Reflecting on the integration of Web3 and sports who actually needs who?

Revisiting the Synergy between Web3 and Sports Evaluating their Mutual Dependence

Author: DefiOasis

Editor: Faust

Introduction: The enthusiasm of Web3 companies for sports is perfectly reflected in FTX. Previously, they spent $135 million to acquire the naming rights for the Miami Heat’s home arena for 19 years, and even had Stephen Curry as a shareholder and brand ambassador for FTX. Coinbase, FTX,, and others have also directly advertised during major US sporting events, such as the Super Bowl. In recent years, fan tokens, NFTs, and Web3 sports games have also become popular among sports fans.

However, a series of scandals related to Web3, such as the FTX debacle, seems to have quickly ended the honeymoon period between the sports world and Web3. Sports stars who had associations with FTX have been implicated, and the Miami Heat has terminated its naming rights partnership with FTX. Additionally, the Super Bowl has banned any cryptocurrency-related company from advertising in 2023. The poor performance of the Crawley Town Football Club, which introduced Web3 governance, has further raised doubts about Web3 in the sports world.

At its core, the question remains: does sports need Web3, or does Web3 need sports? Do native Web3 elements like cryptocurrencies and DAO governance truly make sense when combined with real-world commercial scenarios like sports? This article, written by DefiOasis, will critically discuss this topic and objectively clarify why there is a “sour relationship” between sports and Web3.

The collision between sports and Web3

Throughout history, humans have had an innate longing for competitive sports activities, even referenced in the Bible as the origin of “Israel” (Jacob, the ancestor of the Jews, wrestled with a messenger of God and was acknowledged, thus being named “Israel,” meaning “one who wrestles with God”). In modern times, sports have gradually become a mainstream form of entertainment and have a huge market.

In just 2022, the NBA’s revenue exceeded $10 billion, while the revenue of the NFL reached a staggering $18.6 billion. According to Deloitte’s “2023 Football Money League Report,” the annual revenue of the top five European football leagues exceeded €17.2 billion, and FIFA’s financial report for the World Cup cycle showed that the 2022 Qatar World Cup generated a revenue of $5.769 billion, attracting over 5 billion viewers, which accounts for 62.5% of the global population.

The strong appeal of sports naturally attracts the attention of many Web3 companies. From the sidelines of OKX at the Etihad Stadium in Manchester, to the naming rights of Arena, the home of the Lakers, and the partnerships between Messi and Bitget, and Suarez and Binance, all demonstrate the determination of Web3 companies to establish connections with sports celebrity fans. But besides inviting celebrity endorsements and other forms of collaboration, Web3 has also brought about unique scenarios such as fan tokens and star NFTs.

Sports fan economy: the transition from collectibles to gamified NFTs and fan tokens

It can be said that NFTs are one of the best ways to bring sports IP onto the blockchain. Mainstream sports NFTs focus on collectibility and gamification, which naturally appeal to young people due to their social and trendy attributes. A well-known accounting firm, Deloitte, optimistically predicted that the trading volume of sports-related NFTs will exceed 2 billion USD in 2022. However, according to the data from LGDoucet, the founder of TheFirstMint, the trading volume of sports NFTs in the primary market in 2022 is about 100 million USD, and in the secondary market, it is about 700 million USD, which is less than in 2021.

The decline of collectibles towards NFTs

(Among the sports platforms with the highest trading volume in the first half of the year, game NFTs represented by Sorare and collectible NFT platforms under Dapper Labs are still dominant)

The transition from collectibles to NFTs is the first step for Web3 to enter the sports industry. Previously, football star Cristiano Ronaldo collaborated with Binance to issue multiple personal series of NFTs. Today, we can still see the shadow of collectibles to NFTs in the traditional sports world, such as star player cards. Whether it is collectible NFTs or physical cards, as well as player cards featuring prominent stars, their value depends on the fame of the players.

Among the physical player cards that have been auctioned for over 1 million USD, there are big-name players from various fields such as Mickey Mantle, LeBron James, and Patrick Mahomes. The rarity and aesthetic design of the cards are additional factors. When collectibles are presented in video form, whether it is a memorable moment of the player also determines its value.

(Adding value with memorable player moments: LeBron James’ highest selling price is nearly 20,000 USD for a shooting moment that made him the all-time leading scorer)

In the field of sports collectible NFTs, Dapper Labs is the undisputed leader, and its collaborations with NBATopShot, NFLAllDay, LaLiga, UFCStrike, and others cater to the needs of fans from different top sports leagues. It can be said that Dapper Labs and its collaborative products are the culmination of a LianGuainini-style card collecting gameplay.

