By: Jonathan Lipman
On Tuesday morning, Major League Baseball announced they will enter the rapidly growing NFT space. NFTs, or non-fungible tokens, are units of data stored on a specific digital ledger that are identifiably unique and have specific characteristics that distinguish them from one another. These tokens come in the form of videos, images, written text, and more. NFTs have no direct utility but have value based on market demand.
Essentially, an NFT is a digital trading card.
MLB cut a long-term exclusive partnership with digital collectible company Candy Digital to produce their NFTs. Candy Digital is being launched by three industry leaders across sports, e-commerce, and collectibles. Michael Rubin, Executive Chairman of licensed goods powerhouse Fanatics, has teamed up with the founder and CEO of Galaxy Digital, Mike Novogratz and mega-entrepreneur Gary Vaynerchuk to lead Candy Digital and provide the necessary resources to promote and execute MLB’s NFT collection.
NFTs in sports gained popularity from the NBA’s NFT platform, NBA Top Shot. Top Shot sells officially licensed NBA NFTs in the form of “Moments”. Moments include specific plays or events that occur in the NBA. These Moments can be purchased by buying a pack on Top Shot or by using the Marketplace on Top Shot’s website. While basic packs can be purchased for as little as $9, many individual Moments go for lucrative amounts of money. The prices vary based on the stature of the player as well as the tier of the card. The tier determines how rare a card is, with some having 40,000 copies and some having as few as 1 original copy. For example, a Common tier Derrick Jones Jr. layup is listed at $3.00 on the Marketplace while a Legendary tier Zion Williamson block is listed at $80,000. The MLB will take a similar approach to Top Shot’s platform by providing the ability to purchase, view, collect, trade and sell their licensed NFTs on a branded storefront and secondary marketplace engineered by Candy Digital.
With all of the money that’s being thrown around on digital marketplaces to acquire and sell NFTs, the MLB sees an opportunity to add a new element to the fan experience and generate revenue. The NBA and NBPA have a revenue-sharing agreement with Top Shot that allocates 5% of each transaction to be shared between Top Shot, the NBA and NBPA. The NBPA’s cut does not translate directly towards the player that is involved in the Moment, but is rather divided across the entire league. This is similar to any other consumer product licensing agreement in the NBA.
Candy Digital and MLB announced the release of their first NFT as a 1-of-1 item of Lou Gherig’s famous “Luckiest Man” speech delivered on July 4th, 1939 at Yankee Stadium after being diagnosed with ALS. The NFT will be released on July 4th and the MLB has announced that proceeds from the sale will support ALS charities.