Spencer Dinwiddie has plans to convert his three-year, $34.4MM contract into a digital investment vehicle that would allow investors to buy a digital token backed by his contract, something that would allow the guard to secure a large upfront payment. The league, which sought outside legal counsel on the matter, is not approving Dinwiddie’s venture for a variety of reasons, as Shams Charania of The Athletic learns.
“At the request of Spencer Dinwiddie and his advisors, we have reviewed a number of variations of their digital token idea,” said Dan Rube, the NBA’s Executive Vice President and Deputy General Counsel. “All of the ideas presented would violate collectively bargained league rules, including rules prohibiting transferring a player’s right to receive NBA salary, gambling on NBA-related matters, and creating financial incentives to miss games.”
The NBA wants to work with Dinwiddie to find common ground, Charania writes. Dinwiddie has met with the league twice over the past month in an attempt to find a resolution that allows him to move forward with his venture. The guard has made several changes to the structure of his investment vehicles that would appease the league and attempted to alleviate concerns about “third-party assignment” or the transferring of his contract, which would violate the Collective Bargaining Agreement.
The latest hangup is over Dinwiddie’s 2020/21 player option, which is worth $12.3MM. Token holders would be invested in his decision on that option, though the Nets’ guard recently altered the payout mechanism for investors, reducing the risk to zero should he opt in and giving them potential upside should he opt out. Because of his option, the league views selling the digital token as gambling, since his investors would be potentially wagering millions of dollars on whether he becomes a free agent as well as his availability to play games in the league.
Dinwiddie still plans on moving forward with his venture, as he believes the NBA’s lack of approval is without cause. Dinwiddie carrying out his plan could bring penalties such as a suspension, a fine, or even the termination of his contract, though that would be an extreme measure.
Charania hears from a source that Dinwiddie’s goal is to design a method that can further improve a player’s economic options while adhering to the league’s concerns. The National Basketball Players Association recently release a statement supporting Dinwiddie.
“The NBPA’s mission is to support its members and we are currently assisting Spencer and his business associates in seeking to address the League’s concerns,” the NBPA said in a statement. “Our hope is that a resolution satisfactory to all parties can be achieved.”
For now, the two sides are in a standstill over the combo guard’s plan. Dinwiddie has played in 13 games for Brooklyn, starting two in place of Kyrie Irving. He’s averaging 18.5 points and 4.8 assists per game and the Nets are 5-8 on the season.