Do you remember what you were up to during the boom of Bitcoin? More than likely you do as the country was in the midst of a pandemic-induced “shelter in place” order when cryptocurrency’s popularity began to surge. 2020 saw the resuscitation of the digital coin after a huge crash in 2018. Some of that renewed interest can be attributed to the surplus of free time citizens had for research. A second and significant reason is the panic and rush to diversify investment portfolios. More than two years later, the economy is still struggling to recuperate from COVID-19 and Bitcoin is still going strong. One demographic that the crypto world is tightening its chokehold on is professional sports teams and athletes.
Former Carolina Panthers offensive tackle Russell Okung sent shockwaves through the industry and kickstarted a movement in December 2020 when he became the first professional athlete in any sport to be paid in Bitcoin.
While some snickered at Okung’s 2019 “Pay me in Bitcoin” tweet, he was laughing all the way to the bank less than four months after having half of his salary — $7.5 million — converted to Bitcoin through a company called Zap. As of that date (Dec. 29, 2020), the price of the digital coin was roughly $27,000. By the end of April, that number doubled. As with any investment, there are ebbs and flows and when prices dipped below $40,000 in May of 2019, the Oklahoma State athlete doubled down on his stance and proclaimed that he is never selling his Bitcoin.
You can’t really blame him for wanting to stay the course, especially when his crypto gamble made him one of the NFL’s top paid players. Although he was the first to successfully execute this type of transaction, others had attempted to do the same before the Super Bowl champion to no avail. Part of the reason their attempts didn’t work out is teams not wanting to have to deal with the accounting. Without holding Bitcoin as an asset – such as cash or bank accounts – it is impossible to account for the payment of wages in that form of currency on profit and loss statements. However, times are changing, and teams are coming around to the idea. One team that was early to the party was the Sacramento Kings. Although none of their players were being paid in cryptocurrency, the NBA team was the first to accept Bitcoin as a form of payment back in 2014. Fast forward to 2021, and the franchise is the first to offer its players and staff the option to be paid in cryptocurrency. The Dallas Mavericks and the MLB’s Oakland Athletics are accepting Bitcoin as a method of payment. To take things a step forward, Athletics fans can pay for their full season suites with a single Bitcoin that is exempt to fluctuating values. In other words, if one pays for their suite with a coin valued at $35,000, they retain the value whether the price dips or soars.
Of course, Okung’s profitable gamble didn’t escape the eyes of other athletes across the various professional sports associations. Several high-profile players have hitched their wagons – well, a portion of their wagons – to Bitcoin. Klay Thompson, Andre Iguodala, Odell Beckham, Jr., Shohei Ohtani, Aaron Rodgers, Cade Cunningham and Trevor Lawrence are just a few athletes who have been paid in Bitcoin in the past year and a half. The value has only dipped a percentage point since Thompson and Iguodala executed their deals in January of this year. Of the athletes mentioned, Ohtani has suffered the biggest percentage decrease – roughly 35%. As more teams move to accept cryptocurrency as a form of payment, expect more athletes to seek diversification through this medium.
Bitcoin is literally everywhere, and its ease of entry and prevalent usage has also ushered in non-fungible tokens (NFTs). You have undoubtedly seen the animated avatars on the social media profiles of several athletes and entertainers and wondered, “What the hell is that?” You are not alone. An NFT, as defined by the Sports Business Journal, is “a unit of data stored on a digital ledger, known as the blockchain.” Player cards, digital artwork and unique clips of game or training highlights are purchased and traded by fans. Think of it as a cyber trading card market, if you will. NBA Top Shot houses officially licensed digital collectibles and raked in over $700 million in sales in under one year. The company’s trademarked “Moment NFTs” bring a “burst of basketball perfection that can’t be lost or forgotten,” as worded by their company website. Each limited edition, individually numbered Moment NFT contains player stats, highlight description and play description. Fans can get their hands on these units via the purchase of packages or through a marketplace. “Common” packs start at $9 while “Rare” packs start at $22. If you’re feeling particularly good, you can purchase a “legendary” pack starting at $230. In the marketplace, fans can buy and sell amongst themselves.
Now, how exactly do the individual players capitalize off NFTs? They can be compensated through royalties each time their name or likeness is used, or they can create the NFTs themselves. For an example of how lucrative this industry can be, look no further than King James. According to Stadium Talk, as of February 25, 2022, the most expensive sports NFT was an original photo of LeBron James dunking. Taken Feb. 1, 2020, the photo is worth a whopping $21.6 million with the owner possessing exclusive, non-commercial rights and the raw file. Those rights allow for future negotiation with James, which could end up netting both the basketball star and the owner a ton of profit. Soccer player Alex Morgan was the only female athlete with an NFT on the top 30 most expensive list. Digital artwork of the former U.S. Soccer Player of the Year sits tied for No. 7 on the list with a value of $2.129 million.
The NCAA’s monumental NIL ruling last year also opens the floodgates of cryptocurrency to college athletes as well. In today’s social media age, many of the NCAA’s stars already have cult-like followings on platforms such as Twitter, TikTok and Instagram. NFTs are a way to build their brands — even before they sign professional contracts or endorsement deals. It also gives the young athletes unprecedented control of their names and likenesses to create and sell their own digital content.
Thanks to a colossal and passionate fanbase, the possibilities are endless when it comes to cryptocurrency and the sports industry. There has always been a market for exclusive items that make the average Joe feel a connection to their favorite teams and athletes.
While many may be unable to afford tickets to experience game action in person, NFTs offer a (sometimes) more affordable, digital option to obtain not only cards and photos but highlights as well. From franchises to players and fans, the versatility and increased access of cryptocurrency make it attractive to the entire industry. Although volatile, the opportunity to hit big will continue to intrigue even the most risk-averse consumer. As athletes begin to step further and further into their power by diversifying their portfolios and managing their own likenesses, expect coins and tokens to be a part of that journey.