According to the Sports Business Journal, Dapper Labs is preparing to announce a partnership with the NFL and the NFLPA to launch a non-fungible token (NFT) product similar to NBA Top Shot. A matter of hours later, the deal was confirmed.
“We are thrilled to partner with Dapper Labs in its launch of NFL digital video collectibles,” said Joe Ruggiero, SVP of Consumer Products at the NFL. “We believe blockchain technology has great potential to enhance the NFL fan experience in the future and we are excited to have Dapper Labs as one of our first collaborators in exploring this emerging space.”
In early September, the NFL announced that teams would not be allowed to sign sponsorship deals with cryptocurrency firms or other blockchain-based initiatives. Teams were also banned from signing individual contracts for NFT products at a time where many leading sports teams had at least one deal in the works.
The reasoning was likely that the NFL was developing a league-wide initiative for NFTs. Sports Business’ sources confirm this assumption.
In many ways, it can be argued that the NFL is late to the game. Most top sports leagues in the U.S., including the NBA and MLB have at least one fan engagement blockchain-based product, if not more. In addition, almost every major football (soccer) team in Europe has an NFT deal.
However, NFL’s un-rushed decision to enter the NFT space puts the project in a stronger and more financially sustainable starting position. The league had the opportunity to observe other launches and learn from their mistakes about what could have been done better. Waiting to enter the industry also enabled the organization to weed out less successful projects such as MLB Wax and understand what kind of product can generate continuous interest from fans despite the volatile NFT market.
The result is that, if the deal goes as rumored, Dapper Labs’ product will be the NFL’s second largest source of digital revenue, behind only EA Sports’ Madden. According to Sports Business, revenue sources include royalties and a minimum guarantee, despite Dapper not being keen on guarantees. However, any Dapper competitors would probably do almost anything to win the NFL contract. Dapper is not short of cash after its recent $250 million investment round at a $7.6 billion valuation. The NFL and the NFLPA will also take equity in the digital platform.
Dapper and the NFL expect to launch the marketplace before the end of the season. The offer will be similar to NBA’s Top Shot, where consumers purchase packs of game highlights minted as NFTs and trade them to complete sets or sell them for profit.
As it stands, two of the top three American leagues have an NFT deal with Dapper Labs. The third league, MLB, is still operating an NFT product with Topps, although it has moved away from WAX to the Avalanche blockchain, and another with Candy. Dapper also has a deal with LaLiga for highlights as NFTs.
Dapper has one of the strongest portfolios in the sports NFT industry despite operating products with only three organizations. Two of them have not yet launched and none are exclusive deals (although they may be exclusive for video).
Fanatics, Candy’s main backer, also entered collectible agreements with the NBA and the MLB. Around the same time, NFLPA but not the NFL inked a deal for trading cards. The reason might be that, with the plans to launch Dapper’s product, an oversupply of NFT offers might confuse consumers and diminish overall interest as opposed to increasing it.
Meanwhile, Dapper Labs has been making moves with its original sports offer. After six months of little visible development on Top Shot’s product, the company announced it would bring WNBA moments to the marketplace. And it launched a collection where fans could request to mint a moment they watched live as an NFT during NBA’s pre-season tour. The company has also been participating in investments in various blockchain products, including in artificial intelligence NFT technology and avatar developers.
Update: added the deal confirmation and NFT quote