3 Realistic Outcomes for NBA's Clippers-Kawhi Leonard Cap Scandal
No matter which way you lean in the Kawhi Leonard-Los Angeles Clippers salary-cap circumvention scandal, the Clippers either look like cheaters or, at best, suspect.
Last week, Pablo Torre dropped a bombshell report detailing potential circumvention by the Clippers through a now-bankrupt "green bank called Aspiration." Torre detailed a "no-show endorsement deal" issued to Leonard from a prominent team sponsor, Aspiration, that also had Clippers owner Steve Ballmer as an investor.
The optics are ugly, regardless of what the Clippers did or didn't do.
Competing owners, executives and agents have strong, varied opinions on the league's best recourse, ranging from dropping the hammer on the Clippers to doing absolutely nothing, depending on what evidence an investigation reveals.
To recap the timeline and what we know about the revelation:
Aug. 21, 2021: Leonard signed an extension with the Clippers.
Sept. 27, 2021: The Clippers announced an arena sponsorship deal with Aspiration worth over $300 million.
Dec. 15, 2021: Aspiration announced it had $50 million investment from Ballmer (h/t BusinessWire).
Last week, Torre presented his argument with a stack of more than 3,000 documents and credited seven witnesses from Aspiration who claim they were told Leonard's deal was in place to help the Clippers circumvent the salary cap.
While Torre makes a compelling argument, the evidence that the Clippers actively made a quid pro quo agreement is circumstantial.
Late last week, Ballmer did an interview with ESPN's Ramona Shelburne to deny any wrongdoing, stating "we, the Clippers, have abided by the salary-cap circumvention rules."
"I made an investment in (Aspiration) thinking it was on the up and up, and they conned me," Ballmer continued. "At this stage, I have no ability to predict why they did anything they did, let alone their contract with Kawhi."
The 2 Key Rules That May Have Been Broken
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The NBA's collective bargaining agreement details two levels related to the Aspiration situation. Notably, a franchise cannot have a sponsor pay the player on the team's behalf, and it also outlaws under-the-table agreements between a team and player.
There is a relevant precedent for the league to base its penalty on. In 2000, the Minnesota Timberwolves infamously put in writing an illegal deal with Joe Smith, leading to a massive penalty: the loss of five draft picks (one was eventually returned to the franchise), a $3.5 million fine, and year-long suspensions for former owner Glen Taylor and general manager Kevin McHale. The league also voided Smith's contract.
The rules do not require a written agreement; oral or implied can be enough. It "may be proven by direct or circumstantial evidence."
The penalties for having a business partner pay a player on a team's behalf range from $4.5 million to $5.5 million, forfeiture of one first-round draft pick, and voiding of the player's contract. That Leonard is on a subsequent contract, not the one in question, may be a gray area.
The more severe punishments could include (up to) $7.5 million in fines, multiple first-round picks, a $350,000 fine to the player, and one-year suspensions for any team personnel "willfully engaged in such violation." The player's contract would be voided, along with "anything of value received in connection," which would include Leonard's current deal via extension.
Clearly, the latter violation is the proverbial hammer. The former is serious, but relatively speaking, it's a mild penalty—assuming Leonard's current deal is not voided.
Best Case for the Clippers, Leonard
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Ballmer's defense strategy was clear in his interview with ESPN. He introduced Leonard to Aspiration, but he had no involvement in anything that followed.
The Clippers had previously signed Leonard to a contract extension, and any endorsement deal with the player was none of L.A.'s business.
Ballmer purchased a small share of the company (believed to be three percent) because he believed in their cause. If Leonard received a no-show contract from a con artist, that's something to address with the con artist.
Dallas Mavericks minority governor Mark Cuban's defense of Ballmer stems from the notion that he wouldn't let Aspiration go bankrupt with his "deepest, darkest secret" of an illegal deal with Leonard. Instead, Ballmer would have used his wealth to bail out the company, protecting his interests.
The other pro-Ballmer argument: He wouldn't go on ESPN to lie outright if there was any written evidence that could later implicate him. That's not to suggest his innocence—just his potential confidence that there is nothing in writing (email, text, contracts, etc.) that will later come back to bite him.
If something untoward occurred, it may have been done verbally and only with the top decision-makers. The NBA may view hearsay from Aspiration staff as nothing more than gossip and conjecture, lacking more substantive evidence.
