How to gauge the value of NBA Top Shot mania

Photo credit: All-Pro Reels from District of Columbia, USA, CC BY-SA 2.0

As GameStop stock replaces the gold standard and the market for sports collectibles sizzles, NBA Top Shot joins the revolution. NBA Top Shot, a venture powered by Dapper Labs in partnership with the NBA, sells serialized highlights of NBA players. The company utilizes blockchain technology to verify and publish every purchase made on its site. Users either buy specific highlights (called Moments) from the marketplace or pray they make the queue for a pack opening, a randomized draw from a predetermined set of Moments.

Any Moment sold arrives with a ledger of previous prices and ownership. Users now own that one digital asset, determine its NBA Top Shot value, and sell it or collect these digital highlights. Recent packs sold highlights from the NBA’s Rising Stars team and a curated set of Moments from the 2021 NBA All-Stars. 

The product in theory mirrors traditional sports memorabilia. Buyers with specific goals or fans who love only their players can purchase exactly what they want. Others with smaller budgets could buy a pack and enjoy a chance at a high-value item. With the product entirely digital, the consumers’ stressors start to vary. NBA Top Shot collectors do not worry about quality grades or overzealous, Marie Kondo’ing parents that sell everything. Depending on your perspective, NBA Top Shot could be an exciting collectible, an investment opportunity, or an opaque bit of Internet nonsense.

So far, the investors and collectors appear to be winning that argument.

NBA Top Shot: the evolved microtransaction

In his excellent piece on NBA Top Shot, SI’s Shaker Samman dove into the oddities, the thrills, and the serious challenges facing this new company.

He interviewed Daniel Hurtado, a NBA Top Shot user who started making real money off his investments. Hurtado, Samman wrote, was “chasing theoretical cash gains, but he was also looking for a rush.” This evocation sounds similar to the sports video game microtransaction. From NBA 2K to FIFA, modern gaming franchises built an entire economy out of pack openings, marketplaces, and commercialized fandom. 

FIFA’s Ultimate Team mode allowed players to create their own superpowered franchises out of all eligible players across the world. Players dropped real and fake currency on packs. Dozens of YouTubers monetized that gambling into high subscriber counts and billions of views. 

For the average player, the packs offered a remote possibility of a star player far too expensive to purchase on the market. 

Your collection provided utility as a superpowered team and as a bragging point for other potential collectors. Resources like Futhead provided a database of new cards and the market valuations of those assets. FIFA‘s production team refreshed the market with new, powerful cards and challenges to complete.

Like NBA Top Shot, these assets never left your screen. You couldn’t hold the Arjen Robben you packed. 

The analogy’s not perfect, though. FUT assets improved your team in theory and offered competitive advantages to those lucky or wealthy enough to acquire elite players—the assets offered some utility. Unlike FIFA, NBA Top Shot aims to provide some permanence to your collection. Once acquired, these clips are yours forever, while the FUT teams do not carry over to next year’s game.

The trickiest part now seems to be: How do you know how what Moments to acquire, and what you should spend?

What are these NBA Top Shot Moments worth?

A look through the roiling NBA Top Shot Discord reveals post after post of new users desperate for clarity on the valuation of their assets. Each pack opening brings in a flood of curious buyers wondering if they just hit the lottery. NBA Top Shot themselves doesn’t exactly discourage this type of thinking. Promotional imagery like this appears on their homepage with a focus on the sheer volume of sales.

Currently, Ja Morant’s venomous dunk on Aron Baynes, available for free on the internet, sits at the top of the market at a cool $240,000. For investors with slightly less disposable income, this Mason Plumlee dunk only sets you back $16.

The disparity in value could stem from a few factors. Ja’s dunk over Baynes became part of his lore as the eventual Rookie of the Year. He’s undeniably more popular than Mason Plumlee, a career backup big who, despite a solid season in Detroit, won’t be appearing in any All-Star game any time soon. 

Morant’s Moment also benefits from the artificial scarcity created by NBA Top Shot. Only twenty-five versions of that dunk in current form have been made by the company. Compare that to the over 35,000 versions of the Plumlee slam.

Like any other commodity, rarity increases value.

