[UPDATE 2: Pablo found out that a Clippers minority owner invested nearly $2m into the company while it was going under. Aspiration then used that money to pay Leonard his owed $1.75m payment. Smart investors don’t throw money at companies that are on fire. Companies that are on fire do not pay creditors that have literally no purpose or anything to offer. This is the most damning info yet.]
[UPDATE: Ballmer and the Clippers deny wrongdoing and say they welcome an investigation. The damage is done though. Even if the investigation finds nothing, it doesn’t exonerate him in the minds of the fans and other owners]
Everyone in NBA circles woke up this morning to the news that sports investigative reporter extraordinaire Pablo Torre on his Pablo Finds Out podcast seems to have discovered that the Clippers may have circumvented the NBA Salary Cap by getting Kawhi Leonard a fake endorsement deal with the company Aspiration. This is going to be a big story, so let’s get ahead of it.
The Allegations
You should listen to the whole podcast, but what you need to know is that a founder of the company was arrested for fraud, there is an SEC investigation ongoing, and the company filed for bankruptcy. In the filing, it was found that a company owned by Kawhi Leonard is still owed $7m of a $28m endorsement deal with Aspiration signed in the same offseason in which he signed an extension with the Clippers. This was by far the biggest endorsement deal signed by the company. However, he has apparently never done anything to actually earn the money, nor did he have to under his contract. The contract was only terminable if Leonard were to leave the Clippers. Steve Ballmer apparently invested more than $300m in the company.
It is easy to infer that this money was a side payment to lure Leonard to play for the Clippers and funded by Ballmer himself. If anyone remembers the summer of 2019, Leonard going to the Clippers was HUGE news that kept everyone up all night as the rumors came out. Other teams were suspicious. The NBA cleared the Clippers of any wrongdoing and we all moved on. Then, in 2021, Leonard re-upped with the Clippers. Considering we only know about the Aspiration contract because of a bankruptcy filing, the extent of their relationship is not fully known. If it was Ballmer and the Clippers who set up and funded this fake deal, they would be in violation of league rules for circumventing the NBA salary cap.
Why is This a Big Deal?
I am not exaggerating that this could be one of the biggest scandals to ever hit the NBA. Why? Because the NBA is a collectively bargained entity of 30 teams that have agreed to be on the same page financially. Because of maximum contracts, no owner can use their financial might to offer any extra incentive to a player to play for their team. Steve Ballmer is one of the richest men in the world. Him being an owner only works if he cannot use his Steve Cohen-esque financial leverage over the rest of the owners. This would destroy that relationship and understanding.
The NBA is not just on court competition. Of all leagues, the NBA gets a sizeable following from people following its off-court activities too (hi!). If this part of the league was proven to be a sham, it would be just as bad as fixing games on the court. If the NBA cannot contain its illusion of a level playing field, it damages the product. For the other billionaire owners, the fans, and the now very influential league gambling partners, this is non-negotiable.
Penalties
If the NBA wants to, they could really put the hammer down here, just maybe not on Kawhi Leonard himself. As per the NBA Collective Bargaining Agreement, the NBA Commissioner has the power to deliver suspensions and pass down fines. However, all of these consequences are subject to the arbitration process. If Balmer or Leonard want to object to any potential fines, it will have to pass through the scrutiny of an arbitrator (for a primer on arbitration, I went through it with the Flyers earlier).
The Clippers as a team are subject to at most a $7.5m fine and the forfeiture of draft picks. This starts at 1 First Round Pick, but can be more in certain situations (how very Sixers this would be if the pick is the one owed to Philadelphia? They can’t do that, right?). If Leonard’s contract is terminated, they would be prohibited from resigning him. Staffers involved in the scheme could be fined up to $1m.
When it comes to Steve Ballmer, things become much more serious. He can individually be fined up to $1m. Don’t laugh, that’s not the serious part for the billionaire. Ballmer can be suspended from Clippers games and any other league functions indefinitely, despite his ownership interest. As for that, thanks ironically to the Clippers, we know that an owner can be forced to sell the team with a 3/4 vote of other owners. So, if 23 owners are mad enough at Steve Ballmer, he can actually be made to sell the Clippers. Don’t cry for Ballmer. The Clippers are currently valued at $5.4b which would be a handsome profit on his initial $2b investment.
As for Leonard, under the same circumvention clause in the CBA, the NBA has the power to terminate his contract. The problem there might be that he has already received the full benefit of and performed completely under the contract that would be terminated. Leonard has since signed a new extension which might not be covered under the rules. Other than that, the NBA only allows for suspension in certain situations like drug abuse, arrests, and domestic violence. This does not fall under any of the categories. So, the NBA might be out of luck when it comes to a suspension. If they try to hand out a type of catch-all suspension under an “integrity of the game” designation, the player’s union will vigorously defend Leonard (and would probably win because what is the point of having specific suspension rules if the Commissioner can just do what he wants anyway?). In the end, Leonard absolutely gets to keep his money since he actually performed his duties under both his Aspiration contract and his contract with the Clippers. At worst, he could be declared a free agent. I don’t think he would have trouble finding a job.
Why It Might Not Matter
Wait, you just said that this could be huge, what gives? There are a lot of problems here that could get in the way of any real punishment.
First, by re-opening any investigation into Ballmer and the Clippers, the NBA would have to admit that its original investigation was basically a sham. Other owners will probably want to know what exactly occurred in the investigation and get their hands on the documents. It could get very messy.
Second, what’s the old saying, let ye without sin cast the first stone? Steve Ballmer might come off as a loveable sports nut, but $153b buys a lot of secrets. He cannot be the only person to have circumvented the salary cap, even if he is the only one under the spotlight right now. If other owners want to string him up, you better believe other stories will start to come out. Will other owners really come down hard on Ballmer only to possibly have the same punishment come down on them? I simply cannot imagine that he is the only one to allegedly circumvent the cap. Do 23 other owners have a clear conscience?
Third, the Player’s Association might not stand for the league terminating and blackballing Kawhi. After all, this is not something that was collectively bargained for specifically and is not related to on court basketball. You could see the players going all the way to a strike to protect their rights from an omnipotent Commissioner.
Lastly, all of us are way too numb to the idea of rich people not playing by the rules and getting away with it. This all may drift from the public conscience within a few days with no action taken. It only becomes a real story if it remains a story. Hell, despite Donald Sterling being a known racist in his business ventures for decades, it only became a problem because his ditsy girlfriend recorded him and the public latched on to her awful personality and looks. Sorry Pablo, but you are not holding national attention like V Stiviano. Punishment just doesn’t ever seem to happen for billionaires.
Here is hoping the NBA realizes what is at stake here and gets ahead of it by Ballmer selling the team.
Philly Front Office 
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