Brooklyn Nets guard Spencer Dinwiddie calls himself “a tech guy with a jumper” and aims to prove that with his contract.
The 26-year-old signed a three-year, $34 million contract in December that begins in the upcoming season. He is scheduled to earn $10.6 million in the upcoming season, $11.4 million the following season, and $12.3 million the year after that.
Rather than be paid on that schedule, Dinwiddie is looking to raise money from investors immediately by using his playing contract as collateral.
According to The Athletic’s Shams Charania, Dinwiddie is looking to raise money through digital tokens, which would be like buying bonds that are backed by Dinwiddie’s $34 million contract. He could create a digital-smart contract that would give investors tokens and pay them out according to the contract.
Say Dinwiddie raises $30 million now through this method. He could use that $30 million and invest it in a way he chooses. Based on his Twitter, it seems he might want to invest in bitcoin.
Why would this be in Dinwiddie’s interest?
Say he raises $30 million up front by promising a 2% annual return or so the next three years (the length of his Nets contract). He could use that money to buy $30 million in bitcoin, or invest part in crypto currency, part in stocks, or whatever. He would be betting that the value of bitcoin and/or his other investments will rise over the next few years. If he gains a 10% annualized return, he would end up with just shy of $40 million. Comparatively, he would have been paid $34 million over that time period had he stuck to his contract, although he would have been able to invest his earnings each time he receives a pay check.
Why would someone invest in Dinwiddie by buying a token?
Dinwiddie’s NBA contract is guaranteed. Absent some horrific circumstance in which the contract becomes voided, someone could buy a token in Dinwiddie and maybe receive a greater return than they would from a traditional savings account or short-term bond. Investing in an NBA contract is a pretty sure thing.
This is not unlike a scenario in which someone who wins the lottery is offered the choice of a lump-sum payment up front for less money, or payment installations in the future for smaller amounts. Dinwiddie would be choosing the lump-sum option. His “lottery” would be formed by offering digital tokens. Token owners would be paid back with the money Dinwiddie is owed by the Nets. How well this works out for Dinwiddie depends on his ability to invest. He clearly has an appetite for risk.