The NBA notified Brooklyn Nets’ player Spencer Dinwiddie that he cannot tokenize his $34 million contract.
The National Basketball Association (NBA) notified Brooklyn Nets’ player Spencer Dinwiddie that he cannot tokenize his $34.4 million contract.
As The New York Times reported on Sept. 27, the NBA pointed out that Dinwiddie’s initiative goes against the collective bargaining agreement in a statement sent to the outlet. The statement reads:
“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.’”
Dinwiddie, on the other hand, told the outlet that he intended to better illustrate the investment scheme to league officials, hoping to change their minds. He commented on his initiative:
“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.”
Heightened fan involvement
Per the report, by tokenizing the contract Dinwiddie would have allowed investors to bet — and capitalize — on his ability to play well enough to earn an even more lucrative contract after the second year of his deal. As Cointelegraph reported on Sept. 16, the plan was to enable investors to buy into his three-year $34 million playing contract with his team.
According to the Times, he intended to raise $4.95 million to $13.5 million by offering an Ethereum-based security token developed by his company Dream Fan Shares. He also reportedly intended to guarantee to investors a few percentage points in interest over the duration of the contract and to set the minimum investment to $150,000.
As Cointelegraph recently reported, Turkish Football Club Galatasaray Spor Kulübü plans to launch Ethereum-based fan tokens in partnership with blockchain sports fan startup Socios based on sports tokenization platform Chiliz.
Source: Cointelegraph https://cointelegraph.com/