Invincible invisibles? Infrangible non-fungibles? The NFT craze and the sports collecting space
This generation’s Pet Rock, or the future of investment? High-tech Ponzi scheme, or a revolutionary democratization of the economy?
These and many other questions surround non-fungible tokens, or NFTs — the acronym now ubiquitous on the internet. Two years ago, the only people familiar with the abbreviation seemed to be unemployed, technologically savvy millennials and Gen Zers. And some overcaffeinated, professional YouTubers. However, that’s changed. NFTs are now covered by The Wall Street Journal and BBC News (yes, this is a global phenomenon), as well as other mainstream outlets.
It sounds a bit dubious and silly to own intangible electronic items. However, digital art has sold for tens of millions of dollars. A LeBron James dunk NFT sold for hundreds of thousands of dollars. Money talks.
Digital collectibles have transformed the hobby of sports collecting. They come with both advantages and disadvantages when compared to the trading cards and memorabilia of the conventional sports collecting world. Most salient, NFTs don’t require authentication or grading (and, in theory, are impossible to counterfeit), unlike trading cards and other items, such as autographed baseballs. Major trading card authentication and grading companies suffered backlogs of millions of cards in recent years. This never-before-seen quandary made NFTs attractive to frustrated and impatient card collectors.
Tyler Holzhammer, content producer at Sports Card Investor (and godson of baseball Hall of Famer Andre Dawson), recognizes this issue, along with the overall pros and cons of NFTs when compared to traditional collecting.
“The benefits of NFTs include instant transactions, no shipping, no concern about returns, and no grading,” he says. “It’s a slick and smooth marketplace to buy and sell.
“But there are cons with NFTs. Nothing is sent to you, so you can’t have an item in your hands like with a card or piece of art. Plus, we know the longevity of the value of physical cards, whereas the value of NFTs might get diluted.”
Ian Linde, CEO of Collectionzz and a veteran Wall Street trader, emphasizes the marketability of NFTs, but also takes a skeptical, Economics-101 perspective.
“NFTs fit the digital world,” he states. “Millennials embrace digital content, and NFTs attract a big audience. It’s good that NFTs are aligned with a digital currency.
“But there are drawbacks. There’s lots of speculation, the ability to manipulate, and no true regulation. Value becomes debatable because there is no price history or data points. It’s based on whatever people accept the value to be. There are also no royalties or utility.”
Longtime sports collector, buyer, and seller Les Wolff is optimistic.
“NFTs open a whole new window and source of revenue,” he says. “You can post and share your activity with NFTs on social media. And you don’t have to worry about physically protecting them.”
Founder of Les Wolff Sports, LLC, and member of the International Society of Appraisers, he is shocked at the exorbitant, “crazy” money investors are pouring into NFTs.
Can digital and traditional collecting exist in harmony? Or does the rapid success of NFTs threaten the conventional market? Recent sales of physical sports cards indicate a future of peaceful, profit-producing coexistence. In the past year, those sales have dwarfed previous records. Even middling cards have sold for more than they ever have. It’s all fed a ravenous $6 billion sports card industry.
Another question has emerged: Could collecting cannibalize itself? Some popular NFTs feature real-life photos and items. The Muhammad Ali NFT collection, for instance, includes digitized famous photos of the boxer in the ring, as well as those of his signed gloves. What does that mean for the value and significance of the original photos and collectibles?
“An NFT of an actual item can be good for the value of that item because the NFT will bring an extra awareness to it,” Linde says.
Holzhammer thinks it’s an interesting concept, though not without its flaws. “It would be cool to see a Michael Jordan ‘flu game’ NFT or something similar,” he says. “But it can be tricky to determine value and what you’re actually getting, especially if a player puts out his own NFT that’s not associated with a company.”
If done prudently, investing in collectibles, whether physical or digital, can rival traditional forms of investing. In recent years, sports card investments have often outperformed the S&P 500, money markets, and certificates of deposit. Should people shift some of their money from stocks to Mickey Mantle cards? Again, the answer isn’t simple and involves self-reflection.
“Wall Street trading, collecting, and NFTs all involve supply and demand, liquidity, speculation, and some form of gambling,” Linde observes. “Similar principles, but different motives. Collecting, however, involves more emotion than trading.”
The physical and digital collecting markets are saturated. It can make a beginner feel overwhelmed and intimidated. The solution? Stick to certain core principles. Holzhammer warns not to be swayed by the advice and actions of popular influencers. Instead, he recommends finding corners of the market that have yet to be swamped. Hockey and soccer cards, Marvel cards, and tickets and programs have all been overlooked, according to Holzhammer. At any rate, he encourages investors to chase significance, not mutable trends or prices.
“I like to do a player analysis before a product analysis,” Holzhammer says. “For example, if you gave me $500 to invest right now, I’d probably put it into a Jackie Robinson card because he’ll always have significance.”
As with anything new, the NFT and crypto worlds are specked with imperfections. It’s hard to discern what is real and what is not. And most people still don’t know what cryptocurrency is—maybe it should be renamed cryptic-currency. Others refuse to trust what they can’t see. Yet the crypto beat goes on.
“I read that people who are still physically collecting are just like the people who were clinging to compact discs when MP3 players were coming out,” Holzhammer says with a chuckle. “But those trading cards, those pieces of cardboard, still matter.
“It’s all about what is considered historic and valuable.”
Peter Kropf (https://muckrack.com/peter-kropf) is a sports journalist based in New York City. He explores the often overlooked human side of sports.