Spencer Dinwiddie is at it again. One of the NBA’s most creative off-court thinkers, Dinwiddie routinely offers out-of-the-box ideas and has even attempted to convert his contract into a security. The NBA rejected that plan, just as it will surely reject his new one: on Twitter, Dinwiddie promised to allow fans to pick his next team provided they raised the cash value of 2625.8 bitcoins, or $24,632,630. He has since started a GoFundMe campaign to raise the money.
If the money is raised, Dinwiddie says that he would sign a one-year, minimum-salary contract with a team voted on by fans when his current contract expires (which would be in either 2021 or 2022 depending on whether or not he exercises his player option for the 2021-22 season). In a statement released through The Athletic’s Shams Charania, Dinwiddie says that he hopes “no owners/team personnel participate so there’s no impropriety on this one of a kind endorsement deal.” Because NBA teams are a famously law-abiding bunch when it comes to roster-building. That’s why nobody ever tampers in professional basketball.
If the sarcasm wasn’t apparent, this offer, which Dinwiddie is likely making in jest anyway, is in no way, shape or form legal. While there is no direct rule against crowdfunding a contract, that is likely because the NBA never considered a possibility. Fortunately, this idea still manages to violate virtually every clause of Article XIII of the collective bargaining agreement, the section related to salary cap circumvention. Below is the NBA’s official definition of circumvention:
“Neither the Players Association, the NBA, nor any Team (or Team Affiliate) or player (or person or entity acting with authority on behalf of such player), shall enter into any agreement, including, without limitation, any Player Contract (including any Renegotiation, Extension, or amendment of a Player Contract), or undertake any action or transaction, including, without limitation, the assignment or termination of a Player Contract, which is, or which includes any term that is, designed to serve the purpose of defeating or circumventing the intention of the parties as reflected by all of the provisions of this Agreement.”
This legalese is obviously not particularly easy to read, so here’s the gist of it: the cap exists for a purpose, and the NBA reserves the right to reject deals that its rules may not technically deem illegal if they violate the spirit of those rules. The most recent example came in September. The Houston Rockets used a series of technically legal bonuses to artificially inflate the cap number of Nene in the interest of creating a sizable salary to use in a trade. Because of the structure of those bonuses and the non-guaranteed second season on the deal, the Rockets could have essentially traded him as if he were a $10 million player, but his new team would be able to pay him significantly less than that. The NBA ruled that while the contract itself was legal, the Rockets could not trade him at that inflated cap number.
So, would a crowd-funded Dinwiddie violate the spirit of the cap? Absolutely. Look at it this way: a new team would pay Dinwiddie only a small fraction of his salary, essentially artificially lowering his cap number well below its worth, yet he would still be paid. That money would just come from fans. It would give teams access to a player it couldn’t normally afford, either directly in the form of Dinwiddie, or indirectly in the form of savings that could be given to other players. This is circumvention.
Of course, this deal would not just violate the spirit of the law. There are several clauses in Article XIII that would actually be violated by this arrangement. Which ones? I’m glad you asked. I submit this excerpt from Section 1(b):
“It shall constitute a violation of Section 1(a) above for a Team (or Team Affiliate) to enter into an agreement or understanding with any sponsor or business partner or third-party under which such sponsor, business partner or third-party pays or agrees to pay compensation for basketball services (even if such compensation is ostensibly designated as being for non-basketball services) to a player under Contract to the Team.”
The short version: third parties cannot pay for basketball services, the legal definition of a player’s salary. Who is the third party here? The fans paying for Dinwiddie’s GoFundMe. Would Dinwiddie’s actual player contract be making “substantially below the fair market value of such a contract?” Yes. Spencer Dinwiddie nearly made the All-Star Game this year. He is only 27-years-old. He is worth far beyond the minimum. If anything, the number he sets in GoFundMe sets the bar too low. In a typical offseason, he should at least expect a deal that pays him eight figures for several years.
This is the primary rule being broken, but arguably, there is another one being violated. Below are Sections 2(a) and 2(b):
“At no time shall there be any agreements or transactions of any kind (whether disclosed or undisclosed to the NBA), express or implied, oral or written, or promises, undertakings, representations, commitments, inducements, assurances of intent, or understandings of any kind (whether disclosed or undisclosed to the NBA), between a player (or any person or entity controlled by, related to, or acting with authority on behalf of, such player) and any Team (or Team Affiliate):
(i) concerning any future Renegotiation, Extension, or other amendment of an existing Player Contract, or entry into a new Player Contract …
In addition to the foregoing, it shall be a violation of this Section 2 for any Team (or Team Affiliate) or any player (or any person or entity controlled by, related to, or acting with authority on behalf of, such player) to attempt to enter into or to intentionally solicit any agreement, transaction, promise, undertaking, representation, commitment, inducement, assurance of intent or understanding that would be prohibited by Section 2(a) above.”
Again, this is complicated legalese, but it boils down to this: contracts cannot be agreed upon in advance. The last notable occasion in which this clause was invoked came in 1998 when Joe Smith signed a suspiciously cheap contract with the Minnesota Timberwolves. It was later revealed that Smith had only signed that contract so that Minnesota could gain his Bird Rights and pay him a more lucrative deal down the line. Smith’s contract was voided, and the Timberwolves were then stripped of five first-round draft picks (though one was later returned). The NBA takes these kinds of agreements very seriously.
Dinwiddie’s situation is different in that he is not making a future agreement with a team directly. Instead, he is making an agreement with a third-party entity (fans) to sign with a team of their choosing for a guaranteed financial amount. Assuming they dictate the team before he reaches free agency, that could be construed as an agreement, though how legally binding a GoFundMe campaign would prove in a court of law is uncertain.
Now, is Dinwiddie being serious in making this offer in the first place? Probably not. Having traversed the CBA in attempting to tokenize his contract, he is likely fairly well-versed in what it allows. Though not currently a union rep (Brooklyn happens to have two highly respected union leaders in Garrett Temple and Kyrie Irving), he is an active member of the NBPA and has even hosted a clinic on its behalf in the past. He is, put simply, one of the NBA’s smartest and most creative players. He had to know this wasn’t going to work.
That raises the possibility that this was a joke, a veiled attempt to raise money for charity, or his way of bringing to light what he believes is rigidity within the CBA. While his motives are unclear, Nets fans can rest easy knowing the illegality of this scheme. They are not going to lose one of their best players to a crowdfunding campaign.