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December 12, 2022

Get Off The Sidelines And Join The Pro Athletes

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A growing number of athletes, clubs, and sports brands are strengthening their communities of fans through NFTs. Some of the most prominent include the NBA Top Shot, NFL All Day, Sorare, and Cristiano Ronaldo's new NFT collection. These collectibles allow fans to not only possess player cards and video highlights from their favorite games, but also engage with a community of fans through digital and IRL experiences.

The NBA partnered up with Dapper Labs to create Top Shot, a platform that allows fans to buy, own, and trade video highlights from the NBA and WNBA teams and players called "Moments." Those Moments can earn a fan more collectibles when they participate in Top Shot challenges and other activities.

Similarly, the NFL also partnered with Dapper labs to create an analogous platform called NFL All Day Fans can buy, own, and trade video highlight NFTs of great NFL plays throughout the season and in NFL history. These videos are also called "Moments" and, like Top Shot Moments, can earn a fan more collectibles when they participate in challenges and other activities. NFL All Day also offers weekly opportunities for fans to "gain yards and earn exclusive rewards" called Playbook.

Sorare, a platform for fantasy soccer, NBA, and MLB games, partnered with clubs such as Real Madrid and FC Bayern Munich. Like Top Shot and NFL All Day, fans can buy, own, and trade NFT cards while also managing their online fantasy teams. The cards gain or lose points based on the real-time performance of the players.

Individual athletes are also getting involved with their fans through NFTs. Most recently, on November 18, 2022, Cristiano Ronaldo dropped his NFT collection on Binance. This inaugural collection features statues of Ronaldo in iconic moments from his life (as early as his childhood in Portugal) and different benefits depending on the rarity level (normal (N), rare (R), super rare (SR), or super super rare (SSR)), including a personal message from Ronaldo and autographed merchandise.

These sports NFTs are growing increasingly popular as it provides a new monetization avenue for athletes, clubs, and sports brands. For example, as of March 2022, NBA Top Shot reached a market capitalization of over $1.1 billion and, as of August 2022, NFL All Day had a market capitalization of over $68 million.

However, as you may be aware, the NFT market is volatile and it is always prudent to conduct due diligence when investing in an NFT. As such, NFT platforms are wrapping themselves in terms and conditions and disclaimers. Binance's announcement of Ronaldo's NFT collection includes a "Risk Warning" that states, "The value of your NFT may go down or up. NFTs are subject to high market risk. Please do your own research. NFTs are not regulated in most countries, however please ensure you are permitted to access our Binance NFT Marketplace based on your circumstances. For further details, see the Binance NFT Terms and Conditions, our Terms of Use and Risk Warning."

With the allure of athletes' names attached to high-profile drops, it may be easy to buy into sports NFTs without caution, but celebrities and large NFT platforms are not immune from the market volatility.

Pro baller Michael Carter-Williams was recently in the news about the NFT community he co-founded with Brooks Brown and Austin Grieshober called Players Only, which has since been acquired by Knights of Degen. Players Only promised its investors opportunities to interact with Carter-Williams and other pro athletes through the online community and IRL. Players Only also promised giveaways for signed memorabilia, events in real life such as practice facility tours, impromptu meetups, and regular conversations with the players. Players Only raised approximately $1.5 million in NFT sales, but the community felt that they did not receive any of what they were promised. Of the seven professional athletes that were advertised as founding members, six rarely participated in conversations on the Discord channel, there were only 3 in-person events, the Metaverse implementation never materialized, a baseball division led by McCullers never realized, and signed memorabilia were either never sent (e.g., one investor won a giveaway for three Ethereum and an all-expenses-paid trip to Orlando, but only received the Ethereum) or did not match the description (e.g., one winner tweeted that they won a signed jersey, but received an unsigned practice t-shirt and said "I have to admit, I didn't do my research and just bought one [NFT]."). It is unclear whether Players Only was a rug pull, but Carter-Williams did try to refund investors who asked for one and also participated in one-on-one conversations with investors to try to salvage his reputation and that of those involved with Players Only. What likely happened was that the founders of Players Only bit off more than they could chew. Carter-Williams said, "Do I think that people expected more? Yes … But again, I don't think people understand what it's like to be in an NBA season and do all those things. I don't think that people understand how busy professional athletes are."

Even seasoned NFT company Dapper Labs experienced hiccups in its execution of NFL All Day. In an Ask Me Anything ("AMA") on Youtube early November 2022, Dave and Noah of Dapper Labs participated in a conversation with the NFL All Day community about their concerns about the platform. In that AMA, they discussed the recent layoffs at Dapper Labs, the lack of promised challenges, the recent lack of communication with the community, and the paused Playbook. A summary of Dave and Noah's answers seem to be that NFL All Day is a live project that needs constant attention and Dapper Labs is learning more about its own project and more efficient ways to interact with the community as it progresses and as more feedback is received by the community. Dave and Noah expressed that they are trying to walk the tight line between providing enough content with which the community can engage without providing too much content that collectors feel that the value of the NFTs are diluted. It seems that Dapper Labs delivered on their promises (for now) as the Playbook is back.

With these new and exciting ways to engage with our favorite players and teams, it falls, at least partially, on us to be flexible and communicate with the platforms. What's an athlete or a team without fans, anyway? 

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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