Hi, it’s Ramp Capital. You may know me from lighting up your Twitter feed with the latest and greatest takes on all things finance (and memes). I'll be collaborating with Rhone over the next few months to provide fun and interesting articles on golf, finance, and how those topics intersect. I hope you join me for this ongoing editorial journey. For today’s article, we’re looking at how cryptocurrency has affected the professional sports landscape. For more, follow me on Twitter, @RampCapitalLLC.
If there’s one industry that loves a good gamble, it’s the world of pro-sports. From making risky player trades to making bank for literal gamblers, some aspects surrounding athletics have always been as much about luck as it’s been about skill.
And what better high-stakes, all-in, adrenaline-mainlining kind of bet is there today than one on cryptocurrency?
By the end of 2016, the entire cryptocurrency market was worth about $13 billion. At its peak in May 2021, the market was worth $2 trillion — more than the global pharmaceutical trade ($1.5 trillion), Google ($1.6 trillion), or Amazon ($1.7 trillion). As for the global pro sports market, it’s estimated to hit $500 billion sometime between 2023 and 2024.
While crypto’s history stretches back to the late aughts, the tech didn’t really intersect with pro sports until the past year or so. The pandemic put pressure on leagues, teams, clubs, stadiums, and arenas to make up for major losses during the COVID-19 lockdowns. Meanwhile, crypto blockchains are now storing more cash value than most countries. So, the mash-up is really just a smart play at this point. (Or is it?)
How has sports benefited from crypto and blockchain technology? How has crypto benefited in turn? What’s hot right now in the digital tokens space, and where might things go from here? Below, we’re going to explore how cryptocurrency has influenced the professional sports world thus far, as well as how the technology could change the future of athletics.
NFTs for Sports Highlights and Other Digital Memorabilia
NFTs, or non-fungible tokens, are blockchain certificates of authenticity attached to digital works. Only the crypto’s blockchain processes and stores the NFT’s data, so there’s always proof for how rare it is, who created it, and who currently owns it.
Right now, sports NFTs are raking in healthy profits. The current record for most expensive sports NFT sold goes to Tampa Bay Buccaneers tight-end Rob Gronkowski’s one-of-a-kind card set, which commemorates his four Super Bowl wins. The set sold for an icy-cool $1.6 million, or 830 ether, in March 2021. At the time of this writing, 830 ether are worth about $2.6 million (Note: Crypto is very volatile; it’s not your grandfather’s currency).
For European football fans (or soccer fans, as the Yanks call them), there’s a fantasy NFT team game called Sorare. As with all fantasy football games, players build their dream teams with NFTs based on real-world athletes. The Sorare player scores points based on the real-world performance of said athletes.
Sorare’s NFTs can fetch big paydays, with single NFTs selling into the hundreds of thousands of dollars. In March, Sorare’s NFT for Portuguese megastar Cristiano Ronaldo — arguably the greatest football champ in the world — sold for $290,000. As a single-piece sports NFT, it’s the most expensive ever sold (Gronk’s NFT was a set, not a single item).
Previously, the most expensive single-item sports NFT featured LeBron James. Specifically, an NBA Top Shot NFT of James landing a monster dunk in October 2020. That one sold for $208,000 in February. NBA’s Top Shots, which are basically digital trading card highlights of iconic pro basketball moments, is one of the world’s most lucrative sports NFT platforms, worth over $200 million.
Crypto Companies Are Sponsoring Pro Athletes and Sporting Events
While an athlete’s discipline makes or breaks championships, it’s endorsement deals that make or break their bank accounts. Perhaps the most infamous crypto endorsement was for Stefan Parson at the NASCAR Xfinity Series Race this past June. Parson’s car, sporting a giant Dogecoin logo, crashed during the race, just as the meme crypto’s price was also crashing.
But not all crypto-related sports endorsements have wrecked in such a spectacular manner. Last March, the crypto exchange FTX landed a $135 million endorsement deal with the Miami Heat, which included naming rights to the Heats’ home arena.
