The Los Angeles Clippers are facing accusations of salary cap circumvention concerning their star player, Kawhi Leonard. These claims emerged from an investigative report by journalist Pablo Torre, which references a March 2025 bankruptcy filing by Aspiration, a defunct sustainability company. Clippers owner Steve Ballmer had reportedly invested $50 million in Aspiration.
The NBA confirmed on Wednesday afternoon that it is reviewing the allegations. Subsequently, The Athletic reported on Thursday that the league has appointed the New York law firm Wachtell, Lipton, Rosen & Katz to lead the investigation.
Aspiration itself has been mired in fraud accusations, with co-founder Joseph Sanberg admitting guilt to defrauding investors. A bankruptcy filing from Aspiration listed its creditors, including KL2 Aspire LLC, a company managed by Kawhi Leonard.
Court documents reveal Aspiration still owes Leonard $7 million. However, Torre`s investigation uncovered no evidence of Leonard ever endorsing or publicly mentioning Aspiration, which is unusual for an endorsement deal. In contrast, several other celebrities, such as Milwaukee Bucks coach Doc Rivers, did actively promote the company.
A signed document obtained by Torre indicates Leonard was slated to receive $28 million in cash from Aspiration over four years (2022-2025), contingent on his continued play for the Clippers. Further reporting by the Boston Sports Journal, validated by Torre, alleged a clandestine side deal between Aspiration and Leonard for an additional $20 million. This brings the total potential payment to $48 million, closely aligning with Ballmer`s reported $50 million investment in Aspiration.
On Torre`s podcast, `Pablo Torre Finds Out,` a former Aspiration finance employee candidly stated that the deal`s purpose `was to circumvent the salary cap.`
Given these revelations, it`s crucial to examine the NBA`s regulations on salary cap circumvention to understand the implications.
Understanding Salary Cap Circumvention
The legal definition of salary cap circumvention is detailed in pages 339-346 of the NBA`s Collective Bargaining Agreement (CBA), specifically in Article XIII, Section 1(b):
No Team, nor any of its owners, officers, directors, representatives, or agents (including, without limitation, a Team-affiliated entity), shall enter into any agreement with any player represented by an agent that is designed to, or that would, directly or indirectly, defeat or circumvent the provisions of this Agreement.
In essence, salary cap circumvention occurs when a team utilizes an external entity to compensate a player beyond their contracted salary or what is permitted under the salary cap rules. A common method involves an endorsement deal with a company connected to the team or its owner.
While a team being definitively proven to have circumvented the salary cap is uncommon, the rules aim to prevent various scenarios. These include a superstar earning above their maximum allowable salary or a team signing a player to an initial undervalued contract with an implicit agreement to offer a larger deal later, once Bird Rights are acquired. Another instance involves compensating an underpaid player who is ineligible for an extension. Such regulations are crucial for maintaining competitive balance by preventing teams from exceeding salary cap limitations to attract or retain talent.
Kawhi Leonard, who initially joined the Clippers in the summer of 2019, signed a three-year extension valued at nearly $150 million in 2024.
Historical Cases of Cap Circumvention
In 1993, the NBA suspected the Portland Trail Blazers of cap circumvention over the peculiar structure of center Chris Dudley`s contract. The seven-year, $11 million agreement featured a first-year opt-out clause. This was notable because, at that time, a free agent gained full Bird Rights after just one year with a new team, allowing Dudley to opt out and potentially re-sign for a higher salary, exceeding the cap. Though the contract was upheld in arbitration and Dudley didn`t use his opt-out due to injury, the league has since tightened rules on contract structures. Other players like Toni Kukoc and Craig Ehlo had similar contract provisions then.
A reported 1996 cap circumvention plot by superagent David Falk aimed to enable the New York Knicks to offer Michael Jordan a competitive contract during free agency. Both the Knicks and Sheraton Hotels were owned by ITT Corporation. Despite the Knicks having cap space, there was no maximum salary then, allowing the Bulls (who held Jordan`s Bird Rights) to offer unlimited funds. Falk`s strategy involved paying Jordan $15 million to endorse Sheraton Hotels. This plan was never officially presented to the league, as Jordan ultimately re-signed with the Bulls.
The most infamous instance of cap circumvention in NBA history centers on former No. 1 overall draft pick Joe Smith. Although Smith didn`t achieve superstar status as envisioned by Golden State in 1995, he remained a highly sought-after free agent in 1998. His decision to sign an inexpensive, one-year deal with the Minnesota Timberwolves thus raised eyebrows.
Two years later, a contentious lawsuit following Smith`s agent`s departure from his firm exposed the truth: Smith had inked three consecutive one-year contracts with the Timberwolves. This arrangement would have granted Minnesota full Bird Rights after the third season, enabling them to offer him a long-term deal potentially worth up to $86 million.
Then-NBA Commissioner David Stern imposed a monumental penalty for this circumvention. The Timberwolves were fined $3.5 million, all of Smith`s contracts were voided (along with his Bird Rights with Minnesota), and owner Glen Taylor was banned from team operations for a year. Most significantly, Stern stripped the Timberwolves of their next five first-round draft picks. Although he later reinstated their 2003 and 2005 picks, the team still forfeited three crucial selections.
