NFTs in Football

Football (Soccer) has a history of collectables and trading fan merchandise.  Rarer match programmes fetch significant sums.  Trading cards and stickers offer an ‘affordable’ introduction to the hobby.  Digital collections are following this trend.  Some brands such as the trading card manufacturer Topps have launched their own digital platforms.  Examining the current state of the market will benefit any club or society considering adopting NFTs.

The NFTs could come directly from a club or association or the core rights might be licensed to or from a body offering collectables from several clubs.  The simplest case is of direct sales by the club itself.  Manchester City has followed this route with NFT drops on Makerspace.  This is an Ethereum based market that is open to anyone.  NFTs can be sold as a one-off or as a limited edition collection; the latter pushes the definition of a NFT as there are multiple copies of the same thing.  These only differ in their issue number, like a signed limited edition print.  Makerspace allows its art to be browsed together with a collection of the related sales history.  This means that the actual prices of NFT sales can be seen rather than the price the seller expects to achieve.  The ‘Moon Dance’ a 76MB video NFT was released as a collection of 11 in August 2022.  All 11 sold for $99 but none have currently traded on to secondary buyers.  ‘Heroes of Manchester’ (a unique edition of a 17MB video NFT) was purchased for $5,948 in 2021.  9 Others had made offers in the range of $10 through $5,000.  Much of ‘The Football Artists’ collection remains unsold or owned by the original listing names a year after the original drop.

Liverpool has offered NFTs on the popular Open Sea marketplace.  A collection of head and shoulder images loosely based on 24 LFC men’s players images with differing headwear, clothing, poses and so on created a breadth of 9,700 NFTs and attracted 3,900 owners.  This sort of art collection can be created relatively quickly by changing image layers, fills and frequent exports.  The buyers are not looking for artistic content.   Recent sales figures are in the order $25, selling on Ethereum on Polygon so the buyer will avoid gas fees to mint the NFT (the energy savings of Polygon is promoted as a benefit of the drop).

The less direct approach is to use a platform offering assets from several clubs.  This is a specialised service that can attract a wider audience and offer a service better tailored to the supporters.  It does depend on there being enough perceived demand in the brand to keep up with the other offers on the same platform.  Topps are standard NFTs running in a similar vein to their physical trading cards except on a virtual platform.  NFTs are bought as sealed packs with a fixed distribution of cards with varying rarity, from common (40.75%) through legendary (0.75%).  Topps is a closed marketplace.  NFTs are bought as packs using MasterCard or Visa.  Cards can only be traded within the Topps marketplace but income from sales can be withdrawn from the system.

Socios are a major player in the football digital trading market.  They are not strictly dealing in NFTs but offer a ‘Fan Token’.  The tokens are traded in Chiliz (CHZ) not the Ethereum of Open Sea or Makerspace.  So a different wallet is required.  The tokens can only be traded on the Socios market, there is no dedicated artwork but they act as a proof of investment in the club environment.  The Socios tokens are usually sold with linked owner benefits or perks.  These perks have been criticised for offering little real world value.   As an example, the Arsenal Fan Token offers voting rights on decisions such as the game win song, tour bus and jersey design.  Prices for the same token over the period from December 2021 to Novmber 2022 have dropped from $3.68 to $1.77

The Topps and Socios platforms are looking to partner with the big players.  Anyone in that league could interact with and gain income from both.  At the other end of the scale an Open Sea Polygon drop offers the lowest point of entry.  Polygon removes the need for buyers to pay gas fees and hence the final cost of purchase.  The problem with Open Sea is the sheer volume of NFTs listed makes it difficult to locate a particular offering.  This needs to be offset by off-site promotion from the club’s own media such as Facebook, Twitter and physical advertisements at match venues. 

Unlike Socios it is not possible to directly link perks into NFTs on Open Sea.  It is possible to add unlockable content that is only accessible by the NFT owner.  Once this content has been accessed there is no easy way to stop the owner sharing that content or even for anyone to claim to be a NFT owner and entitled to the benefits linked to that item.  On-line verification could be used to prove ownership but any details might have been stolen through hacking.  Any benefit bundled with NFTs should be assumed to be at risk and chosen appropriately.  For example a discount code in a club shop could be restricted in how often it is used.  A leak might even benefit an organisation as information that spreads virally runs as well within social media as an official statement. With careful planning a cost effective drop can be managed together with perks that benefit the supporters and drive sales.  The longer term return on investment is likely to be lower than potentially within pure Proof of Work based solutions which should be regarded as higher risk but with higher possible returns.