Non-fungible token (NFT) platforms Sorare, Dapper Labs, Candy, and ConsenSys reached the final stage of bidding for licensing Premier League’s digital assets. The bids for football collectible rights are between £220 million ($300m) and £434 million ($590m) over the course of the next four years, the Daily Mail reported.
Most top sports leagues in the world have launched their own NFT based initiatives. Dapper has deals with the NBA, the NFL and UFC, Candy has a licensing agreement with the MLB and some NASCAR teams, and Sorare has managed to acquire a deal with almost every top soccer team in Europe as well as LaLiga and Bundesliga.
Bidders have deep pockets
All the finalists have deep pockets. Last year alone Sorare raised $680 million, Dapper Labs secured $555 million in multiple rounds, Candy attracted $100 million, and ConsenSys raised $265 million in two tranches. Softbank led the rounds for Sorare and Candy Digital.
The Premier League has taken a more conservative approach with NFTs. The League apparently investigated teams over crypto based sponsorships. Fan groups have said that digital assets are risky investments and it is irresponsible for teams to get involved without properly educating fans on the potential financial consequences. Some view collectible NFTs as less risky than cryptocurrencies and fan tokens. But given rampant speculation, that may be arguable.
And with these sums of money on the table, the sector is hard to ignore. The Premier League, like almost every sports league in the world, lost significant ticketing revenue during Covid and last year the organization was threatened when the top clubs announced the creation of a Super League with other leading teams in Europe. The idea was quickly dropped but it still exposed the League’s fragility.
Given other Leagues are joining in the NFT trend the Premier League might be left at a disadvantage if it didn’t get involved with its own line of digital collectibles as well.
Premier League’s high price tag
When compared to other NFT-based sports deals, the League has managed to negotiate a value much greater than anticipated. Dapper’s deal with the NBA and NFL is valued at approximately $20 million per year according to the Daily Mail (we’re unconvinced about the NFL figure). And while the details of Sorare’s deal with LaLiga were not disclosed, it is unlikely that it reached £100 million ($136m) a year. The Premier League’s global branding and exposure likely gave it more leeway when valuing the deals’ worth.
The two biggest grossing sport NFT platforms so far are Dapper Labs’ NBA Top Shot with total transactions of almost $920 million, followed by Sorare at $230 million, according to CryptoSlam. However, the vast majority of these transactions are between collectible owners, with the platform taking a small cut.
Sorare already has a deal with almost every team in the Premier League therefore it’s unclear how the licensing exclusivity will work. It has not been specified what kind of NFTs would be launched with Sorare since it already commercializes players’ cards for use in fantasy football games. For Sorare, collectible NFT Moments or video clips would make more sense given its existing deals. But Dapper Labs has far more experience with Moments.
Since most Premier League clubs already have NFT deals, their share from the Premier League deal gives them two bites of the pie financially.
Considering Sorare’s experience in football and relationship with the teams it would seem to be in a leading position. However, the company is being scrutinized by the UK Gambling Commission because it launched a fantasy football game “without the appropriate gambling licenses”. Some have observed that the Gambling Commission got into hot water over the failure of another fantasy football startup.
There’s no question that NFTs pose speculative risks for buyers, particularly secondary market purchases. But it’s hard to see why the risks would be higher with Sorare than the other bidders. And its potential deal with the Premier League is unlikely to include a fantasy game because the league already has one.
One other observation about the bidders. ConsenSys co-founded NFT platform Palm, which provides the technology that Candy Digital uses in its NFT offerings.