Sports clubs and rights-holders can maximize the engagement opportunities provided by digital assets, says Capital Sports Media chief executive Tim Mangnall. This report talks about the lessons 2022 has taught us so far and how NFT creators can improve in the future.
The Public Approach to NFTs
With an already fragile approach to NFTs from the public, NFTs have struggled to make their mark. Only a small percentage have the money and time to learn about NFTs and how to use them, hence why a lot of people don’t even know how they operate. However, aside from this, there are other reasons why people may not favor NFTs.
The Decentralized Aspect
Firstly, NFTs exist on a blockchain, which means it is decentralized. The decentralized nature that drives cryptocurrency also drives NFTs, stemming from a highly unregulated market. The issue with an unregulated market is precisely that it is unregulated, meaning people can do whatever they like. With various and creative scams criminal scams and schemes, people have lost their money whilst interacting with the blockchain.
Speculative Market
In addition, the NFT market is a highly speculative market, made popular by nothing by hype from crypto enthusiasts. Some NFTs have actually reached their asking prices of thousands and even millions of dollars, and this is pretty amazing when we consider NFTs are not physical items.
Looking at the Bored Ape Yacht Club collection, they are some of the most valuable NFTs in the world. NFT owners are granted special access to a secret club, which increased in popularity after high-profile celebrities such as Justin Bieber and Eminem started buying their own BAYC NFTs. This speculation kicked in, bringing a new audience to the NFT collection. NFTs drop in value when interest in them depletes, meaning their high value depends on speculative buyers.
The Rise and Fall of Sports NFT Collections
Whilst 2022/late 2021 has seen an increased boom of NFTs; people were stating that the growth of NFTs would not be linear with the boom. So far, this theory has not been shut down. Even though there have been successful NFTs in sports, there have also been several underwhelming releases that have failed, leaving rights holders exposed to the wrath of skeptics.
Moreover, since November 2021, cryptocurrencies have lost two-thirds of their value, which has affected NFTs significantly. This is due to the cryptocurrency market crash. Additionally, broader market volatility, including surging inflation, has made matters worse.
When speaking about NFTs, Tim Mangnall spoke about how long it would take for people to see the full potential of NFTs, especially in sports. By collaborating with carefully selected partners, rights-holders can adopt sustainable long-term visions rather than concentrating only on short-term revenue.
What Lessons Can We Learn?
There are various lessons we can learn from this information. Mangnall emphasized the importance of a long-term outlook when discussing what lessons we can learn.
“Clubs still have a huge amount to learn about NFTs and there remain lots of misconceptions in the industry,” Mangnall says. “Fundamentally, clubs still do not understand the opportunity around NFTs. The majority of NFT ‘drops’, particularly in football, have been focused on a moment in history or an artwork, but after they are released, everyone moves on quickly and forgets about them.”
Case Study: Liverpool FC NFTs
Looking at some challenges with regard to sports NFTs, we can look at the British football club Liverpool FC’s introduction to NFTs back in April. The football club created a collection of LFC heroes to allow fans to celebrate their favorite club.
The NFTs were designed to bring the players’ individual characteristics to web3, and the NFTs were made accessible to its entire fan base. However, there was a lack of utility, with critics stating that there was little to no interaction with buyers, and the artwork was not impressive enough to generate attention.
After only one week, it transpired that Liverpool had raised £1.2m through the initial NFT drop, with almost 10,000 tokens sold. However, looking at the numbers in-depth, this only accounted for 5.7% of the NFTs available. This raised some eyebrows, sparking whether the short-term gain was worth it and if there was the potential to grow into something more valuable.
Strategizing Sports NFT Collections
Capital Block, an advisor for sports clubs and NFTs, is in place to evaluate the success of an NFT collection and its strategies. When speaking about this, Mangnall commented that football, in particular, has not seen longevity in NFT strategies. Of course, there are collections for football NFTs, but these exist within games such as Sorare. Mangnall states that although clubs generate a form of income from these NFTs, fans are unlikely to come back due to a lack of benefits, utility, and attraction.
The utility of these NFTs should continuously be updated, providing benefits and experiences as part of the NFT package and purchase. Looking at the 2022 Australian Open tennis grand slam, fans were offered NFTs to update with the ball and match the metadata in real-time. Similarly, the NBA all-star VIP NFT auction, supported by Dapper Labs, included some unique VIP passes and other benefits.
Speaking about this, Mangnall stated that this is the way it should be, and brands should continue pushing NFTs whilst offering benefits and perks and exploring the space of web3.
All in all, as Mangnall supports, sports NFT projects should never be solely about income. If an NFT collection is approached with income in mind, it is likely to fail.