Investors look toward the potential upside of the Moment’s player as another variable. Morant, last year’s runaway Rookie of the Year, appears to be at the start of a long and successful career in the league. His upside gets priced into the Moment as buyers aim to purchase the asset before the stock soars. 

NBA Top Shot also uses what they call Challenges, a promotion where the collector must acquire a group of players from certain sets in order to earn a more coveted reward. Current challenges center on the players from Kevin Durant’s All-Star team and the Rising Stars. In theory, these challenges allow NBA Top Shot to popularize a variety of Moments from heralded and unheralded players.

How to think of valuations

Let me do my best Professor Scott Galloway impression here and sketch out a rough valuation framework. Take this as a guideline; I am positive a machine learning NBA Top Shot model will be published somewhere else sometime soon that gets actual projected numbers.

Valuing moments within this model should help provide a baseline understanding of the chaotic market. Ja scores highly on Popularity and Upside. That combination barely reduces due to a very low number of available Moments. Scarcity as the denominator rewards cards with much smaller counts.

Utility serves as the real wildcard. NBA Top Shot at any point could curate something like a Zion Williamson special and require 10 Moments with players from his alma mater Duke University. Suddenly, the Blue Devil Mason Plumlee Moments could skyrocket in value.

Properly weaponized hype

I’m hopeful for the collection mechanism in NBA Top Shot, which offers the potential to bring attention to the lesser known athletes. Promoting new faces helps avoid reinforcing the existing media ecosystem that weighs quantity of coverage solely against quantity of traffic. I didn’t need FIFA Ultimate Team to introduce me to Messi and Ronaldo. It did expose me to workhorse midfielders like Luis Gustavo and the two-footed brilliance of striker Stevan Jovetić. 

NBA Top Shot could provide a healthy service by democratizing the access and appeal of non-stars to a broader audience. Using its market to promote the passing wizardry of 29-year-old rookie Facundo Campazzo chips away at the attention hierarchy. Superstars are undeniably worth your coin and your time, but there’s no downside to showing some love to the guys who don’t reach that echelon. Adding them to a Challenge produces financial benefits to those players and collectors.

Reward your collectors

NBA Top Shot’s messaging of the product could be fine-tuned a bit. Do users join for the chance at an instant profit on their pack? Or, are you creating the better trading card, a product meant to provide investors with security and the freedom from counterfeiting?

Empowering the collector, and not the speculator, should provide the most fruitful path forward for NBA Top Shot. To do that, I would love the company to explore a more appealing showcasing mechanism than the current version. Imagine a partnership with a company like Aura Frames or Infinite Objects. 

This enterprising collector already had a similar idea and built a beautiful display of his prized LeBron James Moment; hat tip to the NBA Top Shot subreddit for finding this.

Imagine that experience provided by NBA Top Shot to all collectors above a certain Moment count or account value. Those high value users could receive a NBA Top Shot branded screen to turn their collection into a streaming, curated highlight mixtape on a beautiful display. Investments into the collectors in the community pay dividends for all aspects of the NBA Top Shot experience.

Skin in the digital game

I am likely the exact profile for a NBA Top Shot fanatic. I obsess over the NBA, fall for hype trains constantly, and have the single-minded fanaticism to wait in queues to lose money. 

So far, I purchased one pack for $14. NBA Top Shot gave me a limited edition Ben Simmons layup and common—read: high number of duplicate versions—of slick De’Aaron Fox and Paul George dunks. The anxiety of the queue brought back memories of PS5 searches. My heart raced as I opened the pack, despite not knowing what outcome I actually wanted.

As of 3/18, the marketplace values those three Moments at $246, a tidy 1,675% return on my measly investment. Big ticket investors, like those profiled by Ben Cohen in this excellent article in the Wall Street Journal, remain bullish on the product and in their abilities to find value in existing and upcoming Moments. 

I feel the same, and I’m putting my money on it. You can follow my collection here. I’ll be as transparent as the ever-present blockchain on the performance of these assets.

I will continue to spend a reasonable amount on what I’d consider valuable or promising assets, and hope that my love for the NBA and data crunching minutia finally found an outlet with a slightly higher earning potential than self-funded sportswriting.