The Future of Non-Fungible Tokens (NFTs) in Sports: A Boomtown Accelerators Insight

Today most sports fans are going to games with scannable, QR-code tickets in their digital wallets.

Now imagine that shortly after entering an arena, their tickets send a message to their phones that there’s a scavenger hunt that night. Fans rove around the venue with their families and friends looking for clues and  scanning different waypoints, ultimately unlocking prizes – including NFTs, the latest tool in high-value fan engagement. 

Scott Lawin, CEO of Candy Digital, believes such a thing is right around the corner. Interactive NFTs will help fans “to own a piece of their passion and express their fandom through a new technology,” he says.  

NFTs, or non-fungible tokens, are a type of digital assets for fans and collectors. Like a painting or a house, they are unique, tokenized digital assets on a blockchain with an identifiable, authentic record of ownership. An NFT is essentially a digital receipt that says you own an asset, Lawin said. 

“It could be a photograph, an audio, or a video,” he said. “It’s publicly identifiable and transferable, and it’s unique and secure.” 

The NFT market stood at $95 million at the end of 2020. A year later, it had exploded to $25 billion, he said. 

Candy Digital is pursuing the next generation of digital collectibles, minting NFTs on a blockchain in categories of music, sports, art, and cultural sub-groups, he said. Lately the company has leaned more heavily into sports, a global industry with billions of passionate consumers and collectors. 

The company focuses on creating authentic digital objects with partners around licensing, IP, and content. Its partners include Major League Baseball, NASCAR, post-NIL basketball and football players, Getty Images, and Netflix through its Stranger Things series. 

It’s all part of Web3, Alwin says, the “own-all-you-can” economy. Candy Digital is bullish on NFTs in the sports world, and is focused on providing digital assets that are collectible, transferable, authentic, and secure. The assets are also portable, since they are digital tokens that can travel around the world at a moment through an exchange. 

NFTs provide a way for teams to “start to see the real fans,” Alwin said, the ones who own the largest collections of IRL and virtual trading cards. 

Creators will benefit from NFTs, since they will no longer have to go through an intermediary to sell their wares, he said. 

“A digital artist can create the work, put it on an exchange, and immediately earn a royalty, every single time it trades on the secondary market,” he said. “It’s empowering a new generation of creators to have ownership over their content, not just creating it and selling it to someone else.

NFTs will help fans develop an identity and connect with their favorite league or team. NFTs will also help them form communities, connecting with other NFT owners, collectors, and tech buffs. 

Many consumers will want to collect the digital version of an object, but also the physical thing that goes along with it, like a signed baseball, Alwin said. 

“In the sports collectibles world, we’ve seen Trading Cards 1.0 such as Topps cards, a pretty big market worth $14 billion in 2019, which was before the Covid-19 bump,” he said. 

Trading Cards 2.0 involves taking a sports image and minting it as an asset on the blockchain, he said. This market stood at about $1.5 billion in 2019. 

Trading Cards 3.0 is where Candy Digital is playing, offering a full range of media assets and licensed IP, with static images but also video, audio, and animation, he said. 

“We’re creating something much more dynamic and much more engaging, and while it certainly represents the team and league that someone loves and wants to follow, it also can provide more utility and value,” he said. 

It includes dynamic statistics. “Every time a particular player is on the field, that digital trading card can be updated with his or her performance stats. And when a player pitches a no-hitter or the team wins a game, that asset can change over time, become more valuable for the fan and in the exchange marketplace.” 

Fans collect digital memorabilia “because we want those objects in our lives, and while they’re digital, they tell stories such as Lou Gehrig’s ‘Luckiest Man’ speech,” he said. So collectors will trade for the digital equivalent of a Jackie Robinson signed baseball, for signed helmets, and for special World Series rings, a 1:1 minted for the Atlanta Braves, he said. 

Traders will also exchange pieces of digital apparel that can have some utility in an augmented reality or a gaming world. 

“Anyone who has kids of a certain age, you know the experience they have playing games with their friends, that is where the world is going – that is social engagement,” he said. “Owning things in the digital world – they are growing up with that already baked in.” 

Another broad category is digital tickets, he said. “When I was a kid, I would bring tickets home, put them on a bulletin board, and then they would wind up in a shoebox, a memory of a good experience with my father, or friends and family,” he said. “We don’t get that anymore with tickets on our phone or QR codes.” 

But digital tickets can provide that same sense of memorabilia for the individual: Digital tickets can be a platform for messaging, allowing for push communications – and a jumping-off point for ecommerce – from teams to the fans, a jumping-off point for ecommerce, whether they are season ticket-holders or a fan who comes to one game, he said. 

“Ultimately, when these become ubiquitous and when everyone owns a digital wallet of some sort, that’s when IRL-interactive becomes more pervasive,” he said, such as the “scavenger hunt” scenario. 

“Or let’s say it’s a sponsorship night, and holders of a particular Budweiser NFT get a free beer or a discount,” he said. “Ultimately it doesn’t have to be in the stadium. A fan can be sitting at home watching the game, checking on the digital assets they own, registering their fandom and qualifying for different experiences or benefits in the future.” 

Alwin said he “doesn’t like the term ‘metaverse’ because it conjures different views of where the world is heading,” but when sports organizations start to go deeper into AR and VR experiences, the utility of NFTs will increase accordingly. 

“Say you own a LeBron James NFT, and when you hold your phone up, LeBron comes to life and does a dunk in your home,” he said. “You could imagine that as the tech becomes more pervasive, we can have players re-enacting dunks or home runs.” 

The sports world is in the early innings of NFTs given that only the most hard core enthusiasts in blockchain and crypto drove the numbers last year. “We’re thinking about what the path is to the next 1 million, 5 million, 10 million customers,” he said. 

The reset in crypto has brought a certain degree of rationality to the market, he said, a “focus on building and not on how quick money can be made.” 

But “big money” still has an interest in NFTs, he said. “Companies and brands will want to figure out how to intelligently get into this space where they can connect with their customers,” he said. “Most are targeting Millennials and Gen Z generations, since this part of the tech curve where they already live.” 

Still, crypto is complicated, he said. “We need to make it easy, with authenticity and trust. They are important to building a brand.” 

Also important is who your partners are in this space and their ability to deliver safety, security and confidence. “You need to build on your community of existing customers and help them along their educational journey” into NFTs. 

Eventually the goal is to provide a mixture of digital and physical experiences that amplify where the fans are today and where they are going. “Do that and you’ll end up connecting with your fans through Web3,” he said.  

Tripp Baltz
Head of Research