NBA blocks Spencer Dinwiddie’s attempt to tokenize contract
NBA point guard Spencer Dinwiddie’s heart was in the right place, but his efforts have fallen short. The Brooklyn Nets star had wanted to tokenize his league contract, worth $34.4 million, on a blockchain before the NBA stepped in and shot him down. The league asserts that Dinwiddie’s contract isn’t really his to tokenize.
The 26-year-old basketballer has found his tokenization efforts to be a league foul. According to the New York Times, the NBA said in a statement:
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. [collective bargaining agreement], 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.’
Investors would have been able to bet and capitalize on Dinwiddie’s skills on the court as he tried for an even more lucrative contract following the second year of his current contract. He had hoped to raise $4.95 million to $13.5 million through the plan, which was developed through his own company, Dream Fan Shares. The tokenization effort would have had a minimum investment of $150,000 and Dinwiddie has indicated that he would have offered guaranteed interest of a few percentage points for the duration of the contract.
The NBA’s application of the regulation can only be viewed as a loose interpretation at best, since Dinwiddie wasn’t planning on transferring the right to receive compensation. Instead, he was offering to augment the opportunity the contract provides, which is new territory for the NBA.
Dinwiddie isn’t ready to give up and accept the NBA’s decision as final. He has stated that he hopes to meet with league officials to present his plan and show them how it works, adding, “What better way to be invested in a player as a fan than to have some level of skin in the game. […] 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.”