Asia’s Sports Industry Eyes NFTs As A Source Of Revenue

Sports teams across Asia are plunging into the NFT (non-fungible token) world, hoping to cash in on the digital trend du jour, after the COVID-19 pandemic has wrecked traditional revenue streams.

In the past year, the potential of NFTs as a new source of revenue for major sporting leagues has broken out across the world. The business involves selling digital images or videos – such as a goal in a football match, or a special poster – as NFTs, enabling buyers to exchange them like an online version of trading cards. 

Unlike regular videos that can be easily copied, NFTs are on a blockchain — a publicly shared ledger of transactions— which proves their authenticity and uniqueness.

In the U.S., NFTs featuring Michael Jordan have changed hands for hundreds of thousands of dollars. And the NBA’s Top Shot, an NFT marketplace for NBA highlights launched last year by Dapper Labs, allows users to trade “moments” with other users. A highlight of LeBron James in the 2020 NBA Finals was sold for over US$230k in August, and about US$750 million has been spent on the platform since its launch in 2020. Transaction fees are shared between Dapper Labs and the NBA. 

One early example of the sports NFT phenomenon in Asia comes out of Japan where Pacific League Marketing, a company backed by six professional baseball teams in Japan, announced the launch of an NFT service called Exciting Moments late last year. Sales of highlight reels of baseball games have been retailing from US$17.50 to US$219 each for fans and collectors. A percentage of the each sale will be distributed to the players featured.  

Those who buy the videos will be able to trade them as NFTs on the blockchain as early as this year. Pacific League Marketing partnered with e-commerce company Mercari to kickstart the platform and will use a blockchain called Flow, developed by Canadian startup Dapper Labs.

Speaking to local media, Pacific League Marketing CEO Tomoki Negishi said he wants to create a new revenue avenue, as income from match tickets have taken a hit due to the pandemic. 

“In the past, professional baseball’s point of connection with fans was the stadium,” he said in a December news conference. “But the last two years have seen a situation where we couldn’t get a lot of visitors to the ballpark. Connections need to be made elsewhere.”

The subdued Tokyo 2020 Olympics had not given the Japanese sports industry the boost it needed as the pandemic curtailed fan participation to live events.   

Other sports-related spending, such as buying tickets to a game, fell 32% this year to US$9.6 billion, according to a survey by Mitsubishi UFJ Research and Consulting and research company Macromill.

Fans at top-tier baseball matches—the most popular sport in Japan— declined by 1.84 million people to 22.8 million. Stadiums have gradually started to fill up again, but Negishi said the pandemic continues to pose a risk.

Elsewhere, Asia’s elite football leagues – the K League and J League – have already granted merchandising rights to Sorare, a French startup backed by SoftBank Group’s Vision Fund. Sorare operates a fantasy football game where users create virtual teams using NFTs of existing players, which they can trade with other users. In September, it said over US$150 million worth of cards has been traded on the platform since January. Sorare and its licensees— football clubs and leagues— split revenue from the sales of new cards. A J League spokesperson said revenue distributed to clubs and players has “far exceeded expectations.”

Star athletes also want their slice of the pie too. In August 2021, Philippine boxing legend and presidential candidate Manny Pacquiao auctioned a series of NFTs. Japanese boxing star Naoya Inoue also announced plans to sell his first NFT related to a recent match.

While the NFT economy is emerging, some analysts say risk-averse investors may continue to veer away from the industry due to the wild fluctuation in prices. The daily transaction value of NFTs surged from less than US$1 million in early January to nearly US$400 million at its peak in August, but has fallen to under US$100 million for most of December, according to NonFungible.com.

Hagiwara of Mitsubishi UFJ Research notes that the copyrights remain with each NFT’s creator, even after being sold, while ownership rights for digital assets are still a legal grey area. “With NFTs, it is not very clear what you are owning,” he said. “Those that worry about such issues may stay away until there is more clarity.”