Brooklyn Nets guard Spencer Dinwiddie is planning to tokenize his $34 million dollar contract extension.
Dinwiddie is reportedly going to sell digital tokens tied to the contract, wherein investors in the offering would receive principal and interest.
At face value, it’s a fascinating decision, especially since NBA contracts are guaranteed in full.
A securitization like this allows Dinwiddie to get more of the cash—potentially all of it—upfront, so he’ll have more capital to invest or spend.
The biggest risk in the Nets player’s deal is his contract, as it’s the primary driver for Dinwiddie to pay investors back. Dinwiddie could find himself without the funds to repay bondholders if misconduct threatens his deal with the team.
Dinwiddie is a prominent tech and business enthusiast in the NBA. One could only imagine he has plan for that money since he’ll be forgoing at least some of the long-term cash in order to get money upfront.
The move is a first for the NBA, and could shift how players negotiate contracts should it prove successful.
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