The NFL informed teams last month they could not, for now, sell sponsorships to cryptocurrency trading firms, multiple club sources said. Teams also cannot sell non-fungible tokens (NFTs) as the league develops a strategy in the hot and cold market for sports digital trading cards and art.
Other leagues have opened the floodgates for digital assets, but the NFL is notoriously cautious with new commercial categories, going slowly, for example, with gambling and alcohol before relaxing its restrictions. In the case of cryptocurrency, the league will only, for the moment, allow teams to align with companies that are a step removed from the trading, the asset managers that sell funds to track the digital currency markets.
“Clubs are prohibited from selling, or otherwise allowing within club controlled media, advertisements for specific cryptocurrencies, initial coin offerings, other cryptocurrency sales or any other media category as it relates to blockchain, digital asset or as blockchain company, except as outlined in this policy,” according to the new guidelines, as read by a team official, who requested anonymity.
A blockchain is a digital ledger whose technology powers crypto and NFT sales.
The restrictions would appear to exclude some of the principal players in crypto, like FTX, a digital currency exchange endorsed by Tom Brady that has been on a bit of a sports deal binge, including finalizing a 19-year, $135 million naming rights agreement for the Miami Heat’s arena and a 10-year, $210 million agreement to switch the name of esports organization Team SoloMid to TSM FTX.
The NFL is also ruling out, for the time being, team NFTs. The NBA has had great success with NBA Top Shot, its vault of NFTs, which are digital highlights marketed as unique to the buyer. NBA Top Shot is operated through the league, and not by teams.
What the policy does allow, the team official said, is sponsorships with “companies whose primary business is providing investment advisory and or fund management services in connection with cryptocurrency, provided that such advertising sponsorship rights are limited to promoting the company's corporate brands.”
(Photo: Robin Alam / Icon Sportswire via Getty Images)
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Do any teams have a digital asset currency partner?
In May, the New York Giants named Grayscale Investments the official digital asset currency partner of the team. Grayscale’s business allows investors to buy into funds that track the digital currency markets.
The Giants have the only such partnership in the NFL. The team was in touch with the league and aware of the policy outlines before agreeing with Grayscale, said Pete Guelli, the chief commercial officer of the Giants.
“When the guidelines came out, it was within the new guidelines,” he said, “so we didn't have to change any aspect of the partnership.”
Asked about the restrictions, he replied, “The league just wanted to be very deliberate and strategic, about how they move forward. And it's an interesting category, you know, we're in that institutional fund space, but, you know, exchanges, wallets, NFTs, cryptocurrency in general. So there's a lot of different areas to navigate. I think they just wanted to be comfortable that they were approaching it the right way.”
An NFL spokesman did not have further comment.
The state of the market for sports NFTs
While red hot at the start of the year, sports NFTs have cooled. They were more than half of the market earlier this year, but dropped to less than 1 percent last month, with most of the sports NFT volume coming from NBA Top Shot, according to DappRadar, which tracks the market.
“I wouldn't be surprised if the NFL approach is initially from the league standpoint, and then eventually opens up potential rights for the teams,” Guelli said. By that he means NFTs, and crypto, would for the NFL become league-only terrain before teams have the right to sell their own deals.
Why the NFL is notoriously cautious about new markets
The NFL has earned a reputation for a second-mover approach. In sports gambling, the Supreme Court legalized betting in 2018, but only this year did the NFL sign official sportsbook deals.
With the NFL, “we've seen similar (slow approaches) from casinos probably to even spirits and other kinds of new categories over the years,” said Todd Fischer, senior vice president of GMR, a sports marketing firm. “So in some ways, it's not totally surprising but with the move that everybody else has been making, it feels like they are going to be a second-mover. And time will tell I guess if that was the appropriate strategy or now's the time to seize the moment.
“The NFL has really had a strong reputation of not always having to be first, but ultimately still comes out usually being the biggest, given their scale,” Fischer added. “And so I think given their other revenue streams, especially from their broadcast media piece, they probably don't feel as much pressure to go optimize a category in one year, and are going to take a longer-term perspective to it, to figure out where some of the issues lie, as well as possibly give the category more time to mature for more players to come in and create competition.”
The NFL has an internal group focused on digital assets, led by Joe Ruggiero, senior vice president of consumer products. Most consumer product deals are league-licensed, like apparel, so Ruggiero’s leadership role suggests the NFL is looking at digital assets first as league-wide partnerships.
Ultimately, Ruggiero’s group advises the owners’ business ventures committee, which signs off on strategy and any league sponsorships or initiatives in the category that emerges. The NFL team restrictions do not apply to players, some of whom have sold their own NFTs and have long invested in cryptocurrencies like Bitcoin.