NBA Investigation Update: No Evidence of Salary Cap Circumvention Scheme

As the NBA continues to investigate the Los Angeles Clippers for potential salary cap circumvention, recent reports have shed light on the league’s findings. According to ESPN, the NBA has found no evidence to support the claim that Steve Ballmer, the owner of the Los Angeles Clippers, funneled money through team sponsors to pay Kawhi Leonard as part of a scheme to circumvent the salary cap.

Instead, the league is reportedly focusing on whether the team’s introduction of Leonard to team sponsors constitutes a violation of league rules. Specifically, the league is determining whether the Clippers are guilty of a ‘failure to supervise’ their employees, though it’s unclear what rule that would violate or what the punishment would be for doing so.

Soon after the report, the NBA issued a statement denying the accuracy of ESPN’s article. The statement read: ‘ESPN’s article regarding the LA Clippers investigation — for which the NBA declined to cooperate — contains numerous and significant inaccuracies. The results in this matter will be made clear once the investigation is concluded.’

The investigation, which began roughly 11 months ago, has been sparked by reports from podcaster Pablo Torre. In September, Torre reported that Aspiration, a now-bankrupt sustainability company that Ballmer was a large investor in, was paying Leonard millions of dollars seemingly as part of an endorsement agreement in which no services were rendered. Further reporting this month found a similar agreement between Leonard and Daktronics, the company that made the enormous halo scoreboard at the Intuit Dome.

Any punishment brought about by the league for possible rules violations would need to be upheld through arbitration, with the arbitrator jointly selected by the NBA and NBPA, and an appeals panel, with three panelists jointly chosen by the NBA and the NBPA. Two sources told ESPN that bringing up cap circumvention charges on the basis of introducing a player to a sponsor would not hold up in the arbitration process, with one adding ‘that’s dead on arrival.’

The NBA and the Clippers are reportedly negotiating a resolution to the investigation, with the NBA bringing up the punishment it applied to the Minnesota Timberwolves for circumvention with Joe Smith as a possible template. Ballmer, according to ESPN, ‘has insisted repeatedly in conversations with confidants that will not accept a league result that asserts he or the team intended to circumvent the salary cap and would instead bring the matter to arbitration.’

The Clippers have repeatedly denied wrongdoing throughout the investigation, releasing a statement on Monday that read: ‘The Clippers introduced players, including Kawhi Leonard, to companies with which we had business relationships. Making introductions between players and team partners is both an ordinary practice by NBA teams and a common request of players and representatives. From there, Kawhi and his representatives handled their own negotiations. The Clippers did not negotiate or dictate the terms of Kawhi’s endorsement agreements or determine what he would be paid.’

The statement continued: ‘Our commercial relationships stood on their own merits. We chose sponsors, vendors, and other business partners based on normal business considerations, including the value they provided, the quality of their products and services, and their ability to meet our business needs. We did not overpay any vendor or provide any sponsor, vendor or business partner with discounts or other favorable terms in order to funnel money to Kawhi.’

The Clippers also emphasized that the fact that a player has an endorsement relationship with a company that also does business with the team is not evidence of salary-cap circumvention.

With the investigation ongoing, it remains to be seen what the outcome will be. However, one thing is certain: Kawhi Leonard will be entering the final season of his contract, and the NBA’s investigation will continue to be a topic of discussion in the coming months.

Investigation Timeline:

• September: Pablo Torre reports that Aspiration, a now-bankrupt sustainability company that Ballmer was a large investor in, was paying Leonard millions of dollars.
• June: The NBA begins investigating the Clippers for potential salary cap circumvention.
• Monday: The NBA releases a statement denying the accuracy of ESPN’s article.