By Rowland Goddard, Director of Finance
A world in which the most recognizable athletes are no longer paid in dollars or even promote their name on jerseys may be just around the corner. This new generation of athlete compensation is due to the acceptance of cryptocurrencies as a form of payment for goods and services. Players from the major American sports leagues are asking that their game checks be transferred to Bitcoin. This is a risk as the value of Bitcoin is constantly in flux, however they see money as more than just a currency.
Last year NFL player Russell Okung received half of his $13 Million salary in Bitcoin. His crypto would eventually appreciate enough to make him the highest paid player in the league. Many players across the league would follow suit and dedicate a portion of their salaries into investing in Bitcoin. As the demand for compensation through Bitcoin has grown, teams, athletes and agents have created partnerships with Crypto companies to make the transfer of funds. Trevor Lawrence, the NFL’s first overall pick of the 2021 draft, has elected to put his almost $23M signing bonus with investment app Blockfolio.
Salary is not the only way Athletes can add to their crypto portfolio. Non fungible tokens (NFT’s) are becoming a new platform where fans can buy experiences or highlights of their favourite athletes. An NFT is a unique individual digital asset that can be traded, sold or displayed. In sports terms, this is similar to a trading card that has been integrated into the blockchain network.
Dapper Labs partnered with the NBA to deliver blockchain-based experiences and digital collectibles known as moments on a platform called TopShot. Instead of simply being a player’s face on a card, a moment is key play in a game captured and monetized. TopShot markets these trading cards and distributes funds to the players association and Dapper Labs. As well, when cards are traded TopShot takes a small percentage. It’s a win-win for the fans, league and players. TopShot has already made sales of $430M and is valued, got investments from the likes of Michael Jordan and now the three-year-old company is valued at roughly $2B.
Athletes that are taking advantage of this see it as another way of speaking to fans and extending their brand. Leagues see it as the future of communication as younger demographics engage with digital objects on a primary basis. Increasingly fans interact with the sport through video games, social media and collectables before real-life game experiences. This new form of interaction will create digital earnings through the blockchain network which could help unlock the metaverse. This is a realm online in which fans can buy and sell merchandise (NFT’s), build an avatar and even attend games virtually.
Although we can’t be sure how prominent cryptocurrencies will eventually be in sports leagues, we know that they will play a part in how athletes are compensated and will change the way fans interact with the sport.