NBA player Spencer Dinwiddie, who plays for the Brooklyn Nets, will be allowed to tokenize his contract, following a few months of negotiations with the league.
Dinwiddie plans to roll out his token-based investment vehicle on Monday.
The basketball player announced his plan to tokenize his three-year, $34.5 million contract, through the Ethereum blockchain and raise $13.5 million in the first year. The plan was to raise his contract’s value as an upfront flat rate, with investors reaping the benefits during the season.
A few months ago, the NBA banned Dinwiddie’s plan because of the collective bargaining agreement which applies to all NBA players. According to Dinwiddie, the NBA didn’t approve his plan due to the potential of “significant dividends for investors” if he decided to opt-out during the final year of his contract in 2021 and sign a higher-paying contract with Brooklyn or another team.
“Pretty much of what they said was that the player option was gambling,” Dinwiddie said, “and that would’ve been cause for termination.”
Dinwiddie also said that he and his group of lawyers, as well as a Players Association representative, have discussed the plan with the league four times in person and three times over the phone.
The NBA also hired the eminent law firm, Debevoise & Plimpton, to attend the negotiations. The 26-years old added that he never intended to antagonize the league, nor did he expect from them to fully back his plan.
“But what we did want was for them to be like ‘it’s not terrible,”he said.
However, the league disapproved his plan from the get-go, despite the fact that he was seeking to use this option in the way it was created.
“I stand up for what I believe in and what I believe is right. And so I’m going for it, obviously, in the face of some adversity,” Dinwiddie said. “But I also wasn’t going to sacrifice my basketball career for this.”
In an interview with Forbes, he said that offering a flat bond instead of the clause would allow for the progression of the plan. A minimum buy-in amount the investors have to pay in order to buy tokens is $150,000, including his contract’s value upfront.
Dinwiddie said that his plan allows players to design and issue debt securities in the digital token form to invest their money as they like. The key feature of the plan is the decentralization of the personal loan to players through bonds they make with their guaranteed contracts as security.