Don’t look now, but professional athletes are starting to look into tokenizing their contracts. In fact, Brooklyn Nets point-guard Spencer Dinwiddie is doing just that – he’s creating a Security Token Offering (STO) secured by the terms of his contract and in effect, creating the sports world’s first digital investment. By doing this, Dinwiddie is leveraging his up-front lump sum dollar amount via his STO, which will allow him to use the money raised with his tokenization efforts to fund other investments now. Investors in his STO will receive principle and interest payments covered by the longer-term payout provided by his NBA contract with the Nets – essentially creating a cash payout backed by future cash flow.
Could this be the future of what other pro athletes may consider? After all, their contracts are quite lucrative, even for the lesser known players in all four major sports. Plus, the money in sports like golf, tennis, and soccer is off-the-charts as well! Interestingly enough, this concept for raising money isn’t completely unique. Back in 1997, rock star David Bowie raised $55 million by securitizing his future music revenue by partnering with Prudential Insurance Company to provide investors income generated by his back catalog of 25 albums in the form of “Bowie Bonds“.
If Bowie were alive today, he’d see that creating digital assets in the form of future cash flows is a lot easier with STOs and the smart contracts associated with the tokenization process. This type of investment is attractive to the issuer (the athlete) because it transfers the risk of future performance for upfront cash now. And it’s not just sports stars that can take advantage – movie stars, musicians, and pretty much any celebrity should be seriously considering doing what Dinwiddie is pioneering .
The “tokenization of athletes” has significant potential, especially with the growing popularity of fantasy sports and the explosion of interest in the “eSports” arena. What’s basically happening is technology is taking the concept of securitization and metamorphosing it into a digital investment over on the blockchain, allowing investors the opportunity of owning a financial stake in a sports star. Add liquidity into that equation and you have a big winner!
Organizations like the Blockchain Trust Group, Pro Sports Broker and others believe that as blockchain and tokenization become more mainstream, we’re going to see more of these types of celebrity investments. The technology is real, it works, it’s safe, it’s secure, and it’s available at the World Token Market. Welcome to the new world!