Among them, NBATopShot is the most popular, relying on the endorsement and fan base of NBA, NBATopShot once reached a daily trading volume of more than 40 million US dollars at its peak, and has always remained in the top five of the NFT trading market. However, the good times didn’t last long, NBATopShot soon declined, reasons including an excessive supply of player cards in a short period of time, limited exciting moments to current players, and the SEC’s lawsuit against the parent company.

(NBA is a league with high attention to sports NFT)

It can be said that the decline of collectibles to NFT is inevitable. Similar to stamps and other niche collectibles, most sports collectible NFT players are a combination of sports fans and Web3 users. When the NFT market cools down and there is a lack of new players entering the market, the trading market becomes stagnant. With the downturn of the NFT market and the actions of project developers, NBATopShop’s activity has been low since reaching its peak in 2021.

(With the cool-down of the NFT market and the actions of project developers, NBATopShop’s activity has been low since reaching its peak in 2021)

Fantasy sports gamified NFT

Although the enthusiasm for sports collectibles to NFT has declined, sports itself still has a large fan base, especially in the top global sports leagues. With the entrance of DraftKingsReignmakers, Sorare, and others, sports NFT gameplay has been upgraded, injecting more game elements. From the decline of collectibles to the popularity of gamified NFT, sports fans only need one trigger point to become obsessed.

According to CryptoSlam data, there has been a significant trend of PFP transitioning to gamified NFT in the NFT market in the month leading up to October 24th this year, with two sports event game NFT appearing in the top five, surpassing well-known NFTs such as CryptoPunks and MAYC.

Sports games usually focus on realistic simulation and management gameplay. However, the current mainstream Web3 sports games emphasize NFT-centric “fantasy sports” management simulation gameplay. This is a type of game where you operate a team from the perspective of a club manager. The reason for choosing this approach is that EAFC, F1, and other realistic simulation games developed by sports game giants are already very mature. These games have gained recognition from a large number of sports players in terms of cost investment, graphics presentation, and maturity of modes, and have established a strong market share on PC and mobile platforms. Therefore, starting from scratch in the field of Web3 sports games makes it relatively difficult to get a piece of the pie.

(The changes in game NFTs represented by Sorare and collectible NFTs represented by DapperLabs over the past two years reflect the trends of both:

DraftKings, Sorare, UltimateChampions, and other Web3 sports games have chosen the “fantasy sports” gameplay perfectly, combining real matches with NFT elements, allowing players to simulate matches by predicting the player and team’s performance. This pattern is not new in the sports gaming industry, similar to FM (Football Manager) and fantasy basketball which have already established mature simulated match mechanisms.

But what makes Web3 sports games different is that the core lies in the star card NFTs, allowing players to trade them on the secondary market, thus monetizing the star cards and attracting a large number of speculators. Interestingly, the growth potential and rarity of players directly affect the prices of the player cards. For example, the star NFT of NBA’s young talent Giannis Antetokounmpo was sold on Sorare for 113.888ETH (approximately $186,000) earlier this year.

The core of maintaining long-term playability in “fantasy sports” has two aspects.

1. Keeping timely updated data

Unlike most game fans, the appeal of sports games primarily comes from sports fans. Deep sports game fans have a relatively high degree of overlap with real sports fans. From EAFC (formerly FIFA) to NBA2K, although they have evolved from stunning debut hits to routine reskins with continuous criticism, they still maintain strong money-making capabilities, in which the timely update of game data is the main reason for their success.

In simulation sports games like DraftKings Reignmakers and Sorare, players need to understand real player data and comprehend the tactics and overall team status, which effectively attracts passionate fans. For such players, once enough stickiness is formed, timely updates of roster data are more important than changes in graphics, actions, or gameplay diversity. Although most sports games only undergo minor updates each year, players have a relatively high tolerance and are willing to pay for more timely sports data. If player and team data do not have timeliness, the attractiveness of such games will significantly decrease.

2. Revenue models favored by rarity

“Fantasy Sports” games refer to the preferences of players in MyTEAM and UltimateTeam for the rarity of stars, obtaining revenue by dynamically adjusting the player card pool. This includes frequent increases in the card pool limit (player ability value, salary cap, etc.), prompting players to purchase card packs and participate in lottery draws, or directly purchasing game coins to obtain their favorite players.