Two months after the Heats’ court became the FTX Arena, the crypto investment firm Grayscale partnered with the New York Giants for an undisclosed amount. Besides becoming the Giants’ lead corporate sponsor, Grayscale will also manage the team’s crypto assets.
Athletes Are Receiving Crypto as Part of Their Payouts
Speaking of the New York Giants, the team’s MVP running back, Saquon Barkley, announced in July that he’ll only accept bitcoin for all endorsement and marketing deals. His reasoning: To hedge against inflation. Take that, Jerome Powell.
Barkley isn’t the only pro sports athlete to get his bank account swole with crypto. Back in December 2020, the Carolina Panthers’ offensive tackle Russell Okung stipulated half his salary, or $6.5 million, would be paid in bitcoin through the Strike app. That came to about 240 bitcoins, which is worth roughly $10.8 million at the time of this writing.
Trevor Lawrence, the Jacksonville Jaguars quarterback and the #1 draft pick for the 2021 season, is also taking a portion of his salary in crypto. However, the amount hasn’t been released publicly.
Several Crypto Blockchains Now Serve the Pro Sports World
Cryptocurrencies are powered by blockchain technology. The host blockchain can often do a lot more than simply trade its cryptocurrency. For instance, they can also trade NFTs, execute smart contracts, and store massive amounts of user data (think: clouds).
Currently, about a dozen crypto blockchains service the pro sports world and its fans. Ethereum, the world’s second largest crypto by market cap, processed Gronk’s $1.6 million NFT trade mentioned above.
Chiliz ($CHZ), a cryptocurrency created in 2018, provides tokens for FC Barcelona, a pro football club based in Spain. Fans with Chiliz’s FC Barcelona tokens essentially own pieces of their chosen teams. They also hold voting rights regarding club decisions and policies, and get exclusive access to special club promotions.
Other crypto blockchains servicing the sports world include Flow ($FLOW), which manages NFT trades at NBA Top Shot, REVV ($REVV), and All Sports ($SOC).
Sports Venues and Vendors Are Accepting Crypto Payments
The major hurdle for crypto’s acceptance into the mainstream economy is adoption. Until people use their crypto as an exchange of value — to actually buy stuff — investing in crypto will most likely remain as a speculative bet.
Fortunately for crypto (and sports) fans, some teams now accept crypto to purchase tickets to games or team swag. The most famous example is probably the Dallas Mavericks, as the team’s owner, Mark Cuban, is a huge fan of crypto. This year, the Mavericks began accepting Dogecoin to buy seats at the team’s home games and for official Maverick’s gear. (The best part: Cuban promised not to sell off the team’s doge any time soon, which elevates its price as some of the crypto is kept out of circulation.)
Caveat: A Word of Wisdom While Eyeing the Future
Given the boatloads of cash (digital or otherwise) infusing the sports world and crypto, both industries are now playing the long game together. How could athletics and crypto expand in the future?
While NFTs have already become today’s trading cards among the wealthy, smart contracts still haven’t been used much. It’s possible we could one day see smart contracts where NFL players automatically receive sweet Bitcoin bonuses for breaking yardage records. Or perhaps fouls, penalties, and other bad behaviors could come with smart-contract incentives built right in, where players are charged fees for unsportsmanlike conduct.
Trading players themselves (and not just their NFTs) could also take place entirely through smart contracts, where the players’ seasonal deals are tracked, stored, and processed directly on blockchains. This could ensure contracts are honored and payouts guaranteed in timely fashions. However, there are still some logistics to work out concerning how smart contracts should, and will, truly operate in the real world’s legal landscape.
Regardless of where the intersection of crypto and sports goes, keep a steady head. While the recent rapid adoption of crypto among pro sports is historic, we could just be scratching the surface on how the two could interact with each other in the future. And if you decide to embrace a bullish stance towards your favorite crypto, make sure you understand the risks involved; again, crypto can be extremely volatile. If you decide to drop some coin on Bitcoin or altcoins, be prepared to possibly lose every penny. Invest only what you can afford to lose.