It's possible the Clippers and Leonard may have broken the rules, but there's not enough evidence for the NBA to act upon. While other NBA owners and executives may want to see the Clippers punished for potentially cheating, they also might not love a checks and balances system that doesn't require supportive cause.
In this best-case scenario, the NBA would give the Clippers a warning that the case is closed for now, but it will be reopened if new information comes to light.
Worst Case for Clippers, Leonard
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The NBA will fight for the integrity of the game, and commissioner Adam Silver has the latitude to go off circumstantial evidence.
Torre mapped out a compelling case that Leonard's endorsement was fake. Still, the league's legal team needs to take an additional step to impose a harsh penalty—that Leonard signed an illegal endorsement deal with Aspiration on behalf of the Clippers, and Ballmer's investment in the company was a back-channel payment as part of an unauthorized agreement.
The absence of a so-called smoking gun may not matter, since the rules explicitly state circumstantial evidence can be enough if it "cannot rationally be explained." The Aspiration endorsement, coupled with Leonard's hidden public footprint promoting the company, is a tough one to map out reasonably.
The timing—after Leonard signed his extension—may not matter if the league determines it was orally promised as part of his deal, or given as an additional sum after the fact.
The Clippers argue that's something to take up with Aspiration. But if the league views Ballmer's ownership stake in Aspiration as a fundamental conflict of interest (despite Ballmer's protestations that he had no involvement in the decision), then he and Leonard may be in serious trouble.
Leonard's $100.3 million contract for the next two seasons could be voided entirely, making him an unrestricted free agent. He might also receive a $350,000 fine. He could sign with another franchise, but few teams have significant spending power at this stage of the offseason.
Ballmer and any executives with the team implicated would likely get a one-year suspension and could be fined $1 million apiece personally.
In this worst-case scenario, the league makes an example of the Clippers and sends a dire warning to other teams to stay within the rules. It would hit the franchise with a penalty of up to $7.5 million while also taking four or five future draft picks (based on the precedent set with the Timberwolves).
A Middle-Ground Decision May Salvage Situation
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A prediction is premature at this early stage. Still, a reasonably educated guess suggests the Clippers will skate through this situation with a medium-level punishment that doesn't reach the higher nuclear standard.
The league, facing tremendous pressure from other team owners and executives and the public, might not let the Aspiration no-show endorsement slide. The timing isn't ideal, since the Clippers are hosting the NBA All-Star Game in February, but issuing zero penalty sends the wrong message and could open the door to future indiscretions if teams feel they can get away without recourse.
The NBA previously investigated Leonard, his manager ("Uncle" Dennis Robertson) and the Clippers, for his manager's solicitation of teams for illegal contract sweeteners, but it found no wrongdoing on L.A.'s part. The Aspiration report isn't entirely out of the blue.
Additionally, Ballmer misspoke to Shelburne in a specific instance, saying, "We can do sponsorship deals with the same companies that they do endorsement contracts [with]. We cannot have any involvement in their negotiation with the companies who sponsor them. We didn't in this case, and we never have."
That last part isn't entirely true. As detailed at B/R in 2015, the Clippers were fined $250,000 for offering DeAndre Jordan a potential third-party endorsement (reportedly with Lexus). The league ruled it didn't impact Jordan's choice to re-sign with them, and his contract remained intact.
Similarly, the NBA can rule that Aspiration represented a violation of the league's anti-circumvention rule, but that it wasn't the deciding factor in Leonard signing an extension. Leonard is on a new contract, and while Ballmer and the Clippers may not have provably orchestrated an illegal deal, a punishment is warranted.
Seeing as it's the Clippers' second infraction (after Jordan), pencil in the maximum $5.5 million fine and one docked first-round pick. They would disagree with the outcome, feeling like they're being made an example of for something done outside their purview, but the penalty could be far worse.
Will that leave everyone completely satisfied? Of course not. Others will complain L.A. got off easy. The Clippers and their fans will feel persecuted that a shady company ultimately conned them out of a first-round pick.
Unfortunately, not every problem has a clean, perfect answer. The Clippers, Leonard and their ill-fated partnerships with Aspiration may stand as an ugly piece of business, although Leonard apparently got most of his endorsement deal despite doing all but nothing for Aspiration.
Email Eric Pincus at eric.pincus@gmail.com and follow him on X @EricPincus and Bluesky.
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