NBA Brooklyn Nets player Spencer Dinwiddie talked with Bloomberg about the potential of crypto in sports fan engagement. Dinwiddie was the first athlete in the NBA to tokenize his contract on blockchain and launched the Calaxy app that enables content creators to issue personal tokens.
When Dinwiddie attempted to tokenize his basketball contract, he wasn’t allowed. Instead, he issued a bond on business assets and was able to sell only nine of the 90 tokens at $150,000 each, hitting 10% of the $13.5 million target sale. Nevertheless, Dinwiddie says his experience opened doors for other non-traditional sports contracts that give new opportunities for players to monetize their name and for fans to engage with the athletes.
Calaxy is one of those opportunities. In the conversation, Dinwiddie mentioned a future where people will be able to buy stock in other people, mainly athletes and branded personalities. This reality is still abstract and securities laws make that tricky, but Calaxy’s platform is a step in that direction. By letting creators issue tokens under their own name, the app lets a market decide the value of the issuer’s brand. The trading of personality tokens and volatility in price according to their popularity may resemble stock investing, although issuers will push the benefits of engaging with athletes.
For Dinwiddie, crypto tokens are a new way for athletes and celebrities to profit off their own brand. For athletes specifically, this ecosystem enables them to have a source of revenue independent of league contracts and sponsorship obligations.
A lot of activity in the sports space is based on the Ethereum, Flow and WAX blockchains. However, Dinwiddie chose the public distributed ledger Hedera Hashgraph. Unlike most blockchains, Hedera has a governing council of large companies such as Google, IBM, and Boeing, that control the only nodes with permission to write to the ledger, avoiding the potential for forks. Dinwiddie told Bloomberg, “For me, I want to align myself with Fortune 500 companies and have some of that reputation risk management.” He believes the association with the big firms brings validity to what he’s trying to accomplish with Calaxy.
Another perspective on crypto tokens is using them as a means for sports gambling, although Dinwiddie was keen to distance Calaxy from gambling. The market for athlete tokens is still too new to define any particular patterns in their price volatility, but if token prices vary according to a players’ performance, token holders might choose to sell or hold on to tokens ahead of a game based on how they think a player will perform, which is not be dissimilar to gambling.
While the practice of athletes issuing their own tokens is not yet mainstream, sports teams have already caught on. Top football teams AC Milan and Manchester City have partnerships with fan token issuer Socios.com, which also has a league deal with the Professional Fighters League. Formula 1’s McLaren Racing signed with Turkish cryptocurrency exchange Bitci.com for the technology.