As expected, the NBA has hired an outside law firm to investigate whether the Los Angeles Clippers circumvented the salary cap with a “no-show” endorsement deal for Kawhi Leonard by one of the team’s sponsors.
The NBA has hired the law firm of Wachtell, Lipton, Rosen & Katz, reports Joe Vardon, Sam Amick and Mike Vorkunov of The Athletic. This is the same law firm that investigated the Donald Sterling situation with the Clippers (which ultimately led to the sale to current owner Steve Ballmer) and investigated reports of a misogynistic workplace under former Phoenix Suns owner Robert Sarver, who was ultimately suspended by the league for a year and sold the team.
This case, if proven to the satisfaction of the other owners (who will vote on any potential punishment), would not lead to as severe an outcome as the sale of the team (circumventing the salary cap is serious for the NBA, but not on the level of racism and misogyny). However, the list of penalties prescribed in the NBA CBA includes fines up to $7.5 million, the forfeiture of draft picks, and potentially the voiding of the player’s contract.
This case resolves around an endorsement deal with a Clippers sponsor unearthed by the Pablo Torre Finds Out podcast. The timeline breaks down like this: In September 2021, Ballmer made a $50 million investment in Aspiration, a “green bank” company claiming it was planting trees to gain carbon emissions credits it could pass on to its clients. Later that month, Leonard signed a four-year, $176 million max contract extension with the Clippers. At the Clippers’ media day at the end of that same month, Ballmer announced a $300 million partnership and sponsorship with Aspiration that was in part an effort to make the then-under-construction Intuit Dome “green.” Not long after, Leonard signed a four-year, $28 million endorsement deal with Aspiration. None of that is out of the ordinary (star players signing separate endorsement contracts with team sponsors, with a clause the sponsorship ends if they are traded/leave the team, are relatively common).
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