Brooklyn Nets guard Spencer Dinwiddie has plans to turn his current contract with the club into a tokenized investment vehicle according to a report today by the sports news agency, The Athletic.
Citing sources close to the matter, The Athletic noted that Dinwiddie is starting a new company to allow him to carry out the move which will see him raise funds from investors by selling digital tokens backed by his three-year $34.36 million contract extension with the Nets.
It is very likely, though according to sources that the athlete will try to raise funds lower than what his contract would be worth at the end of the day since the basic idea behind tokenization is to give up some future income in return for a smaller lump sum payment.
They also confirmed that those who invest in the tokenized bond backed by the NBA star will receive principal and interest back at the end of the day, although the exact figure is yet unknown.
Notably, the National Basketball Players Association has already been informed of Dinwiddie’s decision this week, perhaps meaning that the move is already planned and will come to public knowledge soon.
Meanwhile, the only perceived risk for investors who buy the digital tokens that Dinwiddie reportedly plans to issue would be a termination of Dinwiddie’s contract by the Nets as a result of misconduct. In other words, any investment into the digital tokens is a bet that the NBA star will maintain the required discipline to see out his contract with the Nets.
It is also unclear whether how his decision regarding an existing player option worth $12.3 million in 2021 will impact investors. The Athletic writes that the uncertainty is because Dinwiddie can decide to opt-out of that player option and potentially earn more on his next contract, likely increasing the value of the contract which backs the soon-to-be-unveiled digital tokens.
Either way, the move by the NBA star continues the ongoing intertwine between sports and crypto tokens. Stmarket.co reported last week that the Spanish soccer club, Atletico de Madrid partnered with Socios to launch crypto tokens for their fanbase.