What if Dinwiddie decides to opt into the final year of his deal? Dinwiddie is scheduled to earn $12.3 million in 2021-22 if he opts in — much less than the $20 million in the above scenario — so the rate of return would be considerably lower, approximately 7.4% annually, or $150,000 plus an additional $35,825.
Brian Lewis: The NBPAs statement regarding Spencer Dinwiddie: “At his request, we are assisting Spencer and his business associates in seeking to address the League’s concerns. Our hope is that a resolution satisfactory to all parties can be achieved.” #nets #nba b
What is Spencer Dinwiddie's plan? A few different things. In the big picture, Dinwiddie's token would be a proof of concept for a larger objective: He 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. Those assets could then be traded on a platform that he is in the process of creating. Most immediately, though, he wants to offer a debt issuance to accredited investors that would be backed by his earnings in the 2021-22 season. This product, which would be issued as a token (PAInT), would have many of the characteristics of a typical bond, but it's quite different.
If Dinwiddie moves ahead with the opening of his investment vehicle, what recourse does the NBA and/or the Nets have? Could they suspend him? Could the Nets nullify his contract? Sources say the NBA hasn't reached the point where they're contemplating disciplinary actions against Dinwiddie, and the two sides are continuing to discuss the matter. But if the league felt like Dinwiddie was truly in violation of the CBA, disciplinary action could be conceivable.
What's in it for Dinwiddie? Dinwiddie raises millions in cash at the front end of his contract that he can now put to work in various investments. "The $13.5 million would be in relatively traditional vehicles," Dinwiddie said. "You want to be strong with your money -- we've all heard the horror stories. These investments are designed to be something that athletes can benefit from. We're going to set aside [an amount] for venture capital, but it's not like I've found a new element or anything like that."
Marc Stein: Nets guard @Spencer Dinwiddie confirms to @NYTSports that he has another meeting scheduled with the NBA on Monday -- on the eve of the regular season -- as he continues to seek league cooperation to "tokenize" his contract. The NBA, to date, has said Dinwiddie's plan violates the CBA
Alex Schiffer: Spencer Dinwiddie said he has a meeting tomorrow with the NBA to discuss his stock offering with the league. Might cause a delay in its release, but hopes this gets it resolved.
Spencer Dinwiddie: We were ready to open on the 14th but in the spirit of partnership, we are pushing it back a week to try and allow the @NBA sufficient time to respond. Having been on the ground in China, we are sensitive to what the @NBA has been dealing with. (1/8) This is why we are giving them additional time as our goal is to partner. Regardless of the @NBA’s position, we will move forward. Therefore we will launch on Oct. 21st, a week from our original date and before the start of the @NBA season. (2/8)
Spencer Dinwiddie: Even with our desire to partner with the @NBA, it is not necessary. And I want to be clear, this is not and never was an “assignment” nor am I in violation of the CBA. By definition an “assignment” would give fans rights towards the Nets/NBA. (3/8) This is a third party business transactions between the fans and I beyond the jurisdictions of those entities. Much like the way no one can tell me which home or car I can buy, I am free to use my money the way I see fit. (4/8)
Spencer Dinwiddie: To continue to suggest anything else is deliberately misleading the public. Quite simply the market will determine the demand for this previously untapped asset class. There will be a bevy of information at their disposal and accredited investors (for the first offering) (5/8) will be able to make an informed decision. As we have witnessed, any great business that is built upon its consumers knows how to listen to the demands of that base and adjust as necessary. (6/8)
Spencer Dinwiddie: Although we are individual assets in this instance we are a part of a collective family in the sports/entertainment world as a whole and those same fans should be involved and empowered to determine what their appetite entails. (7/8) Lastly, as we speak about freedoms domestically and urge athletes to offer comments on situations they maybe werent prepared for, it would be a shame if we try to abuse our power to limit similar liberties that can be beneficial to all parties involved due to misunderstanding.
Marc Stein: An NBA spokesperson tells @NYTSports of the Nets’ @Spencer Dinwiddie and his ongoing attempts to sell shares in his contract: “The arrangement discussed in yesterday’s meeting remains prohibited by the CBA.”
Nets guard Spencer Dinwiddie’s plan to convert his $34.4 million contract into a digital investment vehicle has caused a stir, and a lot of curiosity about how exactly it would work. As we reported on Monday, the NBA and Dinwiddie scheduled a meeting together after the league objected to his plan and raised concerns. According to sources, Dinwiddie and NBA officials met on Thursday and both sides had back-and-forth discussions regarding legal issues about the plan. Dinwiddie still plans to move forward with his plans, sources say, as the NBA reconvenes over potential next steps.
But Dinwiddie said that was never his plan in the first place. “I wasn’t doing it anyway,” Dinwiddie said. “You’ve got to think about it: If I spent just short of a year building it, you really think I didn’t read the CBA? You really think I didn’t have lawyers read the CBA? That would be outrageously stupid. If it’s a whole business and lawyers went through it, they probably saw that provision, right? Which means that we wouldn’t construct it in a way that would violate the CBA because who wants to lose their job? That would be pretty dumb on my part.
