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Basketball Giant knows it Tech: The NBA’s Top Shot

Yes, NBA’s steps in the crypto market have been fruitful: the company confirmed that their Crypto deals helped fuel sponsorships to $1.6 billion in the 2021-22 season. How? Let’s first go over the basics and cover NBA’s tracks on the crypto market.

🗣 NBA Top Shot is an NFT marketplace where sports fans can buy, sell and trade basketball video clips. Launched in 2020, it’s a partnership between the NBA and Dapper Labs, the creators of CryptoKitties. High-profile investors include the NBA legends Michael Jordan, Kevin Durrant, and Klay Thompson.

The platform is run using Dapper Labs’ Flow blockchain, allowing users to trade digital assets based on video clips from NBA games. The Flow blockchain supports transactions on a range of other sports NFT marketplaces, like NFL All Day and UFC Strike.

As of September 2021, NBA Top Shot had more than 1 million registered users. Data from NFT marketplace tracker DappRadar suggests that more than half a million NBA Top Shot had exchanged a total volume of nearly $1 billion on the platform since its inception.

What Are NBA Top Shot Moments?

🗣 Moments are the video highlight clips sold as NFTs on NBA Top Shot. Much like conventional sports trading cards, Moments increase value based on their rarity. The rarer the video clip, the higher its potential value as a collectible. On its surface, a Moment is simply a video clip of a specific play—a LeBron James dunk or Steph Curry layup, for example. So why would anyone pay money for video highlights they can watch for free on YouTube?

Moments are more than highlights. Like other NFTs, which represent real-world items from art to in-game items to music, each Moment is an NFT that’s officially licensed by the NBA and minted with a unique serial number and data, including game and player stats. There’s also the cachet of owning a piece of basketball history. NFTs are like a certificate of authenticity: The technology behind them makes it difficult to replicate or counterfeit them.

Think of it like owning a piece of art. You can print a copy of the Mona Lisa online, but it’s nowhere near as valuable—or prestigious—as owning the real thing. It’s that pride of ownership that sets NBA Top Shot Moments apart.

🗣 Starting in July 2019 as a joint venture between the National Basketball Association, the NBA Players Association, and Dapper Labs, the NBA Top Shot beta site went live in October 2020. The individual video highlights, called Moments, are sold in limited edition packs for between $9 and $230. This month, packs have sold out in seconds. After packs sell out, the only way to acquire Moments is on the platform’s peer-to-peer marketplace. Each Moment has value due to its authenticity and scarcity being secured by blockchain technology (an immutable internet ledger). Each Moment’s value is determined by the player (better players reap high purchase prices), scarcity, and serial number (to designate how many are produced). LeBron James Moment, for instance, was one of only 49 ever minted and was pulled from a pack that sold for $230. Lower numbers generally hold more value, although the serial number matching the player’s jersey number is highly coveted. Once purchased, the Moment is transferred into the buyer’s encrypted wallet.

“We do believe in this tech and product and believe this is a long-term partnership, we do believe blockchain technology has staying power and a lot of promise for our business.”

🗨  Adrienne O’Keeffe, NBA associate vice president for licensing, told ESPN.

🗣 Like all NFTs, a Moment is only worth what a buyer is willing to pay in the secondary market. Rare Moments from top players can go for hefty sums, while others sell for just a few dollars. For instance, a moment of a LeBron dunk against the Houston Rockets fetched $387,600 last year.

According to the site Cryptoslam!, one of the most valuable NBA Top Shot Moments is a LeBron dunk from a Nov. 15, 2019 game, with 49 minutes. One of those minted Moments is currently on sale for $1 million.

Of course, not all Moments are that expensive. NBA Top Shot users can purchase a starter pack of Moment NFTs for $9, giving the buyer a 0.024% chance of getting a more valuable “Legendary NBA All-Start Classics” Moment.

Like trading cards, Moments are finite, and NBA Top Shot determines how many to release at once. So, getting a Moment that’s 1 in 49 is more valuable than one that’s 1 in 11,000. The scarcity is somewhat manufactured since NBA Top Shot releases Moments on its website in digital packs via limited events called “Drops.” Drop times vary, so users have to stay tuned for announcements.

How to Buy NBA Top Shot Moments?

🗣 Wondering how you can snag a Moment of your own? First, you need to sign up and get verified on the official NBA Top Shot marketplace.

Only verified users can make purchases with a credit or debit card (Visa or Mastercard) or their crypto wallet with Ether, Bitcoin, and Bitcoin Cash, and the Ethereum variations of Dai and USD Coin. NBA Top Shot also hosts a healthy secondary marketplace where fans can buy, sell, and trade, gift packs, or individual Moments.

🤔 Wondering about the advantages to do so?

👉 Ease of use

👉 Great collecting experience

👉 Downside protection against oversupply: This should help prevent flooding the market with duplicate products

👉 Lowers the barrier to entry for new NFT collectors

So now you know everything there is to know about the NBA’s steps in the crypto market, let’s talk numbers!

☑ Cryptocurrency companies helped fuel the NBA’s sponsorship revenue to a record $1.6 billion in the 2021-22 season, according to estimates by IEG, a sports partnerships consultancy.

☑ That’s up 13% from the $1.4 billion in the 2020-21 season. In the 2018-19 season, the National Basketball Association raked in $1.2 billion in sponsorship money. Sponsorship agreements can include deals for arena-naming rights and for companies to put their names or logos on players’ jerseys.

☑ Crypto partnerships are now the second most lucrative sponsorship category for the NBA, behind only the technology category. Among the NBA’s crypto deals this season was a league agreement with crypto trading platform Coinbase. CNBC reported that the deal is worth $192 million over four years.

☑Other categories estimated to pay the NBA over $100 million annually including banks, telecom, and merchandise, according to IEG. Companies spending at least $50 million include Anheuser-Busch, Pepsi, and AT&T.

☑ Sponsorships include deals for arena-naming rights and for companies to put their names or logos on players’ jerseys.

🗣 Among the big four sports leagues, the NBA ranks third in sponsorship revenue. The NFL is No. 1 with nearly $2 billion in sponsorship deals for its 2021 season, according to IEG. And in March, CNBC reported MLB made $1.7 billion in sponsorships last season. The NHL secured $676 million in sponsorship money for the 2020-21 season.

🗨  “The cryptocurrency category’s sponsorship sending spree is like nothing we have ever seen before”. –  Peter Laatz, IEG’s global managing director.

📝 Sources:

https://www.forbes.com
https://www.cnbc.com