NBA Investigates Clippers Over Kawhi Leonard Endorsement Deal Amid Cap Circumvention Concerns

The NBA has launched an investigation into whether a $28 million endorsement agreement between Kawhi Leonard and a bankrupt California-based sustainability firm enabled the Los Angeles Clippers to bypass league salary cap rules. The development follows a report by journalist Pablo Torre that raised questions about the nature of the deal and its potential ties to the team.

The probe centers around Aspiration Fund Adviser, LLC, a company that entered bankruptcy earlier this year. Court filings revealed that Aspiration owed the Clippers around $30 million and Leonard’s company, KL2 Aspire LLC, about $7 million. Leonard, whose initials and jersey number make up the name KL2, is listed as the manager of the firm in California business records.

“We are aware of this morning’s media report regarding the LA Clippers and are commencing an investigation,” said NBA spokesperson Mike Bass on Wednesday.

The Clippers have strongly denied any wrongdoing and say they welcome the league’s inquiry. “Neither the Clippers nor Steve Ballmer circumvented the salary cap,” the team stated, adding that there was no oversight or coordination involving Leonard’s personal endorsement agreement with Aspiration.

Aspiration’s financial involvement with both Leonard and the team raises questions due to the timeline and amounts involved. In September 2021, about a month after Leonard signed a four-year, $176 million extension with the Clippers, the team and Aspiration announced a $300 million sponsorship agreement. Around the same period, Clippers owner Steve Ballmer made a $50 million personal investment in the company.

Torre’s report includes a copy of the endorsement contract between Aspiration and Leonard’s KL2 Aspire, which promised Leonard $7 million per year for four years. Given that timeline, he was still owed $7 million at the time of the company’s bankruptcy.

The situation has gained further complexity with Aspiration co-founder Joseph Sanberg pleading guilty to federal wire fraud charges last month. Prosecutors say Sanberg defrauded investors and lenders of $248 million by providing inflated financial statements.

The Clippers argue that Ballmer’s investment was made in good faith and that the organization was unaware of any impropriety until the government launched its investigation. “To say otherwise is flat-out wrong,” the team emphasized.

The NBA has a history of punishing salary cap circumvention harshly. If the Clippers are found to have violated the rules, possible penalties include fines up to $7.5 million, voided contracts, or the forfeiture of future draft picks.