Inverse Stock Option

pad300 · Post #1 » by **pad300** » Wed Jun 17, 2015 2:56 am

OK, I am not sure how (if) this would work under the CBA.

If a franchise had a "Face of the Franchise" player, and they wanted to reward him at the end of this career, could you put an inverse stock option in his contract: a clause that would allow him the option to buy a fraction of the team for a fixed price upon retirement? I know an active player is not allowed to have an ownership position, so you can't do regular stock options, but the clause would read something like this:

Upon retirement from the NBA, Player X has the option to purchase n% of Franchise Y from Owner Z for the fixed price of $XXX

Clearly, this is not an active ownership position, but rather the opportunity to take one up after retiring from playing.

To put a concrete example in play, could the Spurs write into Tim Duncan's next contract:

Upon retirement from the NBA, Tim Duncan has the option to purchase 5% of the San Antonio Spurs Franchise from owner Peter Holt for the price of $40,000,000.

How would such a clause fit into the salary cap? (note that in the example I have included, TD may be getting a pretty nice deal - the value of the Spurs is estimated at $1,000,0000,000, so 5% would be $50,000,000 )

DBoys · Post #2 » by **DBoys** » Wed Jun 17, 2015 3:37 pm

"If a franchise had a "Face of the Franchise" player, and they wanted to reward him at the end of this career, could you put an inverse stock option in his contract...."

Nope.

pad300 · Post #3 » by **pad300** » Wed Jun 17, 2015 4:07 pm

DBoys wrote:"If a franchise had a "Face of the Franchise" player, and they wanted to reward him at the end of this career, could you put an inverse stock option in his contract...."

Nope.

Thank you, but a little more detail if you please. What CBA language dis-allows such a contract?

DBoys · Post #4 » by **DBoys** » Wed Jun 17, 2015 5:01 pm

CBA, II, 12
(c) The only form of Compensation that a Team may pay a player under his Uniform
Player Contract is cash via a check made payable to the player or via a direct deposit made to the
player’s bank account. Compensation of any other kind is prohibited.

pad300 · Post #5 » by **pad300** » Wed Jun 17, 2015 10:14 pm

DBoys wrote:CBA, II, 12
(c) The only form of Compensation that a Team may pay a player under his Uniform
Player Contract is cash via a check made payable to the player or via a direct deposit made to the
player’s bank account. Compensation of any other kind is prohibited.

Thank you