During an “Art of Business” event at Rocket Mortgage FieldHouse in mid-June, more than 50 NFTs of the Cleveland Cavaliers’ locker room were given to corporate partners.
The digital collectible starts as a wide view of the home team’s locker room, before zooming in on a locker. Viewers see the doors of the locker slightly move a few times, along with a reflection of the wider space.
In the coming months, if the Cavs’ plan comes to fruition, fans will have their own digital lockers, where they’ll be able to store NFTs that show off a wide array of memorable moments and collectibles.
The idea, Cavs senior vice president and chief information officer Mike Conley said, is to build “a community and engagement platform and an experience around the collectible concept,” instead of “just a drive-by, ‘Hey, we’re going to release some NFTs.’ “
NFTs, or non-fungible tokens, are unique pieces of digital content — from artwork to songs, tweets and memes — that can be “minted.” When an NFT is authenticated, it lives on the blockchain, where it can be bought and sold, via a cryptocurrency called Ethereum, and its digital path can be tracked.
NFTs have soared in popularity in the last year, and the NBA has been at the forefront. By May, Top Shot, the NBA-affiliated NFT platform operated by Dapper Labs, had surpassed $700 million in sales and one million users in less than a year.
The majority of Top Shot’s revenue stems from a 5% seller’s fee for NFTs that are traded on the secondary market. Those funds are shared by Dapper Labs, the NBA and the players’ association.
For individual teams, NFTs are more complicated, Conley said, because of intellectual property rights.
“Traditionally if you think about it, the fan journey and everything that leads up to the ticket itself is kind of team-owned,” the Cavs’ senior VP said. “The second that somebody gets into the venue and starts to take in the product inside the bowl, it has an NBA IP.”
As of mid-July, the Cavs were one of seven NBA teams that had launched an NFT program. Conley said the league opened a “trial-and-error period” for teams to explore what’s possible with the collectibles. That ends on July 31, the Cavs’ CIO said, and clubs are expecting a new round of guidelines.
A league source told Crain’s that the NBA is still determining whether a new set of NFT rules are necessary.