A collective of crypto-investors has raised $4 million in NFT sales to put towards its goal of purchasing an NFL franchise. A few weeks ago, another group of crypto investors raised nearly $50 million to buy a rare copy of the U.S. Constitution, ultimately failing to raise enough to make the purchase.
The two groups are both known as decentralized autonomous organizations (DAO), online collectives with a shared mission statement and bank account. As the Constitution group scrambles to return the funds to its backers, the NFL group organizers remain confident in their vision.
"We understand the reader's first instinct may be to scoff at this and say owners will never let this happen," the NFL DAO, or Krause House DAO, reads in a company statement. "It's important to understand that there was a time not too long ago where players were at the same place on the totem pole where fans are today. There's no reason fans can't do the same if organized correctly."
The 2,000 member organization is named after Jerry Krause, the late general manager of the Chicago Bulls. The six-day NFT sale ended on Nov. 25, raising $4 million in Ethereum cryptocurrency. $4 million is far less than what the group would need in order to bid on a team, and there's no guarantee that it would be allowed to purchase a team in the first place.
For reference, the Memphis Grizzlies, the least-valuable NFL franchise, were recently valued at $1.3 billion.
The failed ConstitutionDAO started off on better footing based on numbers alone. The final bid in the sale of the document came in at $41 million, $6 million less than the group had raised. According to group organizers, bidding was stopped because the group would not have had enough funds to properly care for and maintain the Constitution.
Next, even if the Krause House raised enough money, the NBA isn't likely to welcome a crypto-collective into its group of owners.
With the money the group has raised so far, a Krause House co-creator told NPR the group would be investing in projects meant to enable it to become an NFL owner in the future. Specific details on those projects have yet to be provided. In order for the funds to be spent, investors must vote on where the money should go.
"Kraus House is absolutely serious," Michael Lewkowitz, who invested $100,000 in Krause House, told NPR. "We're used to thinking about a billionaire buying a team as a one-time event. But this will be different. It's about people coming together and taking ownership of something they're really passionate about. Sports should be in the hands of people who care most about it."
Decentralization projects seem to be the next big thing in the crypto market. Some of those projects include decentralizing the ownership of major websites so that they come under the control of crypto collectives. Big DAO purchases and lofty projects may be overtaking the pandemic NFT trend in popularity, despite the recent ConstitutionDAO setback.
"You can see it as a bid that was lost, or you can view it as thousands of people who came together around a common cause and almost doing something amazing," says Lewkowitz.
Of course, Krause House is built around a system of NFT ownership. Each Krause House NFT resembles a ticket to a fake basketball game, with each NFT representing a certain amount of voting power in the group.