Motorsport fans have long been engaged with the collectibles space
Sports fans have taken notice of non-fungible tokens – or NFTs, as they are more commonly known – over the past year.
The motorsport industry has also been making early forays into the digital collectibles space as part of the initial embrace of blockchain technology as a means of launching new partnerships and modernizing fan engagement, just as basketball, soccer, and cricket have.
An NFT is a unique digital certificate of ownership, stored on the blockchain, and can come in the form of photos, videos and audio, which fans are able to buy, collect and trade. This might sound familiar, and that’s largely because it is. Collecting and trading has long been a popular way for fans to express their passion for sport with physical products, whether it be through assembling a collection of trading cards or filling up sticker albums. NFTs are seen as a way of essentially bringing that tradition into the digital realm.
That, it seems, is now the aim of Formula One. According to Ben Pincus, director of commercial partnerships at the global motorsport series, which is yet to release its own NFTs, the motivation to move into the space stems from a desire to give fans access to sport in a different way.
“Our interest in this space is about fans,” he explains. “It’s about a new way of opening up fans engaging in sport and trying to attract a different audience.”
At present, Formula One runs its own game on the popular Ethereum blockchain, while a handful of its teams have started to produce their own NFTs. One of McLaren Racing’s first NFT drops, for example, saw it work with blockchain network Tezos to allow fans to assemble a digital recreation of the team’s MCL35M race car. Aston Martin and Red Bull Racing also released their first collections last year.
However, Formula One is not the only series venturing into this world. September saw Speedway Motorsports, which owns and operates eight Nascar circuits, partner with GigLabs to create RaceDayNFT.com, a first-of-its-kind dedicated marketplace where fans can buy, sell and trade Nascar-themed NFTs.
Like Formula One, the stock car racing series has long been a player in the physical collectibles market, selling everything from trading cards to racing helmet display cases, so making a move into blockchain and NFTs was therefore seen as a natural next step.
“Nascar has always been known to have a very robust collectibles space and this is a new kind of digital collectible,” says Mike Burch, chief operating officer at Speedway Motorsports. “But then all the things that can also be layered on top of it: the interactivity, the way they can work together and the way you can layer on utility with it, as we’ve started to move to digital tickets.
“And, as the fanbase has gotten more comfortable with digital technology, we thought it was a great opportunity to launch something and see how the fans respond.”
Speedway Motorsports have released NFTs that can be used as tickets for a race
Although Nascar’s efforts are still in a nascent stage, fans have responded well to Speedway Motorsports’ NFT release. After receiving a positive reception to the introduction of digital collectibles, the organisation’s next step is to link its NFTs to real-world fan experiences at Nascar events. However, Burch says the ongoing Covid-19 pandemic has put that on hold for now.
“Covid has really put a damper on being able to bring experiences to life,” he notes. “A big part of our plans going forward is to enable the people who are at the event itself to use these NFTs to gain more access and to have different types of experiences.
“So the only way we’ve been able to activate that so far has been through giving people at the events a chance to redeem a QR code to gain an NFT that commemorates the fact they were at the track.”
Despite that minor setback, Burch is still buoyed by how Nascar’s fanbase has been engaging with the new technology to date.
“So far, we’ve been very pleased with the fan engagement,” he declares. “We’ve learned a lot, now we’re looking at how we keep the momentum going in the time between the end of the season and February. How do we keep fans visiting the site engaged while also then thinking about how we layer on more utility for next season?”
Indeed, Burch says meetings are taking place to determine how Nascar can leverage digital collectibles to keep fans engaged during the offseason and into the 2022 campaign.
“How do we make [our NFTs] more shareable in terms of social media and people showing off their collections via social media? I think that is another big opportunity for us,” he continues.
“The hardest part about all this is narrowing the focus into what we want to do and how we actually deliver it. But the appetite has been really fantastic. We’ve seen about 75 per cent of the collectors have been more NFT-focused, but 25 per cent of the collectors have been motorsport fans.
“So, that was encouraging for us to introduce motorsports to the crypto/NFT world – and vice versa.”
F1 and Speedway Motorsports are hoping that their venture into NFTs will attract crypto fans to motorsport
As Burch points out, entering the realm of NFTs enables the likes of Speedway Motorsports and Formula One to attract tech-savvy collectors who perhaps haven’t engaged with motorsport before. By its nature, motorsport – and especially Formula One – should be appealing to those who are interested in technology. The cars and the software behind them have become increasingly complex and detailed, including the wireless technology used to enable communication between the drivers and the pit lane, as well as the hybridisation of the engines and servers, which store all of the cars’ essential data.
“Motorsport has the technology and the engineering, it’s always been really, really cutting edge,” Burch considers. “So I think it’ll be really interesting for people who are little more logically-minded, algorithmically-driven, or more technology-focused to be able to come to a race and actually see this technology in place, whether that’s in timing and scoring, or in the vehicles themselves, or in the overall event administration.”
It would be fair to say that NFTs typically lend themselves to a younger audience, which has been a strong focus for Formula One since US media giant Liberty Media acquired the championship in 2017. However, Pincus and his team are mindful of ensuring that any move into digital collectibles appeals to the series’ older demographic as well.
