The National Basketball Association or NBA, like it is popularly known by its fans, has informed Spencer Dinwiddie, the Brooklyn Nets’ player, that he cannot tokenize his $34.4 million contracts.
On September 27, 2019, The New York Times reported that the NBA’s action has put Spencer’s plan to put his contract on the blockchain platform, at the stall. The statement sent to the outlet by NBA stated that Dinwiddie’s request is against the collective bargaining agreement.
The official statement read:
According to recent reports, Spencer Dinwiddie intends to sell investors a ‘tokenized security’ that will be backed by his player contract. The described arrangement is prohibited by the C.B.A., which provides that ‘no player shall assign or otherwise transfer to any third party his right to receive compensation from the team under his uniform player contract.’
In his clarification statement to the outlet, Dinwiddie quoted that:
What better way to be invested in a player as a fan than to have some level of skin in the game. […] With the way mine works, if I play well in that player option year and we split the profits up the first year of my new deal, it greatly appreciates the return on this investment vehicle.
Spencer wanted to sell off a tokenized security asset “$SD8” on the Ethereum blockchain network through his firm DREAM Fan Shares. With the help of this tokenization, the player wanted to raise $4.95 million to $13.5 million. His initiative would have required a minimum investment of $150,000 and was slated to be limited to only institutional investors.
According to the report, Dinwiddie’s tokenization initiative would have given a fair chance to bet and capitalize based on his playing capabilities which will allow them to earn more gainful returns after the second year of his contract. Dinwiddie shined as NBA’s top sixth men as he averaged high scores last season while playing for the Nets.
NBA’s decision has raised the eyebrows of many crypto enthusiasts who have shown their disappointment towards it. Binance CEO, Changpeng Zhao tweeted that “People should be allowed to enter into mutually agreed on commercial contracts.”
Recently, Turkish Football Club Galatasaray Spor Kulübü planning to come up with its Ethereum-backed fan tokens in collaboration with Socios, a blockchain sports fan startup based on Chiliz platform.