The NBA has reportedly launched an investigation into whether the Los Angeles Clippers and their team owner, Steve Ballmer, circumvented the league’s salary cap by paying Kawhi Leonard $28 million through a “no-show” endorsement deal.
The probe follows reporting from journalist Pablo Torre’s podcast, in which he revealed Leonard received a four-year, $28 million endorsement contract from Aspiration, a now-bankrupt environmental services company partially funded by Ballmer.
The deal, structured through Leonard’s own LLC, KL2 Aspire, allegedly allowed the Clippers to compensate Leonard beyond the salary cap limits set forth under the NBA’s collective bargaining agreement.
An employee who reportedly worked at Aspiration told Torre the partnership “was to circumvent the salary cap.”
An important aspect of this deal is that it allegedly required Leonard to remain with the Clippers to maintain the agreement, but allowed him to decline performing any actual promotional activities.
Torre added that this arrangement came shortly after Balmer invested $50 million into Aspiration on September 14, 2021, with the Clippers announcing a $300 million partnership with Aspiration less than two weeks after that investment was made.
The Clippers have already issued a statement vehemently denying any wrongdoing.
“Neither Mr. Ballmer nor the Clippers circumvented the salary-cap or engaged in any misconduct related to Aspiration. Any contrary assertion is provably false: The team ended its relationship with Aspiration years ago, during the 2022-23 season, when Aspiration defaulted on its obligations,” wrote the team in a statement sent to The Athletic.
“Neither the Clippers nor Mr. Ballmer was aware of any improper activity by Aspiration or its co-founder until after the government instituted its investigation. The team and Mr. Ballmer stand ready to assist law enforcement in any way they can.”
Aspiration filed for bankruptcy earlier this year amid a federal investigation into fraud.
The company’s co-founder, Joe Sanberg, recently pled guilty to wire fraud charges, accusing him of defrauding investors out of more than $248 million, according to ESPN.
NBA spokesman Mike Bass confirmed that the league is “aware of this morning’s media report regarding the LA Clippers and [is] commencing an investigation.” However, no further indication was provided about the league’s actions.
These allegations have drawn immediate comparisons to a landmark NBA scandal a quarter-century ago, in which the Minnesota Timberwolves were found to have made secret arrangements with forward Joe Smith that violated the salary cap in 2000.
Smith had signed a series of cheap one-year deals at below-market rates to help the Timberwolves acquire his bird rights, with the team promising to eventually sign him to a long-term contract that could reach $86 million, per CBS Sports.
When the deal came to light, then-NBA commissioner David Stern brought heavy penalties.
Minnesota forfeited five first-round draft picks, which were later partially restored; paid a $3.5 million fine; Smith’s contracts were voided; and both Timberwolves owner Glen Taylor and executive Kevin McHale were suspended for a year.
Currently, there is no indication about the level of punishment the Clippers would receive if the allegations are proven true. Still, Torre said there is “a bit of panic” in league circles regarding the allegations.
“I am told that they did not know about this deal between Steve Ballmer, or at the very least between Aspiration and Kawhi Leonard with the influence of Steve Ballmer, according to our reporting,” Torre said on The Dan Patrick Show.