The NBA has opened an investigation against the LA Clippers and owner Steve Ballmer over allegations of manoeuvring around the salary cap to pay star player Kawhi Leonard $28m.
On September 3, former ESPN employee Pablo Torre revealed on his ‘Pablo Torre Finds Out’ podcast that a Ballmer-funded company called Aspiration had filed for bankruptcy.
Within the bankruptcy filing documents, details of $7m to be paid out to ‘KL2 Aspire LLC’ was revealed; Leonard is registered as a Manager at said company.
Leonard signed a four-year $28m sponsorship agreement with Aspiration in April 2022 with his KL2 Aspire company.
Aspiration received $50m in funding from Ballmer on September 14, 2021, followed by the announcement of a $300m partnership between the tree-planting company and the Clippers on September 27, 2021.
Torre notes that while Aspiration received endorsements from high-profile figures such as Drake and Robert Downey Jr., Leonard had not endorsed the company once as an investor. The Clippers forward had a clause in his contract to opt-out or “no-show” any marketing obligations.
When Torre reached out to Aspiration to gather more information, seven company employees agreed to an interview, while also receiving a statement regarding the money Leonard would receive from Aspiration.
“In consideration of the rights and benefits granted to company hereunder, Company (Aspiration) will pay KL2 $28m in cash during the term of this agreement. Company will pay will pay $7m each year of the term,” the statement read.
An anonymous former Aspiration employee told Torre that “these were the major contracts and the major players you really need to be aware of”.
Where this deal may come into falling foul of the NBA’s rules around the salary cap is the former Aspiration employee was told “if I had any questions about it, don’t because it was to circumvent the salary cap”.
Could the NBA take action?
In light of the release of Torre’s report, NBA Spokesman Mike Bass said the league was “aware of this morning’s (Wednesday’s) media report regarding the LA Clippers and commencing an investigation”.
Ballmer is also open to the NBA investigating the matter after he spoke to ESPN on September 4 for the first time since Torre’s report was released.
“Salary cap circumvention rules are important to the league, and I’d want the league to investigate,” said Ballmer.
The Clippers owner later alleged Aspiration was a “fraudulent company” and “had no control over this company” in which he introduced Leonard too.
“I reviewed, my staff reviewed primarily fraudulent financials,” he said. “Now, should I have sniffed it out? Maybe I feel embarrassed and kind of silly that I didn’t sniff it out, but I didn’t.”
If Ballmer and the Clippers are found guilty by the NBA of circumventing salary cap rules, the franchise could be hit with either a substantial fine, being stripped of future draft picks and contracts being voided.
