A LeBron James rookie card sold for $1.8 million last July — a mighty sum for a card less than two decades old, but perhaps understandable. We’re used to seeing collectors with expendable income valuing (or overvaluing) such a traditionally tangible collectible.
By comparison, one of James’ NBA Top Shot highlights went for $208,000 last month, the most paid for a “Moment.” The second-most expensive Top Shot, another James dunk, went for $179,000 on Tuesday.
The top four Top Shot highlights sold, which all feature James, have gone for a total of $612,000, and there are two others currently listed for more than $200,000 each.
Welcome to the world of NFTs — short for non-fungible tokens — that didn’t even exist until James was in his second stint with the Cleveland Cavaliers.
Top Shot — created and run by Vancouver-based Dapper Labs in partnership with the NBA and the National Basketball Players Association — has been open to the public since October and has netted $396 million in sales so far.
“We always thought that this was going to be something that basketball fans would love,” Caty Tedman, head of partnerships at Dapper Labs, told Front Office Sports. “We came up with the pitch as basketball fans. To us, it was a no-brainer. There’s amazing NBA action that you can put together with heroic imagery and stats. This is what fans love. We wanted to do something that was fan-centric. We did think it was going to be successful, but, man, it’s been a rocket ship.”
Adds NBA executive Adrienne O’Keeffe: “The engagement we’ve seen around NBA Top Shot since the start of the season has exceeded our expectations, and it is a testament to the effort Dapper Labs has put into developing the product.”
Other leagues have taken notice — including Major League Baseball, which has its own NFTs (MLB Champions) that haven’t been nearly as lucrative.
Sources tell Front Office Sports that the NFL, NHL, and MLB have been in talks with Dapper Labs and others in the NFT space to create a Moments-like marketplace similar to Top Shot.
“We’ve talked to a lot of other major leagues,” Tedman said. “There’s a lot of interest in this space right now, and NFTs in general. There’s a huge opportunity to do really fun work across sports. And so we’re talking to a lot of different people about it. We already know we’re not going to build everything, so we are talking not only to other sports organizations but other builders who might be doing cool stuff. We are taking a multilayer approach.”
“In music, there is a whole lot of interest. There’s a huge market that has a depth of fandom. Music [has] similarities to sports. Musicians have touring schedules. There’s already a history of merchants collecting memorabilia. It might even go as far back as mixtapes and those types of things.”
Soccer, potentially the largest NFT market in sports, isn’t as popular in the U.S. as the rest of the world.
“Dapper Labs is laying the blueprint right now with Top Shot,” said Alexander Taub, who follows the NFT industry and is the co-founder at Upstream. “The biggest one out there is going to be soccer.”
Buyers aren’t getting anything physical when they purchase a Top Shot, although these virtual Moments are still unique. Take the James highlight that sold for six figures on Tuesday. It’s one of 59 Moments made available for a windmill dunk against the Houston Rockets during a regular-season game in February 2020.
“What has made these digital collectibles truly unique and scarce for the first time is blockchain’s ability to authenticate scarcity and ownership by creating a digital record of all transactions that can be viewed by anyone and can’t be changed,” said O’Keeffe, NBA associate vice president of consumer products and gaming partnerships.
Each highlight, sold in packs or individually, is given a distinct identifier, using blockchain technology similar to what’s behind Bitcoin and other cryptocurrencies. Unlike some other NFTs, Top Shot Moments can be purchased with credit cards.
“By being on the blockchain, every one of the Moments is unique – creates digital scarcity – and can be authenticated and verified,” O’Keeffe said. “Digital goods with these properties behave more like real-world assets.”
NBA, NBPA, and Dapper Labs declined to disclose the financial details of the partnership, including the length of the deal. But even if the NBA chooses another vendor when the partnership comes to an end, the unique Moments can still be bought and sold since they are tied to blockchain identifiers.
“Fans that collect NBA Top Shot moments will own them forever, just like any other piece of memorabilia,” O’Keeffe said.
Experts also point out that Top Shot’s success is due in large part to the game of basketball. It lends itself to spectacular (and short) highlights that can be clipped — such as dunks, a key three-pointer, or a huge block.
There’s also a major social media component at play. Players regularly talk up their Top Shot — which makes sense since they get a cut of the sales — on Twitter and Instagram to arguably the most engaged fan base in North America.
The NBA is also more global than most North American sports, and Tedman said about half the Moments are purchased by buyers based in the U.S., with those in Canada, Australia, Japan, and Germany making up a chunk of the international market.
For pro leagues hurting from pandemic-related stoppages and lack of fan attendance, NFTs are an attractive option for leagues seeking to recoup revenue. That’s something they wouldn’t be able to do with a physical trading card —even if it’s a LeBron rookie.