However, the mainstream “Fantasy Sports” gameplay in Web3 sports games also has some flaws. For example, due to the long game cycle, the continuity is weak, making it difficult to ensure that players maintain sufficient attention throughout a full season lasting one year. In addition, the gameplay of “entrance fee + prize pool” is often considered to be gambling-like, such as game entrance fees, player selection (similar to betting), sharing prize pools, which resemble gambling behavior. On the surface, players need to rationally predict player performance, but in reality, luck is also needed. In addition, the high barrier to entry of the game is not friendly to new fans or non-fans.

In addition to fantasy sports games such as Sorare and DraftKings, other sports blockchain games have yet to make waves.

Previously, FIFA and EA launched four different modes of Web3 games due to the issue of high-priced contract renewal, but these games were not attractive enough to fans. Specifically, there is a big gap in gameplay, visual presentation, and rights to player portraits compared to mature Web2 sports games. In the future, with the attempt of 3A-level sports games such as “Goals” to enter Web3, this situation may improve.

A new direction for sports NFTs

In addition to the above scenarios, a new gameplay of combining NFTs with real sports is also an excellent attempt for NFTs to move from virtual to real, such as NFT tickets.

NFT tickets have already had precedents in the music field, and their biggest role is to prevent ticket scalping and fraud. However, most ticket NFTs are disposable and have a relatively short validity period. After the NFT ticket enters the venue, it only retains its collection value, but apart from rare NFT tickets (such as a star’s debut, or collaborations with celebrities), their value is limited.

Sports events give NFT tickets the possibility of long-term use – such as season tickets for team home games. For some clubs with a large number of fans, team season tickets are basically “hard to come by.” NFT tickets can be used as a team POAP, and clubs can issue loyalty point programs similar to “Odyssey,” such as purchasing team merchandise, verifying the number of attendance in the current season, retaining or eliminating season ticket holders, and allocating seats for the next season.

Clubs can also provide benefits to high-scoring NFT holders, such as player-signed clothing, offline meetups, etc. In July last year, Paris Saint-Germain sold three NFT tickets for a Japanese tour worth over $220,000. Buyers were able to gain unique privileges.

Although NFT tickets are a good solution, sports fans cover all age groups throughout the year,
NFT itself has a small audience, and sports fans are usually older and more conservative, slow to accept new things. At this stage, ticket NFTs are more suitable for small-scale promotion.

NFT Governance

Web3’s decentralized nature makes democratic decision-making for teams possible. Last year, due to political reasons, former Chelsea club owner Roman Abramovich had to sell his shares in the team. Some fans wanted to protect the interests of the team and during this transitional period, they launched a crowdfunding campaign to buy 10% of Chelsea’s shares, establishing ChelseaDAO and hoping to participate in key team decisions in the future.

(During Chelsea’s turbulent period, fans hoped to raise funds to establish a DAO organization to take over part of the team’s affairs.)

Due to various reasons, ChelseaDAO ultimately failed. However, in the town of Crawley not far from England, a small-scale democratic “revolution” has already taken place using NFTs: WAGMIUnited, a Web3 capital, acquired this football club in the English League Two, allowing fans to participate in team development through Web3 management methods (with NFTs as the core governance). They introduced voting to decide the team’s recruitment positions and allowed season ticket holders and NFT holders to vote together.

Although this management method is very democratic, it seems to have little to do with the club’s performance. Crawley Town’s performance fluctuated during the season, with frequent changes in head coaches, and the final result was narrowly avoiding relegation at 22nd place.

Crawley Town’s poor performance may be related to the lack of professional knowledge among fans in sports management. This is also a common problem with DAO management – community voting relies more on common sense rather than professional knowledge. In addition, due to information asymmetry, information about the team’s daily operations and locker room management cannot be fully known to the outside world.

It can be foreseen that when the overall decision-making power of the team is handed over to fan DAO, this democratic management approach lacking innovation and long-term perspective will be difficult to improve the team’s performance.

Club Fan Tokens: A New Attempt to Empower Fans

In addition to NFTs, Fan Tokens are another business model related to sports fans. Unlike NFTs, which have poor liquidity and passive price fluctuations, Fan Tokens actively give governance rights to assets. Previously, there have been fan groups hoping to operate clubs through “DAO+Token”. Fan Tokens provide this opportunity, allowing fans to participate in certain governance activities, such as deciding the team captain’s armband for a particular game, club bus design, pre-match songs, and other affairs, giving fans partial voting rights.

