A contract with a now-bankrupt company, Aspiration, allegedly allowed Leonard to be paid without performing any marketing work.
If found guilty by the NBA, the Clippers could face severe penalties, including millions in fines and the forfeiture of draft picks.
The Clippers have denied the allegations, stating that neither the team nor its owner engaged in any misconduct.
The NBA is opening an investigation into allegations that the Los Angeles Clippers reportedly facilitated a $28 million ‘no-show’ endorsement deal for star Kawhi Leonard with a now-bankrupt sustainability company, allegedly in an effort to circumvent the NBA salary cap.
“We are aware of this morning’s media report regarding the LA Clippers and are commencing an investigation,” NBA spokesman Mike Bass said Wednesday, September 3 in a statement emailed to USA TODAY Sports.
Sports reporter Pablo Torre of “Pablo Torre Finds Out” hosted an episode of his show that published Wednesday, in which he outlined the allegations. At the center of is the now-bankrupt ‘green’ financial services company called Aspiration.
Torre uncovered thousands of pages of legal documents, including a contract signed by Leonard for $28 million over a four-year term to market and endorse Aspiration, which previously received a significant investment from Clippers owner Steve Ballmer.
In the contract, a clause states that KL2 Aspire LLC, a company run by Leonard, could “decline to proceed with any action desired by the Company,” which set up a structure for Leonard to potentially receive payments without performing any work. Another clause states that Leonard would receive payments only if he continued to be a player on the Clippers.
According to legal documents Torre uncovered, Leonard and his company are still listed as a creditor for an additional $7 million.
Torre also aired tape of a former high-ranking executive who worked in the finance department with Aspiration, who agreed to be part of an interview under the condition that they use a voice modifier.
“I didn’t so much as discover it as I was told about it,” the person said during the interview.
“… My reaction was: ‘What the (expletive). And I was told: ‘Oh, these are the major contracts and the major players you really need to be aware of.’ And we went through a litany of really, really top-tier contracts, ‘Oh, and then, by the way, we also have a marketing deal with Kawhi Leonard, a $28 million organic marketing sponsorship deal with Kawhi ’ and that if I had any questions about it, essentially don’t because it was to circumvent the salary cap, LOL. There was lots of LOL when things were shared.”
When asked if the person ever saw any proof of Leonard marketing or endorsing Aspiration in any way, the person responded: “Never, not once.”
In a social media post from Thursday, June 29, 2023, the Clippers honored Leonard for his birthday, with a branded message from Aspiration.
“For every comment/retweet, @Aspiration will plant one tree for Kawhi’s birthday!” the message reads.
The post also contained an image that featured Aspiration’s logo at the top.
If the NBA finds the Clippers guilty of wrongdoing in an attempt to circumvent the salary cap, the penalties could be steep.
According to Article XIII of the Collective Bargaining Agreement, the league could “impose a fine of up to” $4.5 million for a first-time violation. A second violation could trigger a $5.5 million fine and forfeiture of a first-round draft pick.
Another section under the same article prohibits unauthorized agreements; a violation of that section could trigger a fine of up to $7.5 million, forfeiture of draft picks, the voiding of player contracts, a fine of up to $350,000 to the player, a prohibition of the player signing an additional contract with the violating team and a one-year suspension of “any Team personnel found to have willfully engaged in such violation.”
The Clippers did not respond to a request for comment, though they did issue a statement to Torre.
‘Neither Mr. Ballmer nor the Clippers circumvented the salary cap or engaged in any misconduct related to Aspiration,” that statement reads. “Any contrary assertion is provably false.’