Brooklyn Nets guard Spencer Dinwiddie wants to create a security out of his next NBA contract and the NBA says no but Dinwiddie says he’s doing it anyway, with plans to create a digital token so fans can invest in his success.
Dinwiddie said the plan is legal and does not violate the NBA collective bargaining agreement because the transaction is between him and fans. The NBA has no control over a third-party transaction, Yahoo reported, but still, he is giving the NBA a chance to respond.
In a series of tweets, Dinwiddie said he would let fans invest in his next contract — guaranteed money — giving him cash upfront in exchange for a return of their principal plus interest at a later date.
Dinwiddie plans to sell 90 Professional Athlete Investment Tokens (PAInT) with a minimum investment of $150,000 to accredited investors only. His investment vehicle will be known as SD8 coins. He hopes his new platform will eventually host other athletes inspired to do the same, ESPN reported.
The NBA said Dinwiddie’s plan violates the league’s 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 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,” the NBA said in a statement to the New York Times.
“Dinwiddie wants to create a new asset class — athletes — that would allow fans and anyone else to invest in players the way you would the stock market, a treasury bond, a real estate fund or cryptocurrency,” Kevin Arnovitz wrote for ESPN. Those assets could then be traded on the platform he is creating.
Dinwiddie developed his own sneaker brand — K8IROS shoes — before embarking on creating a bond-style security, Forbes reported. He turned to Vivek Indudhara, CEO of investment company Project DREAM — that stands for Disrupt Reality Every Available Moment.
His blockchain-based investment platform will allow him to collect a big piece of his guaranteed three-year, $34 million contract up front.
Why is a securitized token threatening to the league?
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“If he’s able to sell all 90 tokens, he will raise $13.5 million in cash for a season in which he’ll earn less than half of that amount post-tax from the team that employs him,” ESPN reported. “Athletes like to say they ‘play for the fans.’ In Dinwiddie’s case, his fiduciary obligations to his fans/investors certainly would be comparable to what he owes the Nets. It’s easy to see how that could make institutionalists nervous — and players curious.”
Dinwiddie is ready to revolutionize the way professional athletes own their own brands and intellectual property, Forbes reported.
He plans to open SD8 to the public in a year. The original 90 coins will be tradeable by then if all goes according to plan. He plans to offer a flat bond, opening up the security to about 10,000 more investors. In 2020, he hopes other players join in with their own digital coins based on their contracts.