In this model, clubs also benefit. Chiliz, as a leading Web3 sports fan project, has incubated Fan Tokens for several clubs, including AC Milan (ACM), Atletico Madrid (ATM), and Tottenham Hotspur (SPURS). Chiliz’s incentive platform generated $12 million in revenue in 2021 through Fan Tokens, and clubs collaborating with these Fan Tokens can receive a share, providing new revenue streams for the teams.

For example, in 2020, Barcelona’s Fan Token sold out on the day it was launched, generating $1.3 million in sales revenue, some of which was shared with the club, adding to its financial income.

( has established partnerships with multiple sports clubs)

However, the revenue from Fan Tokens has limited impact on the club’s finances. Broadcasting rights, match days, and real-world commercial activities are still the main sources of income for sports clubs. Taking Barcelona as an example again, a club facing financial difficulties, according to data from the Deloitte Football Money League 2023, the club’s revenue in 2022 was nearly 640 million euros, compared to this, even’s revenue for all collaborating teams in 2021 is just a drop in the ocean.

(Breakdown of FC Barcelona’s income in 2022, source: “Deloitte Football Money League 2023”)

At the same time, Fan Tokens have become “a means for fans to show their support, and a speculative target for non-fans”.

On one hand, the transactions that token holders can participate in are limited, with few relevant transactions available each season, and most are inconsequential, with major decisions still being managed by club executives. On the other hand, Fan Tokens lack long-term investment value and become a disguised gambling arena. While collectible NFTs of popular players can be sold for high prices due to rarity, Fan Tokens have no value anchor, and even the club’s position in the league and performance in matches can affect Token prices.

During the 2021 European Championship and the 2022 World Cup, Fan Tokens of different teams experienced price fluctuations at different stages of the matches. Even during the offseason, a club’s transfer activities, departure or arrival of star players, can also have an impact on Token prices. It can be said that these meme-like Fan Tokens are essentially guided by fan emotions.

Web3 and Sports IP in the Cold Winter

In the past, Web3 sports projects aggressively launched advertising displays, NFTs, fan tokens, metaverse games, and other scenarios that revolve around fans. These scenarios provide fans with benefits and convenience, but they haven’t quite won over the fans.

Firstly, the concept of fan groups itself is quite complicated. Sports fans cover all age ranges and include people with different cultural backgrounds and ages. It will take a long time to get the majority of these people to accept new concepts.

Secondly, after witnessing several European giants like Manchester United and AC Milan introducing foreign capital, the turbulent management of these clubs, operated with the mindset of a public listed company, lasted for years, even decades. Traditional European fans are generally skeptical of foreign capital involvement in their club’s affairs, let alone understanding Web3 capital, which is still unfamiliar to most people. Although this doesn’t mean that Web3 capital investment in a team is destined to fail, at least the failure of Crawley Town has left a lasting impression on the fans.

Nevertheless, sports clubs have a massive fan base, which is why Web3 capital is unwilling to give up on sports projects. However, if Web3 itself wants to gain recognition from fans, it not only needs to genuinely benefit fans but also needs to prove its own value first.

In the 2021-2022 season, the cryptocurrency industry provided approximately $130 million in sponsorship for the NBA, becoming the second-ranked sponsorship category for that season. Adidas, Nike, and other major sports brands have also entered the Web3 scene in recent years. Just as Web3 and sports were entering a honeymoon period, a series of scandals like FTX’s collapse implicated stars like Tom Brady and Stephen Curry, who had previously endorsed FTX. Even the partnership naming rights between the Miami Heat and FTX were terminated. To make matters worse, Voyager’s bankruptcy and its collapsed partnership with the Dallas Mavericks further tarnished the reputation of Web3 in the sports industry, leading to a sharp decline in its reputation.

The crypto industry wants to build a massive commercial empire through sports events, but the continuous negative news not only damages its own image, but also drags some people in the sports circle down with it. This makes the sports industry have to approach Web3 capital cautiously, deepening the gap between them.

Is it Web3 that needs sports fans, or sports fans that need Web3? Although it is often said that the combination of Web3 and traditional sports can bring in new revenue for clubs, compared to mainstream sources of income such as ticket sales, broadcasting rights, and fan merchandise, it seems insignificant. In terms of visibility, Web3 capital seems to need the promotion of sports events to expand its influence. However, whether it’s influence or income, Web3 and sports IP haven’t yet achieved a “1+1>2” effect. Moreover, from the perspective of finding investors, traditional sports clubs clearly have a preference for traditional capital, while Web3 capital represented by FTX lacks this stability.