John Terry’s collection of non-fungible tokens (NFTs) have plummeted in value by 90 per cent over the past month, with England internationals Tammy Abraham and Ashley Cole quietly deleting their endorsements of the controversial scheme, The Athletic can reveal.
This comes as the Premier League is considering its own official NFT partnership deal potentially worth hundreds of millions of dollars, despite the sector being completely unregulated, and the subject of fierce criticism.
Terry’s ‘Ape Kids Football Club’ NFTs were publicly trading for an average price of $656 after launch on February 2, but by March 8 the average price had dropped to $65.
This means football fans who bought NFTs because their heroes endorsed them on social media stand to lose huge amounts of cash.
Non-fungible tokens are a form of digital asset based on blockchain technology that underpins cryptocurrencies like Bitcoin and Ethereum.
To their advocates, they are the modern iteration of trading merchandise like stickers or clothing, but to detractors, they are enriching the already wealthy to the detriment of sports fans exposed to unregulated financial speculation.
There has been a general dip in the cryptocurrency and NFT markets in recent weeks, which may explain part of the dip, though not nearly as big as 90 per cent.
After Terry announced Ape Kids Football Club in January, the Premier League staged a legal intervention over NFTs which used an image of the trophy, protected by intellectual property laws. Premier League, UEFA and FA trophies were removed from the Ape Football Kids Club NFTs, as well as the badge of Chelsea, the club which Terry now works for, for similar reasons.
(Photo: GLYN KIRK/AFP via Getty Images)
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What is Ape Kids Football Club?
In December, Terry enthusiastically endorsed ‘Ape Kids Club’, a collection of NFTs featuring baby monkeys based on “a magical world where apes ruled the metaverse”.
The project claims to offer an exciting “roadmap” that shows what people can do with their NFTs.
A basic mobile game was recently released but it is not clear what the “project” really offers besides creating a bunch of virtual assets which can be speculatively traded online.
Detractors say NFTs are merely a vehicle for financial speculation and, in those terms, the tokens are failing miserably. The Ape Kids Club tokens have lost a great deal of their value since first being publicly traded.
Weeks later, Terry announced his own collection, the Ape Kids Football Club, where digital images of monkeys dressed in football kits would be traded online.
Terry is not merely a promoter, rather the project is marketed as coming directly from “John Terry and the team”. Terry himself is a prominent member of the online ‘community’ on social media app Discord and has participated in Twitter Spaces online discussions.
As well as promoting it on his own feed, multiple other top footballers subsequently endorsed the project on their own feeds, tagging in Terry.
This proved controversial when the Premier League announced it was taking legal action because of the NFT project using the league’s intellectual property without permission in terms of trophies.
Many of these endorsements have now been quietly deleted, including by Abraham, Cole, Ezri Konsa and Willian.
Some still remain online, such as that of former Arsenal midfielder Jack Wilshere and Watford goalkeeper Ben Foster.
What does the price drop mean?
NFTs are initially “minted” at a fixed initial price. The AKFC tokens had no “public mint” meaning they could only be bought by a select group of people, such as those already holding Ape Kids Club tokens.
They were minted at a price of 0.1 Ethereum, roughly $250. After they are minted, they can then be publicly bought and sold on the app OpenSea which sort of functions like an eBay for NFTs.
Public data on OpenSea shows how the price was high initially, when the tokens were being promoted by top footballers, then gradually plummeted.
The opening average price on February 2 was 0.235 Ethereum, around $650, meaning those who minted an AKFC token and quickly “flipped” it banked a healthy profit.
Flipping it in this way means they would have sold it to someone not party to the public mint, perhaps a football fan who saw their favourite player promote it on social media.
In the five weeks since the tokens were first traded, the value has gone down and down, with fewer and fewer trades taking place.
Most recently they are being traded for around $65.
Effectively this means there has been a huge transfer of cash from the people who bought the NFTs at the high initial prices to the select group of people who “minted” them.
Just as the prices have gone down (and down), it is of course possible they could come back up.
AFKC and Terry did not respond to request for comment but the website boasts of “utility” which gives the tokens value beyond the mere sale price.
The AKFC page on OpenSea says the tokens will be able to take part in the ‘AKFC World Cup’, though it is not entirely clear what this means.
What next for football and NFTs?
At the same time as Terry’s project is tanking, potentially leaving ordinary fans out of pocket, the Premier League is planning its own massive NFT project.
This was discussed at a shareholder meeting that could see the 20 clubs launching officially branded tokens in a deal that advocates think could be worth hundreds of millions of pounds.
US basketball league recently launched NBA Top Shots, where fans can buy highlights and clips.
Although these are supposedly “scarce” and “limited edition”, the same highlights can be viewed for free on YouTube — the scarcity refers to a specific token linking to the clip in question, which can then be bought and sold.
Although any Premier League deal would likely be far more sophisticated than Terry’s collection, many of the same concerns remain.
There has also been backlash to NFTs promoted by players such as Liverpool’s Andy Robertson, who quickly turned off replies after attracting furious responses on Twitter.
Meanwhile, Socios, a “fan engagement” cryptocurrency company, has also faced fierce backlash from football fans upset at the perception their clubs are trying to “monetise” them by promoting volatile cryptocurrency which has recently tanked in value.
The Premier League’s NFT deal is a high-risk one to strike.
On the one hand, it could bring in much-needed cash at a time when wages and other costs are spiralling constantly upwards.
On the other hand, the league’s reputation could take a hit if it is seen to be cashing in on unregulated financial speculation which could hit ordinary fans in the pocket.
The apparent failure of Terry’s NFT collection will help the sceptics’ case.
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