Clippers fined $30M, lose picks over Kawhi Leonard deals

The NBA has levied severe penalties against the Los Angeles Clippers and owner Steve Ballmer for circumventing league salary-cap rules in their dealings with star forward Kawhi Leonard. The punishments, announced a year after initial reporting by Pablo Torre, include a $30 million fine, the loss of five future first-round draft picks, a one-year suspension for Ballmer, and unpaid suspensions for two top executives.

According to a 35-page report from the law firm Wachtell, Lipton, Rosen & Katz, the Clippers' history as a repeat offender factored into the harsh sanctions. The NBA had previously fined the franchise $250,000 in 2015 for trying to facilitate an endorsement deal for then-free agent DeAndre Jordan. The league also questioned the Clippers in 2019 about reports that Leonard's uncle sought improper benefits during free agency.

The report stated that Mr. Ballmer failed to create conditions under which his organization abided by the NBA's circumvention rules, an especially egregious lapse because the Clippers are a prior offender of those rules and were previously and specifically investigated by the NBA with respect to Mr. Leonard.

Cooperation Affected Punishment

The investigation found a stark contrast in how two Clippers executives handled questioning. President of business operations Gillian Zucker was described as not forthcoming, offering statements inconsistent with documents and other witnesses. In contrast, president of basketball operations Lawrence Frank was cooperative, recalled details, and took responsibility.

This difference factored into their punishments. Zucker received a one-year suspension without pay, while Frank was suspended for six months without pay. The report suggested it was appropriate for the NBA to consider cooperation and credibility - or the lack thereof - when determining consequences.

The Aspiration Sponsorship Deal

The investigation centered on a sponsorship agreement between Leonard and Aspiration, a now-bankrupt tree-planting service funded by Ballmer. The deal reportedly involved a $28 million legal agreement with a company owned by Leonard, KL2 Aspire, LLC. Aspiration co-founder Joe Sanberg pushed for the arrangement, but internal emails show other senior executives were strongly opposed.

One executive wrote they had no idea why they would do this, while another stated it was not a good investment of their capital, being $48M over 4 years for Kawhi, who is not a big name. When concerns were raised, Sanberg told the executives the Clippers were asking them to do this with Kawhi Leonard and promised the team would provide additional business to Aspiration to offset the cost. An executive then noted the deal would be fine if it was cashflow neutral.

Questionable Endorsements with Three Other Firms

The probe into Aspiration led investigators to examine sponsorship deals between Leonard and three other companies: Boingo, Daktronics, and Lockton. The report raised multiple red flags about these agreements, which were signed during the COVID-19 pandemic when such deals were rare. Leonard was paid a total of $18 million by the three firms.

The report concluded that investigators received no reasonable explanation for why these companies needed to quickly finalize and begin paying Leonard during a time of economic uncertainty.

Investigation May Continue

Investigators admitted they might not have uncovered the full extent of the Clippers' attempts to sidestep NBA rules and suggested their work may not be finished. The report stated there is always more that could be done - and, considering the public's interest in this matter, more information will likely surface over time. It noted that investigators continue to receive relevant information, including as recently as the week the report was released, and will supplement their findings as appropriate.

The Clippers, through their lawyers, have continued to proclaim their innocence and seem intent on taking their fight to court.