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Spencer Dinwiddie wanted to turn his contract with the Brooklyn Nets into a digital investment vehicle and go public, allowing investors to buy in — a move that would have made him the first professional athlete to turn his contract into a digital investment.
The NBA, however, shut that down.
The league told The New York Times’ Marc Stein on Friday that Dinwiddie’s plan would be a violation of the current collective bargaining agreement.
“According to recent reports, Spencer Dinwiddie intends to sell investors a ‘tokenized security’ that will be backed by his player contract,” the NBA said in a statement, via The New York Times. “The described arrangement is prohibited by the C.B.A., which provides that ‘no player shall assign or otherwise transfer to any third party his rights to receive compensation from the team under his uniform player contract.’”
Dinwiddie explained his plan to The Athletic’s Shams Charania earlier this week. He planned to go public with an “$SD8” token through his company, DREAM Fan Shares, which would allow investors to buy into his three-year, $34.4 million contract with the Nets.
Investors, and Dinwiddie, would benefit during his player option season in 2021, per The Athletic. He currently has a player option worth $12.3 million for that season. If he were to opt out and find a more lucrative deal, both he and his investors would earn big.
“What better way to be invested in a player as a fan than to have some level of skin in the game,” Dinwiddie said this week, via The Athletic. “With the way mine works, if I play well in that player option year and we split the profits up the first year of my new deal, it greatly appreciates the return on this investment vehicle. It allows you to get up in that 15-percent range in a return, like a growth stock, and that’ll be something most guys won’t beat.
“And you’re going to be invested in watching your favorite player. It’s something with a floor, guaranteeing you a floor, and obviously the cap on the return would beat most stocks in the economic climate that we’re going into. To make it as simplistic as possible, the real growth is for the third year, just like my contract is. You have the guaranteed premiums. You have the big-time fluctuation in the third year, with a floor. Everyone can appreciate it and make money.
“Establishing an asset class that is not correlated to the legacy markets and stocks that are going to get hammered when everything comes to fruition, it can help people save money and create a real fantasy sport. It enhances the real fan engagement. It enhances the NBA.”
Dinwiddie wanted to go live with his “$SD8” token on Nov. 1. He also was planning to create a reserve system in case things went south, intending to secure a million in cash flow, a million in Bitcoin entity and a million in gold, per The Athletic.
The 26-year-old — who averaged 16.8 points and 4.6 assists per game last season in Brooklyn — hasn’t given up on his plan after the league’s decision, however. He said he plans to meet with the NBA in the near future and attempt to change their minds.
“When I was on the phone with the league, I told them it wasn’t an assignment,” Dinwiddie said, via The New York Times. “And they invited me to sit down with them and explain the offering, which is what I’m going to do.”
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