Will NFTs revolutionize sports merchandising by becoming a lucrative source of revenue in addition to their impact on digital artwork?
In a Deloitte analysis, the authors suggest that NFTs have the potential to become the modern-day equivalent of valuable baseball cards due to their scarcity. Similar to how baseball cards are highly sought after and command high prices, NFTs can replicate this allure and become desirable collectibles. This presents an opportunity for fans to not just view, but also possess officially licensed media associated with their beloved sports teams. However, Deloitte notes that currently, many NFTs used in sports merchandising do not grant ownership of the underlying media.
While NFTs have the ability to revolutionize sports marketing, they are still relatively novel in a traditional industry. Consider the realm of football, or soccer, as an illustration. This immensely popular sport unites an ever-expanding range of individuals, particularly in European sports, encompassing different age groups, genders, and sexual orientations.
Compared to other areas like social media or gaming, which mainly attract younger and less diverse audiences, this viewpoint provides a more realistic understanding of emerging technologies. For instance, certain prominent European football clubs still rely on paper tickets instead of digital entry cards. Considering this, it becomes challenging to inspire football fans to embrace NFTs and digital assets.
Domenico Novella, the global commercial director at Entourage Sport & Entertainment, acknowledges that they are still in the early stages of developing their proposition. He stated to Fintech Magazine that NFTs offer captivating narratives that not only generate commercial value but also establish communities and deliver long-term advantages. Novella believes that NFTs possess the capability to retain value and sustain interest among collectors. However, he also recognizes that, at present, the level of interest and engagement surrounding NFTs is relatively low, though their potential for the future should not be dismissed.
Is there professional sports behind NFTs?
The Premier League, hailed as the most widely broadcasted and commercially thriving football league worldwide, garners a staggering international viewership of over 3 billion people. Undoubtedly, this diverse demographic presents a greater obstacle in enticing football fans to adopt NFTs. However, the immensely profitable nature of the industry continues to make it an appealing prospect.
The continuation of the novella states, “NFTs have the potential to attract rights holders who can see the opportunities they offer. Nevertheless, the feasibility of NFTs for these rights holders might be hindered by their current long-term agreements with providers or suppliers, making the transition quite challenging. Ultimately, the triumph of NFTs relies on persuading individuals to embrace the idea and make investments in it.”
Following concerns raised by spectators regarding the societal impact of gambling on the sport, the Premier League has recently implemented a self-imposed restriction on allowing gambling companies to feature on the front of team shirts. Consequently, there is now an opportunity for cryptocurrency exchanges and NFT companies, which have gained increasing prominence in recent years, to potentially occupy this vacant sponsorship space.
As of now, both clubs have not disclosed their front-of-shirt sponsors for the upcoming season. However, it is worth noting that seven gambling companies have already been confirmed as sponsors, even though the ban on such sponsors is set to begin in 2026. Additionally, no team has secured a front-of-shirt sponsor from the crypto industry. Considering this, it raises the question of whether we will witness an increase in crypto sponsorships and brand collaborations in the future, once gambling companies are no longer prominent in this space.
Novella suggests that the market’s growth and stability, coupled with the existence of bitcoin, play crucial roles in driving sponsorship opportunities. However, she acknowledges that achieving success in this field is currently challenging because many people are adopting a cautious approach and waiting to observe how the market evolves. It can be difficult to attain a positive return on investment (ROI) if teams heavily invest in marketing without a proper acquisition strategy in place.
In a few years, he believes that teams will not be compelled to abandon crypto sponsors, just as they have done with gambling companies. The growth potential of NFTs can be enhanced with the help of favorable regulations, although currently, the emphasis is more on the betting industry. Sports brands that sponsor and invest in teams enjoy favorable outcomes and profitability by associating with rights holders. Similar to the betting sector, the crypto market faced a decline due to limited opportunities for profitability. Overall, the existing market conditions restrict the potential for financial gains in both NFTs and crypto.
the power of celebrity endorsements
Novella explains that the rise of ambassadors, where a prominent celebrity is employed to endorse a cryptocurrency company, has become a prominent trend in recent years. Collaborating with such celebrities or ambassadors can prove advantageous as they bring their established fan base, which can be transformed into active users.
celebrities from various fields, including actors and musicians, also contribute to the adoption of NFTs. Many crypto companies are capitalizing on the popularity of sports by securing endorsements from sports stars. For instance, Binance collaborates with Portuguese footballer Cristiano Ronaldo to release a collection of NFTs. Formula 1 Star Daniel Ricciardo becomes an ambassador for the crypto exchange OKEx. Additionally, several sports teams have announced partnerships with DeFi companies. Notably, Italian side Inter Milan is working with Socios.com to offer fans $INTER tokens for purchase and trade.
According to Novella, the implementation of fan tokens presents an exciting opportunity for fans to actively engage in decision-making within the sports industry. The integration of blockchain technology is crucial in advancing both the sporting and commercial aspects of the industry. Furthermore, this integration has the potential to create an enjoyable match day experience for fans, ultimately benefiting both the sport and its commercial aspects.
Nevertheless, at the end of the day, teams must achieve success in their respective sports arenas. The realm of professional sports, particularly football, is currently undergoing some form of disturbance, with the emergence of new leagues and ongoing discussions regarding financial aspects. Lately, there have been cases where companies are entering into sponsorship agreements with renowned sports teams, hoping for a successful season, advancement in competitions, and ample broadcast coverage, solely for the benefit of the team. However, if the team underperforms, faces unfavorable circumstances, or fails to progress in the season, the sponsorship contract may not be renewed.
Crawley Town, an English fourth-tier team, experienced a significant change in April 2022 when it was acquired by a group of American cryptocurrency investors. Initially, the takeover by WAGMI held promise of transforming the connection between sports and cryptocurrencies. However, since then, the club has faced numerous challenges both on and off the field. Their first full season under WAGMI’s ownership resulted in a turbulent journey, with the team finishing in 12th place and narrowly avoiding relegation by just three points.
Naturally, their aim for this season is to achieve a more favorable outcome. However, this also serves as a cautionary message, suggesting that crypto investors should prioritize gaining support from current football fans rather than solely targeting crypto enthusiasts. Nevertheless, the future of NFTs in professional sports is intriguing, as Deloitte forecasts it to become a $2 billion annual industry.
Source: fintechmagazine.com
