Los Angeles Clippers owner Steve Ballmer has publicly denied that he or the team attempted to circumvent NBA salary cap rules in relation to a reported endorsement deal between Kawhi Leonard and the now-bankrupt environmental company Aspiration. The allegations center on claims that the Clippers used a “no-show” endorsement contract worth approximately $28 million to effectively supplement Leonard’s compensation outside of his NBA salary, in violation of league rules.
The allegations
Investigative journalist Pablo Torre, through the “Pablo Torre Finds Out” podcast, revealed legal documents and testimony from former employees of Aspiration suggesting that Leonard’s LLC, KL2 Aspire, entered an endorsement agreement with Aspiration in or around April 2022. Under the reported terms:
- Leonard would receive payments over several years so long as he remained a Clipper.
- He reportedly had no meaningful promotional obligations, meaning he did little or nothing in exchange for the payments.
- The deal is alleged by some insiders to have been structured to mimic or act as supplementary compensation that would normally be subject to the salary cap.
Ballmer’s position and response
Ballmer has denied knowing the details of the deal. In interviews, he claimed:
- He introduced Leonard to Aspiration in November 2021 but that he was not involved in drafting or approving the endorsement contract.
- His investment in Aspiration was approximately $50 million, but he says he held less than 3% ownership, had no board seat, and limited control over its operations.
- He was unaware of how the contract was structured or of the payments’ precise terms. Ballmer has stated that he feels he was misled or “conned” by Aspiration’s executives.
The NBA investigation
The NBA has launched a formal review into these allegations. Commissioner Adam Silver has emphasized that the league takes salary-cap circumvention seriously and has hired outside counsel to investigate.
If wrongdoing is found, potential penalties could be substantial and may include fines, loss of draft picks, or harsher sanctions. The exact outcome will depend on whether the investigation uncovers evidence that Ballmer or other Clippers executives knowingly structured or facilitated the deal in a way that violated the collective bargaining agreement.
Key issues and implications
This case raises several complex issues about the intersection of endorsements, ownership relationships, and league financial rules. Some of the key questions include:
- To what extent are payments via third-party endorsement contracts scrutinized under NBA cap rules?
- When an owner invests in or has financial ties to a company that later contracts with a player, how much oversight or involvement must be shown to establish culpability?
- How do notions of intent and knowledge factor into penalties, i.e. whether there is evidence that parties knowingly attempted to skirt rules rather than being misled or unaware?
For the Clippers, if the allegations prove true, the consequences could affect both their financial standing (via fines) and longer-term team building (via loss of draft assets). For Kawhi Leonard, questions about the legitimacy of the contract could prompt scrutiny of his earnings and independent deals.
Conclusion
As of now, Ballmer continues to reject the allegations, asserting ignorance of the details and emphasizing that any endorsement deal was handled independently between Leonard’s team and Aspiration. The NBA’s investigation is underway, and all sides are awaiting findings. The case represents a significant test of the league’s ability to police financial arrangements that blur the line between permitted endorsements and prohibited salary cap circumvention.
