After months of back-and-forth with NBA, Spencer Dinwiddie to launch digital investment vehicle
After months of back-and-forth with the NBA, on January 13, Spencer Dinwiddie will launch his digital investment vehicle. Dinwiddie’s plan had previously been rejected by the NBA on the premise that it was a violation of the NBA’s collective bargaining agreement. Specifically, the NBA believed his plan was a “third-party assignment” and that his third-year player option was violated anti-gambling rules. Dinwiddie has since modified his investment vehicle, removing the NBA's name and likeness, and opting to make it a flat bond with no performance incentives related to his player option.
Previously announced in September, Dinwiddie’s plan is to convert his 3-year $34 million NBA contract into a digital investment vehicle (security token) through his company DREAM Fan Shares, under the token name “$SD8.” Under the plan Dinwiddie will receive an upfront lump payment of $13.5 million, with investors in the token earning interest through Dinwiddie’s bi-monthly paycheck. The token will be launched on Ethereum.
Why it matters:
- Spencer Dinwiddie’s tokenized NBA contract is an intriguing addition to the “tokenization of everything” crypto thesis. Dinwiddie thinks of athletes as assets not employees, with sports leagues acting as brokers that bring fans and assets together. By tokenizing his NBA contract Dinwiddie believes he can pioneer a new asset class that could provide an interesting source of uncorrelated, recession-resistant returns for investors.
- Equally compelling is how the plan fits thematically into the idea of self-sovereignty, an expressed value of the crypto industry. Providing athletes with the ability to tokenize their contracts and receive money upfront could significantly improve players’ financial flexibility. Not only could it allow players to forgo taking out loans early on in their careers, but it could also bring players greater ability to monetize their earnings in the primes of their careers.