NBA says it will open investigation into report that Clippers broke cap rules with Kawhi Leonard deal
The NBA said Wednesday that it will investigate if a $28 million endorsement contract between Kawhi Leonard and a California-based sustainability services company allowed the Los Angeles Clippers to circumvent league salary cap rules, following a report by journalist Pablo Torre.
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The Clippers strongly denied that any rules were broken and said they welcomed the league's investigation.
The probe will focus on ties between Leonard, the Clippers and a company called Aspiration Fund Adviser, LLC, which filed for bankruptcy this year. It listed several creditors at that time, among them the Clippers (who were owed about $30 million) and a company called KL2 Aspire LLC that was owed $7 million.
Leonard is listed as the manager of that company in California filings. KL is his initials, and 2 is his jersey number. Emails sent to his listed representatives seeking comment Wednesday were not immediately returned.
"We are aware of this morning's media report regarding the LA Clippers and are commencing an investigation," NBA spokesman Mike Bass said Wednesday.
Clippers owner Steve Ballmer made a $50 million investment in Aspiration, and the company and the team announced a $300 million partnership in September 2021. That was about a month after Leonard signed a four-year, $176 million extension with the Clippers.
The team ended its relationship with Aspiration after two years, saying the contract was in default.
"Neither the Clippers nor Steve Ballmer circumvented the salary cap," the team said. "The notion that Steve invested in Aspiration in order to funnel money to Kawhi Leonard is absurd. Steve invested because Aspiration's co-founders presented themselves as committed to doing right by their customers while protecting the environment.
"After a long campaign of market manipulation, which defrauded not only Steve but numerous other investors and sports teams, Aspiration filed for bankruptcy. ... Neither Steve nor the Clippers had knowledge of any improper activity by Aspiration or its co-founder until after the government initiated its investigation."
Aspiration's co-founder, Joseph Sanberg, agreed to plead guilty last month after facing federal charges of wire fraud. Prosecutors said he defrauded investors and lenders out of $248 million, adding that "Aspiration's financial statements were inaccurate and reflected much higher revenue than the company in fact received."
Torre, in his reporting, obtained a copy of the endorsement agreement between Aspiration and KL2 Aspire, one that called for Leonard to be paid $7 million annually for four years. Given that timetable, Leonard still would have been owed the final $7 million at the time of Aspiration's bankruptcy filing.
There is no evidence that Leonard did anything to publicly endorse Aspiration.
"There is nothing unusual or untoward about team sponsors doing endorsement deals with players on the same team," the Clippers said. "Neither Steve nor the Clippers organization had any oversight of Kawhi's independent endorsement agreement with Aspiration. To say otherwise is flat-out wrong."
The league — which previously looked into claims that Leonard's representatives asked for certain things that would be considered cap circumventions when he was a free agent several years ago — can issue stiff penalties if cap rules are found to have been broken by a team, including a fine of up to $7.5 million, the voiding of contracts and the forfeiture of future draft picks.