“So we constructed it in a way that doesn’t violate the CBA. They said they were going to make their statement, and I honestly just said, ‘That’s not what I’m doing.’ It’s very simple. Once the Nets pay me, that’s the end of it. If I wanted to shoot the money into deep space, technically, I could.” Dinwiddie plans to have further conversations with the NBA, though presumably not Elon Musk for the space plans.
Malika Andrews: Spencer Dinwiddie addressed the back-and-forth with the NBA over whether or not he can tokenize his contract. The NBA issued a statement saying Dinwiddie would violate league rules by doing that. Dinwiddie said today that his lawyers made sure he was not violating the CBA.
Spencer Dinwiddie: The news tonight is disappointing because all it does is inspire #FUD in the birth of a previously unrealized asset class under the assumption that I’m breaking a rule that I’ve been clear I’m not breaking in multiple conversations.
Spencer Dinwiddie: I look forward to an understanding because as I stated in the previous articles it was made with the @NBA in mind. Hopefully being able to bring added fan engagement to the different players/teams and liquidity for team owners.
Spencer Dinwiddie: I love the @NBA it is the greatest league in the world. And it is an honor to be their partner. But to put this quite simply I’m not assigning my contract and have been explicit in that when I’ve spoken to them.
The N.B.A. on Friday notified the Nets’ Spencer Dinwiddie that he cannot use his contract as a digital investment vehicle, according to a league official. Dinwiddie had announced earlier this week to The Athletic that he planned to go public with an “$SD8” token offered by his company DREAM Fan Shares that would enable investors to essentially buy into Dinwiddie’s three-year, $34.4 million N.B.A. contract.
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.’ ”
Marc Stein: Reached tonight by @NYTSports, Brooklyn’s @Spencer Dinwiddie said he plans to meet with league officials to explain the concept further to try to change their minds on today’s ruling
Spencer Dinwiddie: My current contract will be the first Professional Athlete Investment Token. #PAInTs give athletes, artists, and influencers financial control of their contracts. And for fans an alternative to our current financial climate.
For Dinwiddie and his investors, the prime appreciation is designed to come during his player option season in 2021. Dinwiddie has a player option worth $12.3 million for the 2021-22 season. By opting out and earning more, it will, of course, create a major return for him — but also investors. “What better way to be invested in a player as a fan than to have some level of skin in the game,” Dinwiddie told 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.”
How do you believe this is going to change the game and how can people get involved? I’m doing it through my company, Fan Shares, and people will be able to go on the website and buy a token. It will pay out in cash. I’m not creating my own currency; that was floated out there. I’m not creating my own Bitcoin. These transactions will flow through the dollar. The money that we’re operating under is guaranteed from my contract.
Dinwiddie will in essence sell bonds in himself to raise funds. The Players Association had no comment on Dinwiddie’s plans, and there have been questions about whether it could face long, drawn-out scrutiny from the league, although Dinwiddie wasn’t expecting it. “What are they going to do, try and stop me? I mean, they could try,” Dinwiddie said. “Then they’d have to have legal standing to do so. Do you really want to do that? Because wouldn’t that be bad PR for them to do that? I would think. Then I’d start to look like [Colin] Kaepernick. “Nothing I’m doing is illegal. I know there’s a lot of misinformation out there, like I’m trying to create a currency or something. I’m not trying to reinvent the wheel and create a new bitcoin; this is different. … I will say this, though: It solves some of the league’s fan engagement issue. It does do that.”
Brooklyn Nets guard Spencer Dinwiddie is planning to turn his contract into a digital investment vehicle and receive an upfront lump payment, The Athletic has learned, an unprecedented move for an NBA player. Dinwiddie, according to multiple sources, is starting his own company to securitize his NBA contract in the form of a digital token as he begins a three-year, $34.36 million extension with the Nets. It’s unclear how much of the contract amount he wants to raise upfront, but it would likely be less than the total amount, according to sources.
In a securitization, the borrower gives up some future income in return for a smaller lump sum payment. But the borrower, in this case Dinwiddie, then has more money to immediately invest than he otherwise would. A token is a digital currency term. The bond exists in the digital currency world. Instead of buying the bond from a broker, it is through a token. According to sources, this Dinwiddie bond would pay investors principal back and interest, which would be covered by what the Nets owe him.
The National Basketball Players Association was informed of Dinwiddie’s decision this week, sources said. While unique for the NBA, it is not the first time a pro athlete has attempted to turn his future earnings into an investment vehicle. Former NFL running back Arian Foster, then with the Houston Texans, started the process of listing himself as a private stock under a company called Fantex Inc. in 2013.
September 27, 2021 | 7:28 pm EDT Update
CJ McCollum: I think it’s important we don’t lose sight of the fact that 90% of the league is vaccinated. Happy Monday.
Anthony Slater: Klay Thompson on the state of his game: “I can make a lot of jump shots. Pretty good at defensive sliding. My timing is a little off. Reaction time’s not there. That’s being rusty two years. I anticipate in the next four weeks playing 5-on-5 again.” pic.twitter.com/Nk9YDlfyGL