NBA's Top Shot craze has NFLPA's attention. Could NFL sell new style of digital memorabilia of its stars and iconic plays?
Imagine owning the Immaculate Reception, The Catch and Tom Brady’s infamous tuck play. Or maybe you want your own personal reel of Marshawn Lynch’s Beast Quake or David Tyree’s helmet catch. Perhaps your chosen splurge would be a collection of Barry Sanders’ highlight-reel runs or every mind-blowing no-look pass that Patrick Mahomes has thrown in his career.
At the moment, it’s a fantasy, but thanks to a wildly hot and remarkably lucrative nexus of NBA highlights and fans who are willing to collect them in a limited edition digital form, it may not be long before the NFL and its players union find a way to jump into a burgeoning new collectible industry.
Specifically, it's highlight-reel digital memorabilia that is being purchased and traded by basketball fans through a deal with NBA Top Shot, an online company that is using blockchain technology to sell collectors specific highlights of players. In the simplest terms, they amount to virtual sports cards, ones that you can collect and sell. They are suddenly fetching seemingly insane prices on the secondary collecting market. For example, late in February, a LeBron James “moment” on Top Shot sold for $208,000.
Digital collectibles reach multi-million dollar status in short time
To outsiders, it’s a collecting industry development that can sound weird, where collectors are paying massive sums of money for online highlight “cards” that feature plays that most anyone could go watch for free in hundreds of corners of the internet. After all, the holders of the Top Shot highlights don’t actually own the rights to the highlight itself. Instead, they are attaching their own inherent value to a digital version of that highlight that is contained in an online portfolio, each dispersed in a tiered format that engineers some level of rarity to the digital highlight cards.
Top Shot takes highlights and sells them in online “pack drops.” The pack drops contain highlights that are doled out in tiers such as common, rare, legendary, platinum ultimate and genesis ultimate versions. Each graduating tier has fewer digital copies of the highlight. If you’re lucky enough to land a LeBron dunk from the platinum ultimate tier, you have a highlight that has only three digital copies issued. The genesis ultimate is only one digital copy. It’s an element of designed scarcity, one that has left collectors willing to spend tens of thousands of dollars or even hundreds of thousands, on a rare tier highlight of their favorite players.
Yes, it sounds complicated. And maybe hard to figure in terms of where the actual value lies in collecting digital moments in an online portfolio. But it also may be no different than what makes most collectibles worth money: Through a series of factors, someone is attaching a value to something and using currency to establish the underlying worth of the item they are pursuing. Much like the age-old debate of what makes some collectibles worthless and other collectibles worth hundreds of millions of dollars, it comes down to what the marketplace values, whether its Gauguin or Garbage Pail Kids.
To sports leagues, the bottom line is there is money to be made in it. The NBA and its deal with Top Shot have showcased that much in short time. In a venture that is in its infancy — roughly 8 months old — Top Shot has sold over $7 million in highlight packs. That doesn’t seem like a huge wave of money, until you consider that the secondary market for cards has produced over $50 million in sales in its latest 30-day period. Resales of the digital cards is a booming market. And it’s just starting to get noticed in the mainstream. The NBA is so amped about the venture that Dallas Mavericks owner Mark Cuban has said it can become one of the NBA’s top-three revenue producing streams.
NFL players union chief has taken notice
Of course, that kind of excitement is catching the eye of other sports leagues that are always looking for new revenue streams. And of course, the king of the revenue stream hunters — the NFL and the NFL Players Association — have been following the NBA’s deal with Top Shot with interest in what it could mean for the league.
“It’s an interesting business,” NFLPA executive director DeMaurice Smith said of the NBA’s Top Shot deal. “Our folks at Player’s Inc. as well as team partners have been following it closely. I think that the trading card market is a fascinating market to begin with. It’s substantially larger than just the trading cards you and I had when we were kids. It’s upwards of, depending on who you ask, $5-to-$6 billion of a market every year. We’ve taken a hard look about that market and where we intend to play in the future. The digital video [memorabilia] like Top Shot is interesting.”
“It’s a uniquely created use of a player’s image, married with a video. They create — let’s just call it a widget. That widget is identified uniquely by cryptocurrency. People bid on that thing, once they buy it. Trade it, sell it, whatever. I think it’s really interesting. I think it’s clearly going to be a new evolutionary development in the market. I think there’s still a lot of questions. People want to know that if they’re buying something that’s digital or virtual, how do I make sure that it’s unique and it retains its value. I think people have questions about the consumer interface with it.”
Smith doesn’t sound like someone who is taking the potential digital memorabilia landscape lightly — even if it seems odd to the uninitiated. He said he has studied the Top Shot phenomenon extensively, likening the intrinsic value of the virtual cards to that of the sneaker industry explosion of the past several decades.
Simply put: There is a demand out in the fan and investment community for the ownership of highlights contained in some form of proprietary presentation. That demand drives price, and that price creates an earning opportunity for the NFL.
What that might look like in the NFL space is hard to say. Not only could it mean some kind of future where the league and union partner in a Top Shot-type partnership to sell highlights of current players, it might also be a frontier where the game’s greatest plays, moments or players become part of the revenue stream as well.
Would NFL fans join the trend?
All of this begs this question: For the craziest of NFL fans, what kind of value could be placed on a limited-copy highlight card of the greatest play in the career of Tom Brady, Patrick Mahomes, Joe Montana, Lawrence Taylor or virtually anyone who has put on a uniform?
While the NFL will have a lot of questions to explore about the validity and longevity of packing its product like NBA Top Shot, one thing is clear: If digital memorabilia becomes something with serious financial prospects for the NFL, the sky might be the limit on how the league and its union can package and sell its game in a seemingly brand new form.
Smith made a point about why the NBA Top Shot frenzy is new and intriguing — simply go to YouTube and search out "pack break" videos tied to the industry and you’ll see something that seems like a hybrid of entertainment, fandom and investment all rolled into one.
“All you have to do is just go on YouTube and type in ‘card breaking’ and you pull up all these videos where these breaking parties are things that, you know, I’m probably a little but too old to do — but they’re clearly something,” Smith said. “It’s exciting because it’s a new level of fan engagement. We tend to make really good decisions on our licensing and marketing front. I’m proud of what Player’s Inc. has done. We’ve always been sort of on the forefront or ahead of where everybody else has been. We’re looking at this and a few other things.”
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