NFTs have become extremely popular in the footballing world. Big players have invested in this new breed of digital art, with many NFTs going for serious amounts of cash.
We would never advise for or against any particular type of investment. That’s what financial advisors are for. But, as with all financial ventures, we would caution footballers and other professional athletes to make sure they understand the potential risks before handing over their money.
What is an NFT?
An NFT – or Non-Fungible Token – is a digital asset stored on the blockchain.
Bought and sold online, usually with cryptocurrency, NFTs are typically offered as a one-of-a-kind, or limited number asset. This rarity makes them extremely sought-after.
With unique identifying codes, you could compare NFTs to art, models, vinyl, books, or anything else considered highly collectable and treasured in the real world. Yes, other people can copy them (although some online platforms are introducing measures to stop this), but only one person owns the digitally authenticated NFT.
While NFTs are not new (they have been around since 2014), they have exploded in popularity over the last few years. In particular, cartoon apes and video clips have been purchased by celebrities, including those in the footballing world.
According to DappRadar, sales of NFTs reportedly reached $25 billion in 2021. However, there were signs of the market slowing down towards the end of last year.
Why are footballers so keen on NFTs?
Many footballers have invested in NFTs to make money and for “digital bragging rights”.
For example, the “John Terry Ape” collection was highly publicised, with former teammates Tammy Abraham, Bobby Zamora and Ashley Cole reportedly investing in the scheme. But, despite the hype, the value of the cartoon apes designed to look like footballers reportedly plummeted from £497 at the start of February 2022 to just £49 the following month.
French footballer Paul Pogba also entered the NFT market with the Cryptodragons project, while Liverpool defender Trent Alexander-Arnold was briefly linked to NFTs. Wayne Rooney announced his own range of NFTs by selling digital pics of himself for £40 each. Rio Ferdinand has also been involved in charitable NFTs and has purchased his own NFT avatar.
Other footballers linked to NFTs include Brazil star Neymar and Liverpool’s Andy Robertson, amongst others.
Can NFTs make you money?
There is undoubtedly money to be made in NFTs. Some investors have managed to purchase and immediately flip them for a substantial profit. Even traditional arthouses have got in on the game, with Christie’s selling one NFT artwork for nearly £50 million.
But NFTs are highly speculative, and prices can be very volatile. For example, while Jack Dorsey, the co-founder of Twitter sold his first tweet as an NFT for more than $2.9 million in March 2021, the buyer’s recent attempts to re-sell it resulted in a top bid of just under $10,000 (at the time of writing).
Importantly, because they are not a regulated financial product – and most UK financial advisors will not be qualified or authorised to advise on NFTs – getting your money back should an NFT investment go wrong can be challenging. As such, any footballer considering investing in NFTs must take advice from a suitably qualified and authorised NFT expert. Not least because, as more footballers embrace NFTs, so do scammers.
Common NFT scams
If you decide to enter the NFT and crypto space, educating yourself on the dangers as well as the potential rewards is vital.
Copyright infringement is a big problem, with artists complaining that their work is being copied and sold as NFTs. If you buy an NFT created from stolen art, you do not own the intellectual property rights, and it will be worthless.
The ‘rug pull’ is another common NFT scam, one example of which is the Evolved Apes scandal. After raising $2.7 million – with some NFTs selling out in minutes – promises to use the purchased NFTs to fund a blockchain video game disappeared along with the creator, leaving the NFT owners with nothing more than jpegs.
Another popular NFT con is where a group of people buy up NFTs under false names to artificially drive-up demand and inflate prices. As soon as the price reaches the desired level, the buyers sell up and leave the market to crash.
Phishing scammers also use fake NFTs to extract information about people new to this technology. It’s also essential to get an actual copy of the asset or digital file. Simply accepting a URL could leave you with nothing.
Even if the NFT is genuine, there are still risks. As previously mentioned, this is a highly speculative form of investment, so you must be aware of the potential losses as well as the possible rewards. Simply losing money on an investment does not make it mis-sold.
In addition, many people are anti-NFTs because of their environmental impact (crypto transactions currently require massive amounts of energy), so you could face negative PR by investing.
Keep safe when investing in crypto
If you still want to invest in NFTs, you must do your research first.
Crucially, you should only invest in a proven NFT marketplace with verified processes for returning money should the investment not turn out to be genuine. And it needs repeating that you should always seek the advice of a qualified and authorised NFT expert.
But what can you do if a NFT investment has gone wrong?
Many sportsmen and sportswomen in England & Wales have been encouraged to invest in toxic or illegal investment schemes.
If you have been persuaded to invest in risky, unregulated, and unsuitable investment schemes involving NFTs or other forms of crypto, and promises of big returns did not materialise, we might be able to help.
Helping professional footballers and other athletes who have fallen victim to financial scams get their money back, those affected could be owed hundreds of thousands of pounds (if not more).
Contact us in confidence to find out how we can help.