

So how do rights owners take the biggest cheque on offer whilst offering tangible value for their fans? That’s not easy, just ask Man City and Barca who have already terminated deals after fan push back and empty promises.

I can see the premium value in limited edition NFT’s that incorporate physical assets, the recent NBA All-Star VIP pass NFT auction is a great example of what’s available now, but this is just the start. Let’s just imagine Spurs win the Champions League next year, the club mints 500 NFT’s of Kane holding the trophy, included are the match statistics and Harry’s winning goal as a video. The NFT owner also receives a signed shirt from the squad and an invitation for a meet and greet with the squad at the next home game. In addition, all 500 owners will be registered into a prize draw to win a front-row seat on the open-top parade bus to celebrate the trophy coming home to North London. Surely, given Spurs trophy count in recent years/decades, this is “money can’t buy” investment gold?

In this hypothetical example, it’s not just the club and fan who have won, but AIA as the front of shirt sponsor, immortalised in blockchain for eternity.

Also in this scenario, aside from lawyers being the other real winners of unpicking the IP maze, the way that blockchain allows smart contracts with all stakeholders in a project to be paid instantly according to what’s been agreed, changes the game. 

At the other ends of the scale, I can see the value in low-value NFT’s being traded between fans such as trading cards, gamification and loyalty programme tokens, that allow fans to vote on the walkout song for next week’s home game or choose the design of next year’s coach…It’s fun and engaging and not meant to be an investment. 

Barcelona’s announcement that Spotify will become the Front of shirt sponsor plus naming rights partner for the stadium is big news, but allegedly Barca had to take a haircut on their original valuation. Why, well because Spotify understands user acquisition and the value of 1st Party data to drive lower CPA’s for new customers and by understanding behaviours through their AI, they recommend playlists that ensure subscribers remain loyal to the brand. For years football clubs have been spending fortunes on paid social channels to increase their social fan base, Barca and Real Madrid spent millions in an arms race to be the first club to have 100m Facebook followers, Zuck and co were delighted but did anyone else benefit? Clubs couldn’t turn their huge social following of fans (likes and comments) into increased Sponsorship money because I would imagine savvy brands like Spotify said, if you don’t know who they are, where they live and you can’t distinguish if they are a super fan or a rival fan ranting in the comments, then it’s of no value and I’m not paying for them.

NFT’s allow clubs and their sponsors a unique opportunity to offer a valued digital asset in return for their data and loyalty. Let’s take Liverpool and Standard Chartered as an example, the longest-serving front of shirt sponsor in the Premier League. SCB target audience is outside of the UK, mainly in Asia and most of their customers have never set foot in Anfield so they will have very little 1st party data from the club's fan base that they can repurpose for their own CRM marketing output. Let us say they gave away free NFT’s to commemorate a title-winning season that included the photo of the team lifting the EPL trophy, stats from the year and a video from Jurgen Klopp thanking them for their continued support of Liverpool and SCB. For minimal capital cost for club and sponsor, the result is thousands of happy fans and a database full of rich first party information. 

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