NBA Top Shot has generated about $500 million in sales with just a fraction of that total coming from NFTs created for retired players.
There are no “Moments” — the short highlights sold to fans and investors — for Shaquille O’Neal’s dunk over Chris Dudley in 1999, Michael Jordan’s game-winner in Game 6 of the 1998 NBA Finals known as “The Last Shot” or Kobe Bryant torching the Toronto Raptors for 81 points in 2006.
That could soon change.
“We do have access to the vast majority of retired players,” said Mikhael Naayem, Dapper Labs co-founder and chief business officer, during a recent Legends Investment Network panel discussion. “That being said, there are others we don’t have access to.
“We have had retired players reach out to us wanting to see themselves memorialized as Top Shots. We are lucky that we have a product that really resonates with the market and that players want to be part of.”
So far, the “Run it Back Series” is the only one to include former players with Moments from the 2013-14 season. (The priciest highlight sold so far is actually a highlight for Kevin Durant, who is by no means retired.) Retirees Chris Bosh, Dirk Nowitzki and Tim Duncan have each had Moments sell for $35,000 or more.
Using retired players is a trickier process. Current NBA players are covered by the collective bargaining agreement between the NBA and the National Basketball Players Association that includes a group licensing agreement. The National Basketball Retired Players Association handles licensing for former NBA players, including Top Shot.
“We expect these historical moments and the legendary players who made them happen to be the centerpiece of a massive market in the very near future,” NBRPA President and CEO Scott Rochelle told Front Office Sports. “Our work in the licensing and entertainment area has maintained strong growth but we are in numerous discussions with potential licensees to establish a strong foothold in this market.”
Top-tier players, however, have some leverage. A person with knowledge of the so-called “carve-out” process told Front Office Sports that Jordan is among several players who have set limits with the NBRPA when it comes to their likeness usage, and those players or their reps typically bargain for more of a cut of sales.
“They still work within the NBA’s licensing program as the NBA is the sole holder of any rights utilizing their marks and logos,” Rochelle said.
The setup is about the same for the NFL, MLB and NHL — all leagues Front Office Sports has previously reported are interested in creating their own NFT marketplaces.
The NBA and NBPA began to look into NFTs in 2018, and they became interested in Dapper Labs that had created CryptoKitties, an NFT centered around virtual cats that can be bought, sold and even bred. Unlike other NFTs at the time, a major plus to CryptoKitties was the fact users could choose to pay with credit cards instead of using a cryptocurrency like Bitcoin. Likewise, Top Shots can be purchased through credit cards.
The success of Top Shot has outpaced the highest expectations of Dapper Labs, which has had to regularly take the marketplace offline to deal with the increased traffic. Top Shot has more than 800,000 registered accounts and in excess of 338,000 customers who have purchased at least one NFT in less than five months after the marketplace was opened to the public, according to Dapper Labs.
Dapper Labs announced on Tuesday that it closed a $305 million funding round, which put the Vancouver-based company’s valuation at $2.6 billion.
There’s a balancing act with Top Shot. Dapper Labs wants to allow fans to enter at a lower price point, while giving NFT investors value with limited series.
“I collected sports cards when I was younger, primarily the ’90s,” said Top Shot early adopter RyanJK. “One of the first things that really caught my eye with Top Shot was just knowing that the scarcity would be provable on the blockchain. I don’t really have to worry about them coming out in five years and printing more LeBron James throwdowns. They are doing a pretty good job at maintaining scarcity.”
The fewest Moments minted by Dapper Labs so far is 49, although Naayem said that could change soon. There are plans to create packs that will include just one or three of the same Moment in a pack.
It’s not immediately clear if that would be for current or former players. But if four LeBron James highlights sold for $125,000 or more, what would a limited Jordan Dapper Labs reel in on the open market?
“We’re really committed to bringing in the right individual partners as we need to and we’re absolutely willing to put in the legwork to make that happen,” Caty Tedman, head of partnerships at Dapper Labs, told Front Office Sports. “A Top Shot [marketplace] that doesn’t have Michael Jordan in it would be somewhat incomplete.”