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Weighing the Upside and Downside of Sport League NFTs

By: Neel Kukarni

With the rise of an evolving digital revolution, we are starting to realize the influence it is having not just on our everyday lives, but the sports industry as a whole. Modern day concepts like NFTs are directing sports towards a new era of fan engagement that is bridging the gap between a fan in the crowd and an athlete on the court.

NFTs, or non-fungible tokens, serve as unique digital identifiers that use blockchain to record media ownership. This means that any sports fan can purchase NFTs of athletes in the form of highlights or certain player attributes that they love the most. For example, NBA Top Shot, created by Dapper Labs, provides the opportunity for a fan to buy Steph Curry’s game winning 3-point shot back in 2016 against the Oklahoma City Thunder. In May 2021, NBA Top Shot crossed the million user mark and has raked in hundreds of millions of dollars in annual sales given how popular some of its NFTs collectibles can be. NBA Top Shot is a primary example to highlight how valuable these NFT marketplaces can be in sports, which has allowed Dapper Labs to expand with NFL All Day and UFC Strike. Other companies like Candy Digital have also entered the mix with MLB Candy. This gives loyal fan bases in several sports the chance to engage with their favorite athletes on an entirely new level.

As it becomes evident that the expansion of sport league NFTs is not slowing down, the question arises: is it worth the investment? On the pro side, there is real intrinsic value to help fans feel like they are a part of a crucial moment in the history of sports. By 2025, it is also estimated that this market of NFTs will grow to $75 billion as entrepreneurs continue to create different product lines so fans can experience something new everytime they buy an NFT. It is becoming an all-in movement as athletes, fans, sport leagues, and NFT marketplaces continue to partner with each other for further investment, profit, and experience opportunities.

However, the downside of these sport league NFTs rely mainly on the fact that this market is very new and involves numerous unknowns. For instance, many individuals treat sport league NFTs like stocks and how they will be profitable to sell in the long run. On one hand, a stock represents the present value of the company’s future stream of income since there are financial reports, product reviews, and other publicly released information to determine if long term profitability is a possibility. Sport league NFTs have zero backing of information in that sense which substantially limits the ability for any customer to predict whether the price of an NFT will rise or fall with certainty. As a result, NFTs are still in their very early stages, so taking advantage of the popularity they have now to learn more about these unknowns seems to be the safer investment approach at the moment.

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