NFT in sport: new investment from enthusiasts and speculators

Posted on April 12, 2022, 12:48 PMUpdated on April 12, 2022 at 12:51 PM

What is an NFT?

The name NFT is the abbreviation of the English ‘Non-Fungible Token’, in French a ‘non-fungible token’, ie it is unique and not interchangeable. An NFT is a tamper-resistant digital certificate of authenticity, whose ownership is traceable, using blockchain technology. Specifically, it is a contract whose rules are determined by computer code, based on a virtual or real object.

These rules may limit the number of copies available for sale, allow reissue, or organize a system of royalties (copyrights) that make it possible to remunerate the original author of a work on any transaction.

It is a new type of highly speculative digital asset, like cryptocurrencies, that uses blockchain technology, namely an authentication directory that is shared between a large number of individuals without a central authority.

They are divided into collections. Owning an NFT also allows you to join a community and sometimes get access to physical events such as conferences, football matches or meetings with professional players.

Who are NFT’s players in sports?

They are mainly “the rights holders, the clubs” and sometimes athletes who venture with this technology, explains Magali Tézenas du Montcel, sports economist and general representative of Sporsora, an interprofessional association dedicated to the development of the sports economy.

Only exercise with “enough audience” such as football, rugby, basketball with the NBA, tennis or even cycling, with collectible cards that can be used in the Fantasy League or even “moments” sport (victory for Wout Van Aert in the Tour de France in the Mont Ventoux stage, decisive basket for Stephen Curry, etc.).

Major players in this technology, such as Sorare, a French sticker exchange for football players for online gaming unicorn, worth 3.7 billion euros, have emerged through these digital goods in the field of sports.

Why is this technology attractive?

NFTs make it possible to “an additional source of income” for these actors, while strengthening the ties between a fan and an athlete or a club, Patrick Mouratoglou, trainer of Serena Williams and recently Simona Halep, who launched her collection ‘The Coach’, which links 500 “digital assets” to real life experiences for $500 each.

They can indeed be resold on the secondary market and “clubs can earn commissions” with every transaction “by commercializing intellectual property”explains Thibaut Predhomme, deputy director of Sorare, without revealing the value of these amounts.

It’s also a “new chance” for the sports world in a “crisis period” economy linked to the Covid-19 pandemic, adds Magali Tézenas Du Montcel. “This virtual side (also) makes it possible to involve fans who are geographically distant from the club”to accentuate this relationship or seek new ones, she specifies. ‘I became unbeatable in Japanese football’says Alexandre Hourcade, Sorare player, who plans to buy a jersey from a J-League club after discovering this championship in a month’s play.

This link, Mouratoglou notes, is even stronger when NFTs have a physical part like that of the ‘The Coach’ collection where buyers become ‘partners’ and can attend “at conferences, receive autographed items from players, conduct coaching sessions…”

NFTs are eventually used as vector for “renew” the spectator base as in tennis where it is “extremely old, so it is essential to look up young people and these new technologies can open interesting doors”he decides.

Who buys these ‘sport’ NFTs?

Two kinds of people are interested in NFTs, explains Magali Tézenas Du Montcel: collectors who are sports fans and speculators “who are not attached to sports” but hope to realize added value by resale. They are generally between 25 and 35 years old and are “mainly male” located ” around the world “ with a certain purchasing power and a “interest in these new technologies”she says.

“I got into it when I saw the opportunity to make money as a football fan”testifies Alexandre Hourcade, a 25-year-old computer engineer, who invested 800 euros in NFTs whose value is now 900 euros.

These most interesting digital assets often cross several “hundreds of dollars”even though those from the Sorare collection and NBA Top Shot sold on average for under $100 last week, according to several marketplaces.