Crypto x Sports: athletes enter the virtually unregulated world of NFTs
Non-fungible tokens (NFTs) are a polarizing concept. For some they are a steaming pile of nonsense, for others, NFTs are a revenue-generating opportunity for the sports industry. Whatever way you might lean it appears that NFTs are here to stay, bringing predefined scarcity to digital content allowing for sports fans to engage with their favorite teams, players and historical moments. Oh and they’re collectible too!
Deloitte Global predicts that NFTs for sports media will generate more than $2 billion in transactions in 2022, almost double the figure for 2021. As such I have decided to do a roundup of some of the key developments in the intersection of sport & NFTs during the month of April.
“The Association,” released on April 20, was the official NBA NFT collection for this year’s playoffs. The collection was set to consist of 75 NFTs per player for all teams in the 2022 playoffs, a total of 18,000 NFTs.
According to their website,
“The Association is a collection of dynamic NFTs that change in appearance over time based on team and player on-court performance.
The Association NFTs are being issued in a blind-mint, meaning that nobody will know which 2022 NBA Playoffs player they will receive prior to the reveal.
Players will be assigned randomly and transparently using Chainlink VRF so everyone will have a fair and equal chance of minting any player from any of the 16 Playoff teams.”
However, smart contract hackers derailed the NBA’s 2022 NFT release due to a loophole that allowed hackers to mint the dynamic NFTs without authorization.
Reportedly, a hacker minted and sold 100 NFTs worth nearly $68,000 after executing code that allowed non-whitelisted wallets to jump ahead in the minting queue by stealing valid signatures.
The team behind the NFTs spent time troubleshooting the issue, fixing the error and subsequently increasing the size of the collection from 18,000 to 30,000 NFTs, with each player having 125 editions instead of 75.
The NBA's failure to afford sufficient code reviews to keep their digital content safe will be a cautionary tale for athletes and organizations as they enter the wider cryptoverse.
Philadelphia 76ers All-Star guard James Harden has launched an exclusive NFT collection with Autograph, which was co-founded by NFL quarterback Tom Brady as an NFT platform that highlights athletes’ accomplishments by minting their success and careers on the blockchain.
Harden’s collection is titled “The Way of the Beard” and according to Autograph will, “celebrate Harden’s success as a pro player and his journey in the 2022 playoffs.” The collection includes a physical print on canvas of the NFT along with a signed Harden jersey, sneakers and basketball.
The Toronto Raptors host the 76ers in an elimination game Thursday evening in the first round of the playoffs. The 76ers are 3-2 up and will look to close out the series for the opportunity to face the Miami Heat in the conference semi-finals.
Six years ago after his NFL Draft night was overshadowed by a video of him smoking marijuana out of a gas mask costing him a reported $7 million, Laremy Tunsil is turning the incident that he described as “probably one of the worst feelings I ever experienced in my life” into an NFT.
The Houston Texans offensive tackle is minting a 1-of-1 NFT of the clip, he announced April 27, with a part of the proceeds going to the Last Prisoner Project, which works to provide aid to those incarcerated for cannabis offences.
The video which was leaked onto Tunsil’s Twitter account minutes before the 2016 NFL Draft led to Tunsil falling to the No.13 pick where he was drafted by the Miami Dolphins.
With most athletes using NFTs to celebrate their achievements and special moments it's a unique reversal from Tunsil to commemorate one of the worst moments of his life. The NFTs auction page describes the token as a “unique piece of draft memorabilia.”
“To this day, I still play with anger, because I have to prove myself, because I feel like I’m not getting the accolades I deserve because of the gas mask,” Tunsil said in a 2021 interview with Complex, his first public comments on the video.
The 2022 NFL Draft begins Thursday, and Tunsil’s announcement was most likely intended to coincide with the draft.
Overshadowed by his recent appointment to Manchester United, former Ajax coach Erik ten Haag was pressed into the controversial world of NFTs before the Dutch Cup final on April 17. Holland and Ajax stars Davy Klaasen and Daley Blind were accused of financially profiting from dressing-room information by coincidentally revealing their team’s lineup via the buying and trading of NFTs on the sports fantasy football game, Sorare, which operates on the Ethereum blockchain.
Users' teams are ranked based on the performances of players in-real-life scoring attributed points, as with traditional fantasy football. The online game, Sorare, has generated large investment and sponsorship deals with many of Europe’s top soccer clubs, allowing its users to buy and manage a virtual team of digital cards (NFTs).
In most instances, such as with sports betting, trading confidential information for financial gain would carry significant penalties but with the unregulated world of NFTs things are decidedly more murky.
Klaasen and Blind had both bought the card of team-mate Maarten Stekelenburg, Ajax’s 39-year old back-up goalkeeper who had not played since August. This activity was seen as a sign that Stekelenburg would be picked over first-team goalkeeper Onana, which was proven to be correct when the starting lineups were announced.
The Dutch Football Association, KNVB, said about the issue, “Our disciplinary law says nothing about NFTs.”
“I don’t know anything,” Ten Haag was reported to have said. “I will not announce the line-up until Sunday morning. Can the players’ earn money with this?”