Over the past few years, NFTs have flourished in the sports space, making the headlines as clubs took advantage of what was being described as a ‘new era’ of fan engagement.
However, Tim Mangnall, CEO of Capital Block, observed a trend of clubs in fact slowing down their interest in and work with these digital assets – perhaps as a result of failed drops the industry has seen – in a discussion with Insider Sport.
Insider Sport – Firstly, are you able to tell us more about your role at Capital Block and what the agency does? How has the role of NFTs grown within the sports industry?
Tim Mangnall – Capital Block is a sports focused NFT agency, advising football clubs and sports organisations on their NFT strategies and how to navigate what is a new and growing space. NFT stands for ‘non-fungible token’ and describes any digital asset, such as an image, video, or sound clip, which is completely unique. The authenticity of an NFT is verified on a blockchain, a database which records transactions in a digital format and provides buyers with proof of ownership.
NFTs are traded at a value determined by buyer demand. NFTs have the potential to offer exclusive content and opportunities outside of simply owning the asset itself which is why we believe it is the most powerful fan engagement tool ever known in sports, particularly for a young audience. In the world of football, this could mean fans buy an NFT of their favourite player’s goal and get exclusive rights to a box to watch the next game up-close, limited-edition merch, or behind-the-scenes access.
The likes of Paris Saint-Germain have partnerships with Crypto platforms, but only a small minority of football clubs have an official NFT partner to advise them on a long-term NFT strategy and which platforms to use. You only have to look at what happened to Barcelona and Manchester City to see how badly things can go if clubs rush into the Crypto space without having a platform-agnostic, properly independent team of experts advising them. At Capital Block, we help sports clubs implement roadmaps to ensure their strategy has the best chance of long-term success.
IS – Why has there been a slight dip in interest in NFT partnerships at this time in particular?
TM – Put simply, the intersection between NFTs and sport has been tarnished by poor intentions and clubs’ goldrush mentality. Many NFT launches are failing because of these money-first objectives, which in turn has served to heighten scepticism among fans and, ultimately, has caused a lull in interest in NFTs in the sports world. The NFT space beyond sports has boomed in the past few years and because they are late-adopters, sports clubs particularly in Europe have rushed into it, not giving themselves enough time to plan out the partnerships. Rather than focusing on the financial gains you can make from NFTs, clubs must take the time to understand and play the long game by building a solid strategy. If not, clubs are bound to face many operational risks and challenges and end up alienating their fans. We strongly advise our clients against seeing NFTs solely for their economic advantages or to recoup revenue losses.
The key fundamental when launching an NFT collection, and I can’t stress this enough, is to get the fans onboard first by helping them understand this novel area. Clubs simply have to educate their fans about NFTs and their benefits to stand any chance of conducting a successful NFT drop. Without this education, NFTs are doomed to fail.
The incentive for clubs to launch NFTs is to take fan engagement to a new level and enable them to be closer to their clubs and their favourite players than ever before. Fans can tell if clubs have the right intentions or not so clubs have to stop seeing NFTs as a quick revenue boost and start investing into long term plans for success. Fans must come first.
IS – Can you tell us more about some of the key obstacles that impact the relationship between NFTs and leading sports organisations at the moment, and what can be done to overcome them?
TM – It all comes down to education and America is miles ahead of Europe in this. As this is a new industry, everyone wanting to get involved must get to know the ins and outs of NFTs. For sports organisations to launch more successful NFT drops, the public must be educated about everything NFTs. That’s where we come in to help companies combat this problem by establishing long term roadmaps which start with fan and stakeholder education.
IS – Why is the role of an agency consultation so important when it comes to football clubs forming an NFT strategy?
TM – NFTs have been around for over seven years but the sports industry’s interest in NFTs has only sparked in the last year or so – particularly in Europe. As with any new industry, organisations wanting to get involved with NFTs are very much in need of guidance – two years ago, had you asked a board member at any Premier League club what an NFT is, they would have no idea (and the truth is that most still have no idea today!).
The NFT and crypto space requires expertise and experience, thereby knowledge not a given in the boardroom. I have heard a board member at a leading club before say to one of their team “I remember you talking about crypto before, this is your responsibility now.” Unfortunately, this is not a recipe for success.
In truth, we’re like a law firm or accountancy firm – clubs rarely have that expertise in house, so they bring specialists in. We are those specialists. The agency model allows organisations to be guided through the process, whereby numerous logistical challenges can be overcome by building quality strategies and the right processes. We would also advise to only cooperate with independent agencies, i.e., agencies that aren’t aligned to a single marketplace or crypto provider – only then do you receive truly agnostic advice. For example, the approach we take is to have no agreements with any technologies or third-party platforms, allowing us to find the best bespoke NFT solutions for our clients every single time. Working with an agency also means that due diligence checks are run on all potential Blockchain companies for you, minimising further challenges. In a space like this, it is important to be guided by experts who understand the space and can consult their clients independently.
IS – Are there any football clubs, in particular, that you feel have stood out in the way they have embraced NFTs?
TM – We advise clubs all across Europe and fortunately we’ve had a number of successes to date. With Galatasaray, for example, we advised the club on the creation of a limited number of NFTs honouring club founder Ali Sami Yen. On the foundation day of the club, 1 October at 19:05, the year the club was founded, we launched the NFT drop and sold out in 59 seconds. We should also mention Liverpool’s first NFT drop.
Whilst it certainly caused a stir and received a lot of criticism for the execution, they were the first Premier League club to officially launch a collection of NFTs which is a bold step, and they should be commended for that. On the surface, the numbers don’t make great reading; of the 171,000 available, around 5% have been sold at the time of writing. However, that equates to around 11,000 NFTs which is actually really impressive for European football. Ultimately, Liverpool was poorly advised. The club should never have issued 178,000 NFTs, the ‘journey’ they created from website to purchase was poor, and they put little effort into helping fans understand what NFTs are.
IS – How much of an impact do you believe NFTs have had on fan engagement and how can digital assets continue to evolve the fan experience?
TM – It is still early days to read anything into the impact of NFTs on fan engagement as the field sample is too small. What I will say is that football is getting there, and more people at boardroom level are now seeing the benefits NFTs can bring to fans, the clubs, and ofcourse to revenues. Forgive me if I sound like Tony Blair, but it really is all about education, education, education. You wouldn’t expect someone to buy a Sky or BT Sports football subscription if they didn’t know what they were getting with it, and NFTs are the same. Clubs must make more of an effort to help fans in this regard. Fans are always looking to get closer to their clubs – particularly younger fans and international fans. Clubs therefore must deliver NFTs that provide real utility which, in real world speak, isa range of tangible benefits for NFT holders.
We’ve seen things like early-access tickets, merchandise, and box-access already, but I think we’ll soon be talking about football and NFTs in the context of the Metaverse, where the possibilities are endless – to the extent that only 2 or 3% of the potential has been realised to date. It may not seem like it just now, but successful major NFT campaigns are coming. NFT was Collins Dictionary’s word of the year in 2021 – expect it to be part of the football parlance by the end of 2022.