League shoots down Spencer Dinwiddie’s plan to use contract as investment vehicle
During last season, Spencer Dinwiddie signed a three-year $34.4 million extension to stay in Brooklyn.
Recently, Dinwiddie announced plans to turn his contract into a “digital investment vehicle” where investors would buy digital tokens, backed by his contract. Dinwiddie would have more money upfront to invest, investors would make some money off interest, and if he opts out of the final year of his contract and signs for more than the $12.3 million he is owed, his investors will make more, too. If you want more details, here is a good explanation of his plans.The league, is shooting the idea down, reports Marc Stein of the New York Times.
The N.B.A. issued the following statement to The New York Times on Friday: “According to recent reports, Spencer Dinwiddie intends to sell investors a ‘tokenized security’ that will be backed by his player contract. 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 right to receive compensation from the team under his uniform player contract.’”
Dinwiddie, 26, intended to offer the security using the Ethereum blockchain and raise $4.95 million to $13.5 million. He planned to guarantee investors a few percentage points in interest over the three years of his deal. The minimum investment was to have been $150,000.
Dinwiddie took to Twitter to express his frustration, and he wants a meeting with the league office to talk this over.
Dinwiddie and the NBA will discuss this further, breaking down the minutia of whether this violates the CBA. However, the NBA lawyers rarely change their minds on this kind of thing.
If the league allows it, it would be interesting to see how many other NBA players will follow in Dinwiddie’s footsteps. My guess is not many, but one never knows.