Following the success of Dapper Lab’s NBA Top Shot collectibles app, the NBA is setting up a blockchain advisory board to explore different ways for the technology to add value to the organization, reported sports business site Sportico. We explore some of the potential use cases.
The board has six well-known personalities, including several billionaires such as Dallas Mavericks owner Mark Cuban, who recently invested in the non-fungible token (NFT) platform Mintable. He’s also been experimenting with selling NFTs through both the Mintable and Rarible apps. Other members include Joe Tsai, Ted Leonsis, Steve Pagliuca, Vivek Ranadive and Ryan Sweeney.
NBA Top Shot sells collections of video moments as collectibles throughout the basketball season. Each moment has a unique non-fungible token (NFT) that can be traded in the app’s marketplace. Dapper Labs opened NBA Top Shot to consumers worldwide in October of 2020. Since then, cumulative sales and re-sales of the app’s blockchain collectibles have passed $300 million, with impressive recent growth. The app accounted for $59 million in transactions during the second week of February and for a record high of $149 million just a week ago. However, the figure for the last week was $48 million.
But the app is just one example of what blockchain can accomplish for the league. The board’s goal is to explore other applications, not just limited to Flow, Dapper Lab’s blockchain on whichTop Shot was developed.
Top Shot’s success has demonstrated that blockchain initiatives do not need to aim at crypto enthusiasts purely. Much of its success is due to targeting mainstream basketball fans and tech enthusiasts alike.
Other potential use cases
There are certainly many derivative opportunities from sports collectibles. That’s because each non-fungible token can then be used for other applications such as fantasy games or other pure entertainment games.
One of the questions is whether a sports team could tokenize the players (as opposed to a player tokenizing their future income). In some ways, this is like crowdfunding a team where fans invest in a player. If the token does well, a player’s bonus could be a proportion of the increased token value when tokens are traded. If a player is transferred, the token holder might get a cut of the transfer profits. Brazilian soccer team Vasco da Gama has already tokenized players’ contracts.
As alluded to, players can also tokenize their own future income. Many have noted that this presents a moral hazard. If the player gets all the money in advance, what’s their incentive to play? Spence Dinwiddie carried out a similar project by tokenizing his NBA contract, but it only raised 10% ($1.3 million) of the predicted value.
A more provocative question for the NBA: Would sports franchises consider getting directly involved in sports betting and gaming? Because there are several blockchain-based prediction markets. The reason this is doubtful is the huge potential for conflict of interest and insider knowledge. Lawyers potentially could make more money from this than the league or teams.
The board may also explore the acceptance of cryptocurrency as payment across all teams in the league. This already happens with some teams, including the Sacramento Kings, whose owner Vivek Ranadivé is on the advisory board, and Cuban’s Mavericks. The Kings have been accepting bitcoin since 2014 and in 2018 started a charitable program that funds scholarships through the mining of digital currency.
The Sacramento Kings have also used blockchain to auction players’ gear. The team collaborated with ConsenSys and Treum to sell used jerseys on a blockchain platform. Since fraud is common for these kinds of products and it’s such an easy source of revenue for the teams, blockchain solutions will likely be further explored here.
Another potential application is tokenizing tickets. Ticket scalpers are notorious. Using blockchain, each ticket can be tied to a registered identity, making sure that it’s fans who own it. Additionally, if someone wants to sell a ticket, a proportion of the increased price could go to the team.
This list of use cases was put together extremely quickly. With the combined imagination of several tech billionaires, this could be one to watch.