Major League Baseball is getting deeper into NFTs.
Baseball and its players union on Thursday announced a forthcoming game with Paris-based Sorare, a company known for its popular non-fungible token soccer games in Europe. Those will be the template for the yet-to-be-titled MLB game, which is expected to launch this summer.
Many details about gameplay remain under wraps while development continues, but users will be able to play for free using a batch of common NFTs of current MLB players to build their rosters for tournaments. The basic, baseball card-like NFTs are provided for free when a user signs up, and winning tournaments within the game — based on how the real players perform on the diamond — gets you more and better NFT player cards.
The new MLB NFT game, positioned as an engagement tool for fans, gamers and collectors, will include a marketplace for users to sell their digital Sorare cards to each other. Baseball and the union will get a share of those sales.
Unlike Sorare’s controversial soccer product in Europe, the MLB game will not reward users with cash prizes.
But because these are NFTs we’re talking about, there is money involved beyond the licensing fees Sorare pays MLB and the union. The sports world was taken by storm in early 2021 when NBA Top Shot NFT collectables of player highlights skyrocketed to hundreds of millions of dollars in resales – with both the NBA and its union getting a cut of each transaction.
NBA Top Shot sales have cooled considerably, but sports organizations (and innumerable companies, organizations and people outside of sports) continue to roll out NFT projects to capitalize on the phenomenon. Or bubble, as many economists warn.
Like its soccer NFTs, the Sorare MLB cards will be created (minted) on the Ethereum blockchain, meaning they each have a unique digital receipt to prove ownership of the NFT, which is simply a digital image that exists on someone else’s computer network. Perhaps more importantly, the technology also allows the use of trackable artificial scarcity for higher tiers of NFT cards that, in theory, will drive the finances of the project via the resale market.
That also means users face the same speculative risks if they opt to get into buying and selling their MLB NFTs.
Instead of cash rewards for game play in tournaments, the baseball game will offer only more NFT cards for winners, said Sorare COO Ryan Spoon. That helps avoid running afoul of US gambling laws and MLB’s own wagering prohibitions.
The game, expected to use both US dollars and cryptocurrency for resales, will initially be web-based. Sorare launched its mobile app for soccer last week in user beta, and the MLB product will follow sometime after its launch this summer, Spoon said.
One of the criticisms of sports NFT collectables is that many buyers see them as alternative investments they hope to parlay into cash, so the NFTs have little utility beyond speculation or collecting. Gamification of NFTs has been one way to provide more utility.
Baseball and Sorare said they are aware of criticisms that the electricity-hogging blockchain technology that is the backbone of these products is environmentally harmful, and that the financial ecosystem created around NFTs can be harmful for investment-minded fans – or gamed by bad actors ( or users who can simply afford to buy the best NFTs).
“Those are not there to be financial instruments. They’re there to show the ownership and utility of the cards,” Spoon said.
MLB has also said its NFT products are not intended for speculation. Instead, the league positions them as means to grow engagement, particularly among the younger fans the game desperately craves.
“I’m looking to deliver a product to our fans that has value in and of itself for the price they’re paying for it,” said Kenny Gersh, MLB’s executive vice president of business development, who manages baseball’s NFT strategy.
Still, the use of a secondary marketplace within the games means speculators have the infrastructure to make money, and late-comers can fall victim to price volatility.
MLB rules prevent its players and team personnel from participating. “We have a policy that covers sports betting and fantasy games for our players and employees,” Gersh said. “We’re comfortable the game Sorare will launch in the US will comply with US laws.”
Players in the top-flight Dutch soccer league have been accused of using inside information to profit off Sorare NFT player cards. Also, the British government since October has been investigating whether to classify Sorare as a gambling product in need of licensing, something the company insists it is not. Switzerland has banned Sorare (pronounced ‘so rare’) as a foreign gambling company.
The look and design of the NFT player cards are still being worked out, and while unique to MLB, the expectation is that they’ll be recognizable as a Sorare product. That includes color-coded tiers of cards based on five levels of artificial scarcity.
“We’re trying to think through those pieces,” Spoon said.
Common cards provided upon starting the game don’t have a set population and cannot be resold. “The commons are for gameplay,” Spoon said.
And amid those that can be sold among users, the expectation is that the rarer the NFT and the more popular the player, the higher the price. Some of Sorare’s soccer cards move for tens or even hundreds of thousands of dollars.
Sorare isn’t setting prices on the non-common NFTs. That’ll be up to users selling them in the marketplace.
“The demand side sets that price,” Spoon said.
And if the game’s marketplace proves popular and volume is anything like NBA Top Shot, baseball and its players will enjoy a windfall. Sorare and MLB didn’t comment specifically on the financial terms of their deal.
“We are very aligned on incentives. As we grow, they will grow. There are shared economics,” Spoon said.
Baseball actually got into NFTs in 2018 – too soon, Gersh previously told The Athletic – with MLB Champions, which was a sort of gamified digital bobblehead on the Ethereum blockchain that owners could use for rewards. It generated about $3.1 million via 68,000 sales and shuttered in 2020.
MLB and MLBPA also have a deal in place for collectable baseball card-like player NFTs through Candy Digital, which sells through sports retail giant Fanatics. Those are not gamified NFTs.
Topps, the venerable baseball card maker, since 2012 has sold licensed digital MLB cards used in a fantasy game called Topps Bunt, but those are not NFT cards and not resold on an internal secondary marketplace (although they can trade hands on eBay and similar sites ).
Obviously, the success or failure of the NFT game won’t be clear until after its launch, which the principals hope will be midsummer.
Victor Matheson, a sports economist and professor at the College of the Holy Cross, likened the Sorare MLB deal as akin to Pokémon or Magic: The Gathering, two wildly popular games whose physical cards, like rare baseball cards, sell for big sums on the secondary market but whose digital versions are much less popular. Both games also are lucrative for their publishers.
Sorare only offers digital cards, so the challenge for the MLB partnership, he said, will be getting baseball fans to do what soccer fans are doing with the NFT cards.
“(Sorare) has to overcome two hurdles: getting collectors to want to play a game with their cards and getting collectors to want to play this game virtually. That’s difficult. Baseball cards have been around for a century, and no one has really ever developed a game with them that people actually want to play,” he said.
Sorare claims 1.8 million users in 185 countries for its soccer product, which has partnerships with 250 leagues and teams. Users did an estimated $325 million worth of resale transactions last year, a Sorare spokesman said via email, and it predicts that will double this year.
Last winter, Sorare reported it raised $680 million in Series B financing that it intends to use as capital for expansion into more soccer leagues, other sports, and to grow US operations. The MLB deal is part of that.
“The connections we build with our fans are vital and Sorare understands the importance of that bond,” MLB commissioner Rob Manfred said in the statement announcing the deal. “The company’s focus on transforming fandom through an innovative combination of sports, technology and gaming to let fans truly own a piece of the game they love is unique and goes beyond borders – allowing us to bring the love of baseball to more fans across the globe ”
(Photo illustration: Rafael Henrique / SOPA Images / LightRocket via Getty Images)