One of the most asked questions of the last few weeks have probably been: What the hell is an NBA Top Shot?
As we — the societal “we” — educate ourselves about cryptocurrency, blockchains, Bitcoin, Dogecoin, and others, the influx and advancements made in the non-fungible token (NFT) space are becoming harder to keep track of. But in the sports world, in particular, we’ve now become acquainted with NBA Top Shot. Top Shot, which is licensed by the NBA and the National Basketball Players’ Association, is built on a blockchain called Flow, an ecosystem providing an open-world for the forthcoming breed of digital assets.
Dallas Mavericks CEO Mark Cuban, an early proponent of NFT’s, said Thursday night with Alex Kennedy of BasketballNews.com and Oliver Maroney of Cameo that these digital collectibles are attractive because they’re easier to obtain for younger investors.
“You’re collecting something that you enjoy,” Cuban said at the 14:05 mark of a sit-down last night. “Like anything else, I collected stamps as a kid, not because I was going to use them to send a letter, but because I thought they were interesting and cool. This is the same way. Having a Luka Dončić step-back three to win against the Clippers moment is cool … and particularly for [Generation Z], everything of value is on their phone.”
The simplified version of what Top Shot’s actual function is that it’s rooted in digital investing, to Cuban’s point. Launched by Vancouver-based blockchain company Dapper Labs, Top Shot is built-around NBA highlights, or as CBS Sports’ Gabriel Fernandez writes while explaining the intricacies behind the new digital obsession, collectibles.
“[Top Shot] allows users to procure a collection of digital basketball highlights, and then show off that collection to others. To get these NBA highlights, which are referred to as ‘moments,’ actual money must be spent in some way, either through purchasing digital packs containing a random assortment of these moments or through spending money in the marketplace.”
Or, as explained to us by HQ Trivia Host and Esports and NBA2K League Correspondent Jeff Eisenband, it’s a glimpse into the future of financial literacy.
“Imagine getting in on the ground floor with baseball cards in the early 1900s,” Eisenband said. “That is what many people believe is going on here. NFTs are the new wave of digital collectibles, and many people feel they are getting in early with moments that will only be considered rarer as time goes on.”
At a quick glance, it may appear as a buy-and-resell fad that many could grow disenchanted with. But the reality is that Top Shot’s growth had been brewing for several months. The Action Network’s Darren Rovell noted back in January that Top Shot was on the verge of an explosion, highlighting that despite being born in July 2019, it didn’t pop until this season, doing around $7 million in sales by the end of 2020.
“Ever since the publicity of the Ja Morant sale, the marketplace has seen more than $1 million in sales on the platform every day. The company is close to $20 million in sales — $6 million from packs, and $14 million on its secondary marketplace, with more than half of that in the last month.”
Shortly following the sale of Morant’s dunk, Jack Settleman — the founder of SnapBack Sports — led a group purchase for a LeBron James dunk that went for $47,500, the most profitable sale prior to Top Shot’s recent uptick.
Later in his story, Rovell also noted Top Shot is similar to traditional card packs, with more upside in its investment.
“Collectors can get common cards or coveted highlights, with the specific number of a highlight also a part of the appeal. The No. 1 always has value, but so too does the number correlated to a player’s jersey. Let’s take the Ja Morant dunk that went for $35,000. That was part of the first series of that dunk release called the Cosmic. The original owner got it out of a pack and sold it in November for $1,999. That owner sold it to the current team, making 15-times his money in less than 50 days. On the marketplace now, there are three sellers offering their version of the Morant dunk from the Holo series, the second version that came out. They are each valuing their edition at $100,000 based on the fact that the Holo series is only numbered out of 25.”
Regarding Top Shot, which technically is still in its beta stage, ESPN’s Brian Windhorst made a similar assessment last month.
“Top Shot has gained traction with more than 50,000 users having bought in and spent more than $65 million in the process, according to crypto tracker CryptoSlam.”
According to CBS Sports, the same tracker listed over 88,000 buyers with over $278M in sales as of March 2.
On the aforementioned Eisenband’s Eis On The Prize Podcast, DapperLabs Community Lead Jacob Eisenberg called in the future of sports collectibles and made a case for why people should invest in the blossoming platform.
“Parts and elements of being a collector are all about kind of finding steals of deals and NBA Top Shot and just the instantaneous nature of being able to pull a great moment from a pack,” Eisenberg said. “Being able to exchange and interact with other collectors in the marketplace really creates this hybrid experience that I think is part-investing, part-collecting, and part daily-fantasy sports even.”
Eisenberg went on to say that Top Shot allows for true ownership, even if it’s not something you can touch with your hands.
“I could go to Etsy or Amazon and buy a print of the Mona Lisa and hang it on my wall,” he continued. “No one really cares about the item itself unless it’s authentically-licensed or authenticated in some way. And NBA Top Shot, of course, exists on blockchain … and it allows for true ownership and authenticated scarcity.
“So, for example, be it Jack (Settleman’s) LeBron dunk. We know that there are only 59 of those in the world. We can trace exactly who owns which serial number of which. Jack got LeBron’s jersey match of No. 23, so that, historically, we’ve seen first mints being serial No. 1 and the jersey match are the two most valuable and coveted of those moments in existence. Trying to explain trading cards to someone 125 years ago would have been on a different planet, then fast forward 100 years ago, Honus Wagner’s T206. Like, all the sudden, people understand it’s all about supply and demand, and we can establish a scarcity on blockchain that ensures that the demand will always be higher than the supply.”
And being that there’s a licensing agreement between the NBA, the NBPA, and Top Shot, it does mean that players are getting a cut, as well as the league, Eisenband (not Eisenberg, I know, it can get confusing, they even have the same initials) adds.
“The moments are officially licensed by the NBA and NBPA, so NBA players are directly profiting from the platform,” he said.
And according to HoopsHype’s Michael Scotto, who wrote a story about Top Shot earlier this month, providing insight into the revenue sharing agreement between the players and the platform. Scottie wrote the following:
“The NBA and NBPA have a revenue-sharing agreement with Top Shot. For every single moment that’s transacted there, there’s a five percent seller’s fee. That five percent is revenue shared between Top Shot, the NBA, and NBPA. When a player’s moment is sold, the cut is divided across the entire league and not just to that specific player. As a result, there’s no direct financial incentive to the players other than viewing Top Shot moments as investments.
The agreement is no different than the rest of the players’ consumer product licensing. The revenue is derived through the royalties generated from the licensing of the active NBA player IP [Intellectual Property] rights, where active players receive a portion of the royalties generated. As of right now, G League players’ and former NBA players’ IP rights are not being used in the product, so they do not make money off Top Shot.”
In late February, CJ McCollum joined ESPN’s The Jump, discussing one of his dunks going for $18,000 and the general curiosity around Top Shot.
“A lot of players are inquiring about it, trying to learn and educate themselves about it,” McCollum told Jump host Rachel Nichols. “I’ve grown closer to the fungible tokens and what they consist of and trying to figure out what moments I should buy. I’m looking at rookies; I’m looking at LaMelo Ball’s first assist; I’m looking at Zion (Williamson’s) first dunk, trying to pick certain things that make sense for me.”
Is Top Shot not just here to stay but built to last? Who the hell knows. But it absolutely has the backing it needs both internally and externally to make it so that it’s more than a fad. It’s also soon expanding to the UFC, so if you have enough disposable income, God Bless.