September 27, 2023
NFL, NFLPA give Dapper Labs runway to face crypto winter

Photo by David Ulitt/Getty Images

Although there is less public enthusiasm for the blockchain collectibles category today than it was last year, NFL partner Dapper Labs is sticking with it and its All Day product. Ahead of this football season, both sides updated their financial relations, offerings, and their expectations for the new crypto era.

The league and NFLPA each took an equity stake in Dapper when they launched the business together in 2021. All Day launched last year, offering NFTs featuring recent and historical NFL content. According to this, the platform’s secondary sales averaged more than $12 million in August, September and October 2022 CryptoSlam! data. Total sales on the market haven’t topped $4 million in a month since then, as blockchain assets struggle to return to their ’21 heyday.

According to reports, the crypto collapse left All Day millions short of previous expectations. At one point, the NFLPA flagged $41.8 million in missing licensing and sponsorship revenue in a filing with the Department of Labor, with most of that figure likely coming from the group’s new partnerships for products like All Day and DraftKings’ NFT-based ReignMakers game. Was connected.

In July, Dapper announced its third round of layoffs in less than a year, cutting 51 employees. “With this restructuring, we have made the business even leaner,” CEO Roham Gharegozlou said in a statement at the time, “which will let us do the right thing for our fans and grow our communities in the healthiest way possible.” ,

Behind the scenes, OneTeam Partners, a joint venture between the players’ union and the league, worked with Dapper to update the terms of its partnership, allowing the partners to move forward with the product for a second season, according to sources close to the discussions. eased in, and offered Dapper a multiyear runway.

Although the financial terms of Dapper’s football deals have not been disclosed, it has become customary this year for rights holders to accept small guaranteed payments in exchange for other benefits, such as an increased equity stake or a higher percentage of potential future revenues. .

Offering increased possibilities for partners rather than higher guaranteed payments could reduce the pressure on blockchain companies to derive revenue from the existing market, allowing them to take a long-term approach to audience growth.

And those deals could change again. Insiders said it is not unusual for agreements to be regularly developed in emerging categories as young partners try to create new business models.

Given the league’s switching costs, digital collectibles platforms may also have an advantage over others in the licensing world. Extensive workflows have been created to support the creation of collectibles, and steering fans toward a new product is more complex than purchasing a shirt made by a different manufacturer. Much of the utility of the product will also be lost if the host platform is no longer an official league partner.

Additionally, with the runaway success of NBA Top Shot, Dapper has the advantage of being a relatively well-known (and well-capitalized) player in its category. If the rightsholders attempt to take their deals elsewhere, they may also face trouble finding a keen replacement. In fact, other NFT startups are already missing out on the long crypto winter, including Recur, which previously launched a college sports-focused product and raised $50 million.

That said, the NFL has continued to develop additional NFT partnerships, such as the NFL Rivals game from Mythical Games, which recently Claim Total 2 million players.

The sports NFT category showed signs of life in August, with major products garnering over $36 million in combined volume. First Mint. On Wednesday, DraftKings — whose data includes primary sales — topped all NFT collections in activity, while NFL All Day cracked the top 10 on Friday after selling out weekly pack drops for three consecutive weeks.

With an updated product line, All Day’s September sales have already topped monthly secondary sales numbers every month since February. This season, the All Day Showcase has several new features unique to digital collectibles.

For example, Dapper Labs introduced “Dynamic Moments”, a set of collectible items that will include highlights accumulated over the course of a season, depending on how well a player or team performs. This way, even if a star like Patrick Mahomes has all-day-worthy plays this season, they can be reflected on the stage without the company needing to dilute the rarity of his individual top-tier “moments.”

“Dynamic Moments is the culmination of a lot of conversations and a lot of strategic planning over the offseason with the NFL and NFLPA,” Adam Barrick, Dapper Labs’ vice president of sports business development, said in an interview. “It’s really one of the focal points of this year’s product.”

Those collectibles will also have special significance in All Day’s game mode, Playbook, which tasks users with capturing “moments” associated with the highest-performing players each week.

On the other end of the spectrum, All Day announced that it would be producing generic tiered collectibles without visible serial numbers, providing a more accessible entry point to the product. Dapper Labs is hoping to attract avid NFL fans in addition to those particularly interested in blockchain assets. Along the same lines, it is also introducing more products focused on teams rather than individuals. This year, Dapper plans to work more closely with NFL clubs, marketing its product through team digital channels in addition to its own and the league’s own.

Target? Making its platform as dynamic as its latest products, and proving that blockchain offerings are here to stay.


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