Web3 đ¤ Sports Industry
Exploring how web3 will transform the way athletes and fans benefit from their contributions to the industry.
Itâs officially the end of summer and, while weâre sad about it coming to an end, this means that fall is here! The Pumpkin Spice Latte mafia is getting ready to take over Starbucks, Trader Joes has stocked its shelves with an unimaginable amount of pumpkin flavored food, and #spookyszn is upon us. It also means that the NFL is back in action! We know that some of you may not have watched a football game in years, but for our subscribers who are dedicated sports fans â this oneâs for you *Usher voice*. Â
Itâs no secret that sports fans are some of the most loyal fan bases in the worldâfrom spending thousands of dollars on tickets to see championship games, to competing in fantasy leagues, to framing autographs of their favorite players. In web3, the most loyal supporters win, with bonus points to those who support from Day1Â (sorry to all of the bandwagon fans)! This makes the sports industry a perfect use case for web3, and in this post weâre going to break down why.Â
Athletes are the new creators.
In 2019, California became the first state to pass a law that allows college athletes to be paid for use of their names, images and likenesses (NIL). This was a HUGE milestone in college sports because it essentially opened up the floodgates for student athletes to begin accepting endorsements, sponsorships, and other partnerships with major brands such as Nike, Adidas, and Jordan. Now, itâs not just California who is allowing this. A law has since been passed to allow college athletes at every level to monetize their NIL.
This law passed around the same time as web3 started to become more mainstream. One of the core value props of web3 is that people can build a community of highly engaged supporters and engage directly with them. Beyond just college athletes, this leads to new streams of monetization such as:
Token-gated communities: Athletes can create a limited supply of tokens that fans can purchase to get access to exclusive events (i.e. meet & greets) and content (i.e. behind the scenes of a practice).Â
1 of 1 NFTs: They can create rare, limited edition NFTs and sell them directly to fans. For example, they could sell a picture of their jersey or an autographed ball.Â
The NBA has been scouting early.
The NBA caught on to this trend really early by working with some heavy hitters in the Web3 space. Introducing NBA Topshot, a joint venture launched between the NBA, the NBA Players Association, and Dapper Labs, a consumer-focused flow blockchain product made for entertainment and supports digital collectibles founded in Vancouver, Canada (Chadâs hometown). Together, they created a physical trading card-like system, except cooler - enter NBA highlights and digital art.
So how does it work?
NBA licenses the highlight reels to Dapper Labs
Dapper Labs creates Moments from the footage, like video highlights, that are attached to NFTs, minted on the FlOW blockchain, Dapper Labs proprietary Blockchain
NBA Top Shot allows users to buy, sell, and collect these âMomentsâ.Â
Itâs worth calling out here that teams make only a limited number of NFTs to create scarcity, and as a result some highlights are more rare than others. This increases the rarity of specific Moments and, as a result, the financial value.
Case in Point - LeBron James *vine voice*
Remember in early February 2020 when Lebron hit that reverse windmill in transition against the Rockets? Nah!?! Roll the clip!
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Well, this dunk was not only a tribute to the late Kobe Bryant (RIP mamba) BUT a highly-valued Moment captured on NBA TopShot. This clip alone sold for an average of $91K!
âHold up, wait a minute! Yâall thought we were finishedâ - the NBA
The NBA isnât done yet with the NFT world. Just this month, the NBA announced its development of a digital-collectible based fantasy basketball game with its official NFT fantasy partner, web3 game developer, Sorare. Similar to your traditional fantasy sports league, this fantasy game lets users create a lineup of NFT-based collectibles representing NBA star players who earn points based on their real-life performances. And itâs set to release just in time for the 2022-23 season next month!
Crazy enough, the NBA isnât the only professional sports league creating this new NFT fantasy league game. The MLB announced a similar partnership with Sorare this past July, and Germany's top-tier soccer league Bundesliga and La Liga, the Spanish equivalent, tapped into Sorare's NFT chops last year.Â
Our thoughts on the future of sports & web3
Whether youâre someone who loves the game, becomes a fantasy football coach through February, or lives for the drama off the court (someone protect Nia Long!), youâre still left with a big question to answer - what does this mean for the future of sports and NFTs?Â
As you can see, these upcoming sports seasons wonât be like others as NFTs become more prominent for the leagues and their athletes. Whether at the amateur or professional level, weâre bound to see athletes taking advantage of web3 to grow their brand and also monetize their NIL. This is particularly important at the college level where NFTs offer a new needed income stream to the 86% of college athletes who live below the federal poverty line. Meanwhile, NFTs allow fans to own a piece of the game, engage with their favorite athletes, and interact with other fanatics like them. As always in the world of web3, itâs a win-win situation for everyone. đđ˝