While the NBA’s Top Shot hits US$1B in sales, the Australian Basketball League (NBL) is yet to score from the demand for NFTs as collectibles.
It took four seconds for the Milwaukee Bucks’ Khris Middleton to take the bounce-pass, pivot off his defender, and lace a jump shot against the Chicago Bulls.
A few years ago, those four seconds may have only survived in the game’s scoreline, or as a two-point bump in the small forward’s deep NBA career tally. Maybe a Twitter hype account would have shared footage of those four seconds, only to bury them under the weight of the next big play. The bucket would otherwise linger in the memory of fans, fading even from the moment Middleton stepped off the court.
But the NBA thinks those four seconds could last. Thousands of basketball fans agree. They’ve spent real money in the hopes they’re right.
The Khris Middleton play is one of hundreds of individual ‘Moments’ being sold on the NBA’s Top Shot platform, which turns basketball highlights into digital collectibles, ready for purchase by hoops fans and curious investors alike. Now, the marketplace for these highlights boasts US$1B in sales.
Jeremy Loeliger is one of those buyers. He’s a longtime Middleton fan, who saw an opportunity to combine that appreciation with his interest in non-fungible tokens (NFTs), the blockchain technology on which NBA Top Shot was built.
Loeliger is also the commissioner of Australia’s National Basketball League — and he “certainly wouldn’t rule out” the creation of a similar marketplace in Australia, potentially opening the door for local sporting leagues to access the booming, multibillion-dollar NFT market.
Take your shot
NBA Top Shot, launched in collaboration with Dapper Labs in October 2020, ‘tokenises’ basketball highlights by linking them to a custom blockchain system.
Anyone can view or share the Moments for sale, but the NBA only ‘mints’ a certain number of Moments on the blockchain, meaning only a few are ‘authentic’. The closest comparison is in traditional trading cards: anyone can print a photo of a young LeBron James, but a collector would only pay US$1.8 million for his authentic, limited edition rookie card.
Spurred by a volatile cryptocurrency market and record-high Bitcoin prices, investors have turned to NFTs as an alternative investment in blockchain technology, with Top Shot a primary clearing house for digital assets; a LeBron dunk clip, minted as an authentic Top Shot Moment, selling for hundreds of thousands of dollars.
Metallic Gold LE Challenge 19 expires in 24 hours ⏰
Collectors have until Friday, March 19 at 10am PDT to acquire all 9️⃣ required Moments to score this exclusive reward of Terry Rozier throwing down a vicious 🔨 over KD 😤
— NBA Top Shot (@NBATopShot) March 18, 2021
NFTs and blockchain application
Loeliger said the National Basketball League (NBL), Australia’s premier men’s basketball competition, is keenly interested in blockchain technology and its commercial applications, but developments are yet to be seen.
“Certainly, we’re very conscious of the NFT market and its developing opportunity, and are approaching it with a great deal of interest,” Loeliger said.
“We are conscious of the fact that we can make much better use of [blockchain] than we are presently, and there are all kinds of initiatives that we’re exploring, or that we can explore in terms of how to make use of that technology.”
Given the NBL’s growing status as a proving ground for NBA talent — 2020’s #3 NBA draft pick, LaMelo Ball, first showed his mettle for the NBL’s Illawarra Hawks — the prospect of ‘rookie card’ NFTs could prove lucrative in today’s fired-up market.
And the basketball league has already been contacted by a “multitude of parties” hoping to make that home-grown Top Shot market happen, Loeliger added.
The NBL is hardly the only sporting league outside the NBA to seriously consider blockchain technology as a way to reach fans — and their money.
McLaren Racing, the Formula 1 team of Australian star Daniel Ricciardo, announced the launch of its own blockchain ‘fan’ token. On the same day, his competitor, Frenchman Pierre Gasly, announced a sponsorship with Fantom, a blockchain network facilitating ‘smart’ digital contracts.
These more advanced applications of blockchain tech also intrigue Loeliger, who speculated the technology may find other uses in the world of professional sports.
“It’d be great to see a world where there are tokens associated with performance of an underlying sporting asset, whether it’s a team or a conference, or a player,” Loeliger said, “where its valuation might vary depending on performance, rather than just scarcity.”
Choosing a “flavour of the month”
Yet the league also holds a “sense of curiosity as to the sustainability of the product.”
“What I’m waiting to see is if the flavour of the month translates into something that is going to be more permanent,” Loeliger said.
His reservations speak to the key disadvantages of NFTs compared to traditional collectibles.
Given the right conditions, a physical trading card can be stored, as-is, indefinitely. What happens when the technology underwriting all those sports highlights faces an overhaul? And what happens to the market if user access is ever severed? What happens to all of that cash?
More urgently: what happens when the investors realise they are shelling out thousands of dollars for a product they could, ultimately, access for free?
“I won’t deny that it’s tempting” to launch an NFT marketplace, Loeliger admitted.
“And there’s been a multitude of parties who have approached us basically saying, ‘Hey, look what we can do in a very short amount of time, and there’s a revenue stream there associated.’
“It most likely will happen in respect of a number of sporting codes here in Australia, I expect.
“But I think it’s the beginning of something much, much bigger, that will take a longer time to really plan out.”
Big money and a “little memento” for the basketball league
Despite the obvious interest, Australia’s other top sporting codes are yet to latch on to NFTs as a merchandising opportunity for the basketball league.
“The NBA deal shows how much those mind-blowing moments mean to fans, and any innovation that gives more access is a good thing,” said Ant Hearne, chief commercial officer of Australian Professional Leagues, which oversees the A-League football competition.
“Australian football is always high-stakes, high-octane, play your heart out madness and the demand for the content is there,” he added.
“But for the time being: no immediate NFT-related announcements.”
In a nation as sports-mad as Australia, it’s not impossible to imagine fans throwing their hard-earned cash at digital collectibles, or a space for die-hards to financially barrack for their favourite players, without thinking too hard about the appreciation of their ephemeral asset.
Loeliger’s purchase suggests as much. He readily admits he purchased the Middleton Moment because it was cheap, compared to other big-ticket clips, and he wanted to understand the Top Shot system. But there’s a little more to it than that: an emotional connection which goes beyond blockchain or shiny card stock.
“Khris Middleton has a dear place in my heart because of the fact that he went to the trouble of coming all the way to Melbourne during winter for NBA’s Basketball Without Borders academies,” Loeliger said.
“He’s a fantastic person. For me, [the NFT] is a little memento. And if that’s all I get out of it, that is absolutely fantastic. Hopefully, I also get out of it a bit of a learning opportunity.”