From their digital nature to the ease with which athletes can profit from them, NFTs became one of the most popular vehicles in the first year of their name, image and likeness.
Iowa’s Luka Garza and Gonzaga’s Jalen Suggs marked some of the earliest NFTS in the college sports world shortly after finishing their final seasons in the NCAA. When July 1st hit, college athletes across the country followed suit.
Companies flocked to the industry – some existing sports memorabilia brands created NFT products, while many new companies emerged specifically for the space. Brands poured more money into NFTs and trading cards than any other segment of NIL activity, which accounts for more than 17% of the NIL market, according to Opendorse data.
But the early success of NFTs has given way to growing controversy. The recent crypto crash has called into question their long-term value – and whether the NFT industry is a good investment.
NFT company executives told Front Office Sports that the popularity of NFTs lies in their convenience, branding opportunities and revenue potential – and that they have found ways around the crash to keep the industry alive.
The different approaches
It is difficult to call any type of NFT “traditional”, given that the concept itself is so young. But if it’s a pro-typical NFT, it’ll be a virtual trading card — either highlighting an athlete or a key career moment. Companies like Topps, Signing Day and Candy Digital used that model, but many other approaches have been taken since.
FOS spoke to three companies with as many different focuses.
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Players’ Lounge, started by two former Georgia football players, has created school-specific groups of NFTs — though most of their value lies in the associated in-person events.
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The Legacy League focuses on providing NFTs to women’s sports and Olympic athletes—often in collections related to the athletes’ interests—and also handles graphic design, so athletes don’t have to create NFTs themselves.
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Katana Capital—a fund not specific to college athletes—views them as celebrities, artists and influencers on a par with its other clients. It focuses on NFTs, DAOs and Metaverse.
“NFT is a very, very broad thing,” co-founder and CEO of The Players’ Lounge and former NFL player, Keith Marshall, told FOS. He noted that there are “hundreds” of use cases.
Appeals to athletes
While some NIL activities such as brand endorsement deals or social media campaigns rely on an athlete’s reach and fame, NFTs are open to a much wider range of athletes.
“If you have 1,000 true fans … that’s really enough to have a successful business,” Katana’s founding partner Kuntal Shah told FOS.
The founders agreed that in many cases, NFTs require much less effort than other NIL activities – which is especially important for athletes’ busy schedules.
Then there is the financial aspect. The range of compensation varies widely, but appears to be lucrative given how little time athletes have to put in.
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Stuart Bush, executive director and co-founder of the Legacy League, said athletes can earn anywhere from $300-500 to $10,000-20,000. On his platform, athletes receive 75% of total NFT sales.
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Marshall also noted that when NFTs are sold on the blockchain, athletes can receive profits for sales on the secondary market, which is not possible with traditional paper trading cards or autographs.
The indirect financial benefit: Athletes “use the social reach they have to promote another product that’s not theirs,” Bush told FOS. “They are able to market themselves.”
Bush said some Legacy League athletes have been discovered by other brands that wanted to partner with them, based on their personal interests. “It’s kind of like a launch pad,” he said.
Crypto crash and future
Despite all the benefits of NFTs, the recent crash in cryptocurrencies is a major concern. Will NFTs be worth anything in the future? Will the money athletes receive through cryptocurrencies be heavily devalued?
Both the Legacy League and The Players’ Lounge believe their business models are stable despite volatility in the crypto market.
Bush said many Legacy League NFTs are paid for with credit cards and regular money, while Marshall argued that while crypto is the transactional currency for the company’s products, the inherent value of personal experiences will remain intact.
Shah is optimistic that the market will recover. “There’s a lot of stuff in the news saying ‘NFTs are dead,'” he said. “NFTs are really only 2 years old.”
As far as the possibilities go? “This is probably not even the first inning,” Shah said. “It’s like the pitchers are still in the bullpen getting ready for the first pitch.”
Read the original article at FrontOfficeSports.com.
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