NBA rejects Spencer Dinwiddie’s plan for ‘digital investment vehicle’ backed by his contract

Late Friday, after the Nets completed Media Day, the NBA ruled that Spencer Dinwiddie’s plan to create a “digital investment vehicle” based on his contract violated the Collective Bargaining Agreement and thus would not be permitted.

Marc Stein of the Times

Dinwiddie responded by challenging the league’s assertions.

Dinwiddie had been pushing the proposed “digital investment vehicle” in the days leading up to the league decision, trying to explain how letting investors —including fans— take a risk on his performance would permit them to have some “skin in the game.”

Approval of the plan was always a long shot.

“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. The collateral in the deal will be his three-year, $34.4 million contract,

In essence, investors would have provided Dinwiddie upfront money, then reap the rewards in the third year of his deal, which is a player option. Assuming his first two years were gang busters, Dinwiddie would opt out and go for a bigger, long term contract, rewarding his early investors.

“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.”

The advantage for Dinwiddie is that he would get more money upfront in investments that he would normally wouldn’t have access to. Of course, like any investment, there are no guarantees.

The digital side of the plan should cut down on costs, he added. Instead of a bond, investors will get a token, cyber currency. Dinwiddie has been advocating investing in cyber currency for a while. He calls his digital investment vehicle both a “new asset class” and “a real fantasy sport” that “enhances the real fan engagement. It enhances the NBA.”

Dinwiddie also said he would set aside a reserve to provide a level of security: $1 million in cash flow, $1 million in a public Bitcoin entity and $1 million in physical gold.

As every Nets fan knows, Dinwiddie is one of the smartest players on the team, in the league. Moreover, he exhibits the confidence most entrepreneurs have in their new product. No word on when the league and union will make their decision.

• Nets’ Spencer Dinwiddie Can’t Sell Shares in His Contract, N.B.A. Says - Marc Stein - New York Times
• Still confused about Spencer Dinwiddie turning his contract into a digital token? We talked to him and got him to explain - Shams Charania - The Athletic NBA