There was a time when NFTs were seemingly making all of the headlines with a number of companies jumping knee deep into digital imagery and collectibles. Now, it seems that with the decline in interest coupled with hit outgoings, Sorare, a NFT sports card collecting outfit is feeling the strain.
If you’ve not come across Sorare before, essentially, it’s a virtual card collecting ‘game’ in which each player is assigned a rarity, almost like its physical counterpart made by the likes of Topps or Panini.
You’re then able to create a fantasy team of said players and bet against others. Additionally, you can buy and sell your collection, with the chance to cashing in big depending on what players you pull.
Moving back to why Sorare might be in trouble, according to a recent investigation by French media outlet L’Informé, Sorare’s revenue streams have essentially been in a downward spiral over the past three years.
In 2022, Sorare posted €143 million in revenue, but this fell sharply by 59% to €59 million in 2023, accompanied by EBITDA losses of €200 million. This continued into 2024, with revenue dropping another 27% to €43 million, although EBITDA losses improved slightly to €100 million.
These figures starkly contrast with the optimistic projections that attracted $680 million in funding in 2021, at a valuation of $4.3 billion. Now, Sorare projects stagnant revenue of €42 million this year, raising serious questions about its sustainability.
A significant factor behind the company’s struggles is the heavy cost associated with securing exclusive image rights from major sports leagues like La Liga, the English Premier League, the NBA, and NFL, alongside sponsorship deals with elite clubs such as PSG and Arsenal.
Despite cost-cutting measures which include downsizing its New York operations and reducing licensing expenses by 80%, these high upfront costs have proven challenging to offset.
Sorare CEO Nicolas Julia does surprisingly remain optimistic, stating to Maddyness that the firm has “a return to profitability within 12 to 18 months, with a very clear plan that does not rely on the possibility of a Series C.” He also mentioned potential plans for a public listing and recently introduced a subscription model aimed at stabilizing future revenue streams.
This comes amid increased regulatory scrutiny in France, where lawmakers are finalizing new web 3 rules explicitly designed to govern companies like Sorare. Critics from France’s established gambling industry argue that Sorare should be subject to standard gambling regulations, echoing ongoing legal challenges from the UK Gambling Commission.