“You’re trying to target new audiences who maybe haven’t found Formula One, and maybe this is a mechanism to help bring them into Formula One,” says Pincus. “Equally, you’re trying to provide your existing fanbase with a means of engaging with Formula One through a different channel and through a different medium.”
He adds: “In our plans around NFTs we’re very mindful of both our core fanbase as well as a new fanbase. Different types of NFTs are more or less attractive to those two groups. So, for your core fanbase, they’re more likely to be interested in anything from heritage through to current day.
“To your new fanbase, they’re probably looking for something a bit more gamified, a bit more playable that doesn’t necessarily require an in-depth knowledge in Formula One. This might be their first experience of Formula One. And this might be the trigger point to get them into Formula One.”
That theory certainly seems to ring true for Speedway Motorsports, which Burch says has not only been able to attract younger audiences to Nascar via its early experiments with NFTs, but also introduce the technology to the sport’s older, more traditional fanbase.
“We’ve been surprised how well our fans have adopted things like digital tickets and moving event programmes onto an app,” he says. “There’s a lot of folks who maybe aren’t super aware [of what NFTs are], especially in the garages, some of the legends of racing, people who are in their 60s and 70s. So this is introducing them to what these things are, and the easy entry for them is a digital trading card. But there’s so much more that these can be.”
We believe that it’s going to be additive, not necessarily replacing some of our core revenue drivers and fan engagement activities.
Ben Pincus, Director of commercial Partnerships, Formula One
However, entry into the NFT market does not come without its challenges. Formula One has made a well-documented commitment to ramp up its sustainability efforts over the next decade by introducing hybrid engines, cutting emissions and introducing sustainable fuel.
In contrast, NFTs have been criticised during their brief lifespan for being environmentally costly and producing carbon dioxide emissions that are generated by the cryptocurrencies used to buy and sell the digital assets. According to Fortune, a single transaction using the Ethereum cryptocurrency consumes the same amount of electricity that the average US household uses in a working week.
However, going into 2022, this is set to change due to the environmental pressures being applied to cryptocurrency organisations globally.
Formula One has also shown itself to be environmentally conscious whilst forging its path into the space. In June 2021, for example, the series secured a partnership with cryptocurrency platform Crypto.com, an organisation which is set to become carbon negative by the end of 2022.
“What we’ve been very mindful of is that the partnerships we either have announced or will be announcing are built on much more sustainable platforms,” says Pincus.
“It’s become a really important part of the crypto and NFT space. If I think about the conversations we were having with cryptocurrency platforms and NFT prospective partners nine or ten months ago, the conversation changed dramatically a couple of months into those conversations where the whole topic of sustainability around crypto and NFTs came up. A lot of the platform providers either changed the way they did things or built their platforms on more sustainable platforms.
“So, if you’re going with an older legacy system, you’ve got sustainability issues. None of the partners we’re working with, or are going to be working with, are working on unsustainable platforms. We wouldn’t do that.”
As F1 teams create their own NFTs, the series is keen to make sure its partnerships in this space remain sustainable
At this stage, it seems reasonable to suggest that there is a future for NFTs in motorsport. While acknowledging that the strategy in stock car racing is currently “a little bit fragmented”, Burch does envision a future where there is a more uniform approach to NFTs across Nascar.
“I think we’ll probably continue to be a little bit fragmented as a way to experiment, allow different groups to try different things,” he says. “But I could see in the long term, eventually, the whole industry – teams, drivers, tracks, the sanctioning body – all coming together around one platform. What that will be, who knows? But I think it’s really healthy to have a lot of different perspectives.”
For now, Speedway Motorsports is focused on improving the interactivity of its NFT offering in 2022 and beyond, as well as making transactions simpler for Nascar’s fanbase.
“There is still a lot of segmentation even in the NFT space,” says Burch. “We’re built on Flow blockchain technology, but there’s also Ethereum and a lot of other different platforms.
“There’s still some friction in converting your dollars or euros to Ethereum or Flow so you can make these transactions and then bring that back out into the real world into real currency. As there becomes less friction around that it will make it easier for people to buy and sell.
“We’ve learned a lot in the time we’ve operated the marketplace. Posting all the prices in US dollars as opposed to being in Flow, people understand better what they’re buying. So [it’s about] how do you make those transactions simpler?”
Both F1 and Speedway Motorsports are keen to simplify the process, making NFTs more attractive to long-term collectors
And while Formula One is still yet to launch its first NFT, Pincus confirms that the series is continuing to explore how digital collectibles can add to the overall fan experience.
“We believe that it’s going to be additive, not necessarily replacing some of our core revenue drivers and fan engagement activities,” Pincus explains.
“As an example, if I bought a helmet of my favourite driver and put it on my shelf, and kept it as part of my collection, an NFT provides you with that same ability. But that NFT might be linked to my physical helmet, or it might just be separate. There’s no reason to think that either are more or less valuable as part of my collection.
“I genuinely think it’s additive. You know, I’ve got a 17-year-old and an 18-year-old son, both of whom have crypto accounts, both of whom trade crypto for fun with their mates.
“If you gave them the opportunity to link that crypto to their favourite athlete, to their favourite sport, to their favourite club, you can see how that becomes more interesting.”