Current Penalties for Salary Cap Violations
The severity of penalties depends on the nature of the violation. Article XIII, Section 1 of the CBA addresses `General Prohibitions` related to circumvention, while Section 2 covers `Unauthorized Agreements.` Section 3 outlines distinct penalties for each. A Section 1 violation typically incurs a more lenient penalty, at the commissioner`s discretion, which may include:
- A fine of up to $4.5 million for a first offense.
- A fine of up to $5.5 million for subsequent offenses.
- Forfeiture of one first-round draft pick.
- Voiding of contracts or transactions found to violate league rules.
Conversely, a Section 2 violation could lead to substantially more severe penalties:
- A fine of up to $7.5 million.
- Suspension of up to one year for any team personnel willfully involved in the violation.
- Voiding of contracts or transactions found to violate league rules.
- Forfeiture of draft picks (quantity unspecified).
The ambiguity regarding the type or number of draft picks in a Section 2 violation is crucial, granting the commissioner extensive discretion in determining the penalty. Consequently, any punishment for the Clippers, if found to have circumvented the salary cap, will hinge on the precise nature of the violation uncovered by the investigation.
Previous Allegations Against Leonard and the Clippers
In 2015, the Clippers incurred a $250,000 fine for offering DeAndre Jordan an unauthorized endorsement deal. The Los Angeles Times` Brad Turner reported that the offer was a $200,000 annual endorsement contract with Lexus. This incident occurred less than a year into Steve Ballmer`s ownership of the team.
While neither Leonard nor the Clippers have ever been definitively proven to have circumvented the salary cap in their past dealings, rumors have circulated widely since Leonard`s initial signing with the team in 2019.
Following Leonard`s signing, The Athletic`s Sam Amick reported that a complaint was filed with the league office, alleging that Dennis Robertson, Leonard`s uncle, sought improper benefits during the free agency period. Amick`s report detailed:
Reports surfaced at the league office shortly after Leonard`s decision regarding Robertson`s alleged demands from interested teams, which reportedly far exceeded a maximum contract (Leonard ultimately signed a three-year, $103 million deal with the Clippers). Sources indicated that Robertson requested partial team ownership, constant access to a private plane, a house, and — last but certainly not least — guaranteed off-court endorsement earnings if Leonard played for their team. All these demands, it was noted, were outside the bounds of the league`s collective bargaining agreement.
Amick specified that Robertson made these requests to both the Lakers and Raptors. Nevertheless, the NBA found no evidence that the Clippers acceded to these demands. Commissioner Adam Silver directly addressed the investigation in an interview with The Athletic:
Silver stated in 2019 to The Athletic, when questioned about a Clippers investigation, “We informed our teams [at the Board of Governors meeting] that we are examining activities from this past summer, and we continue to do so. Our primary goal at this meeting was to establish clear free agency rules moving forward. We are reviewing the summer`s conduct and remain committed to changing how business is conducted in the future.”
Amick also highlighted that the league would reopen the investigation and re-pursue charges if any new evidence of improper benefits emerged. In 2020, another investigation was triggered when Johnny Wilkes, an alleged associate of Leonard and Robertson, sued the Clippers and team consultant Jerry West. Wilkes claimed he was owed $2.5 million for assisting in securing Leonard`s services. This lawsuit was ultimately dismissed in Los Angeles Superior Court in 2022.
Kawhi Leonard first signed with the Clippers in July 2019. However, the specific deal uncovered by Torre reportedly spanned from April 1, 2022, to March 31, 2026. Leonard`s initial Clippers contract was for three years, worth $104 million. He then re-signed in 2021 for four years, totaling $176 million, and extended again in 2024 for three years, worth $149.5 million.
Responses from the Clippers and the NBA
On Wednesday afternoon, an NBA spokesperson issued a statement: “We are aware of this morning`s media report concerning the L.A. Clippers and are initiating an investigation.”
The Clippers, in a statement to Torre, asserted, “Neither Mr. Ballmer nor the Clippers circumvented the salary cap or engaged in any misconduct related to Aspiration. Any contrary assertion is provably false.” Owner Steve Ballmer subsequently appeared on SportsCenter to present his account. He claimed that the Clippers introduced Leonard to Aspiration in 2021, after Leonard`s contract extension was agreed upon and the Clippers had announced a $300 million partnership with Aspiration. Ballmer stressed that the team was not involved in Leonard`s personal deal with the company.
Ballmer clarified, “Our dealings with Kawhi and Aspiration were complete; all agreements were finalized. Aspiration then requested an introduction to Kawhi, which, under league rules, we are permitted to do for our sponsors and athletes, provided we remain uninvolved in their specific arrangement.”
Mark Cuban, the candid former Mavericks owner, voiced his support for Steve Ballmer on social media, stating he was “Team Ballmer.”
Cuban wrote, “As much as I wish they circumvented the salary cap, first Steve isn’t that dumb. If he did try to feed KL money, knowing what was at stake for him personally, and his team, do you think he would let the company go bankrupt? Knowing all creditors would be visible to the world?”
Cuban further elaborated on this perspective during an appearance on Torre`s podcast on Thursday.
Kawhi Leonard has not yet made a public statement regarding these allegations.
