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June 18, 2021

Marketing, Communication and Management

The New Digital Sports Trading Cards

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Sports trading cards were created at the beginning of the 20th century, and their format (small printed images of players, club crests and also stadiums) has remained the same to this day. They are still an object of desire for fans and a source of revenue for clubs. As the rest of sports merchandising, they have also been subject to technological advances. But now, major leagues have seen an opportunity in their virtual format—the NFT—, and they have already earned big revenues from it.

NFT is the acronym for non-fungible token. When applied to digital sports trading cards, it means that it turns your card into a non-exchangeable unit of data. It differs from any identical card that we may have found on the Internet because of its stamp. A set of bits put into an algorithm and copied to thousands of servers in order to certify its authenticity and guarantee its economic value. It is the same kind of technology adopted in crypto-currencies with blockchain. When selling or buying a digital sports trading card, its stamp proves that it is authentic, and that the ownership is transferred.

https://storage.googleapis.com/static.capabiliaserver.com/frontend/clients/barca/Nota/Ejemplo%20NFTs…

This is the original copy of the LeBron James’ NFT sports trading card ($3800), licensed by NBA. Since it lacks its digital stamp, it does not retain economic value.

One of its advantages is that it enables video formats. The NBA has made the most of this feature when it released its collections, with which it reached $230 million in sales in February 2021. Known as the “NBA highlights”, they treasure wonderful moments of the players, and they have reached figures as high as $200,000 after selling a LeBron James card. The selling system, that is via a specific website, establishes an initial price of $9 per each sports trading card, and the ones who want to buy it fight for it as if it were an auction. Some are sold for that price while others surpass a thousand dollars. And it is common to find the “sold out” label since every release is sold out within a few hours. 

To commercialise these NFTs, the basketball league has relied on Dapper Labs, a Canadian company specialising in the development of certified digital products using blockchain technology. In 2019, they reached an agreement which had not been advertised, but they finally brought it to light after last year’s growing interest in the digital art market. The auction of a classic internet meme, the GIF of a flying cat with a rainbow sold for almost half a million dollars, or the first tweet created by Twitter’s founder have caught the public’s interest in digital media. The NBA was at the right place and time—ready for it. 

However, this is not only a product purchased by fans. The sports collectible market is a multi-million-dollar market, and the value of its products increases if they are rare or exclusive. The sports trading card of Mickey Charles Mantle in which he is batting for the New York Yankees (dating from 1952) was sold at an auction for $5.2M. LeBron James’ July 2020 autograph was sold for $1.8M. Specialists in digital art investment suggest that the same will happen with many of these digital sports trading cards.

Following the path traced by the NBA, the MLB has also launched its digital sports trading cards but with a very different business approach. In this case, Topps is its business partner, an 83-year-old company that has been providing printed sports trading cards since the beginning. Keeping in mind this modality, it has now included digital sports trading cards, a strategy it had been implementing as a project and now as a turnkey project for the baseball league with a rapid implementation.

https://storage.googleapis.com/static.capabiliaserver.com/frontend/clients/barca/Nota/Rob%20Gronkows…

Example of Rob Gronkowski’s personal sports trading card. No team or league logo.

There are still no rules or models as it is a completely new market which has started to consolidate in the past months. The NFL football league has been the new league to announce that it is considering whether to release its own collection or not. Meanwhile, one of its stars, the Super Bowl champion Rob Gronkowski, has got ahead of his own league. He has released a collection on his own in which he appears with his equipment and his number but without the logo of his team, nor that of the league, for which he has no exploitation rights. But fans and investors have not lost interest since they have already generated $1.8M in sales. 

Is this a fad? Some point out to the existence of a bubble, that of the possible revaluation of some digital sports trading cards, but it may not happen. However, as a merchandising product for fans, it has come to stay, especially if we take as a reference its price of $9, the starting point for all those sports trading cards released in the US, which is common to both leagues and to Rob Gronkowski’s personal project. This affordable value can ensure its success as much as the way Generation Z shows business interest in sports. Perfectly adapted to the digital world, such generation is used to watching highlights instead of the entire game. That is the reason why the NBA decided to release these tokenised highlights that are in high demand on the web. It is only a matter of time before all sports around the world follow these examples. And it is a good opportunity for players to have another source of income thanks to their image rights.

 

Martín Sacristán

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