The NBA has hired New York-based law firm Wachtell, Lipton, Rosen & Katz to conduct an investigation into allegations that LA Clippers star Kawhi Leonard’s endorsement deal with a now-bankrupt environmental company was made to help his team and its billionaire owner, Steve Ballmer, circumvent the salary cap, a source with knowledge of the situation told The Athletic.
The decision is a clear sign that the league is taking seriously allegations made by anonymous employees of San Francisco-based green bank, Aspiration, who told the “Pablo Torre Finds Out” podcast that the four-year, $28 million endorsement deal Leonard received from the company in 2022 was for a “no-show job” intended to “circumvent the (NBA) salary cap.” Subsequent reporting by the Boston Sports Journal alleged that Leonard also had a second deal worth approximately $20 million that was set to be paid in company stock belonging to co-founder Joe Sanberg, who has since agreed to plead guilty to defrauding investors of $248 million.
In addition to Wachtell Lipton, which will lead the investigation, the league has its own investigator working out of its legal office who will consult on the investigation, the source said.
Wachtell Lipton is the same law firm the NBA used to investigate two high-profile cases of misconduct by team owners — both of whom were later forced to sell their teams. In 2014, the law firm investigated former Clippers owner Donald Sterling for accusations of numerous racially insensitive remarks made about NBA legend Magic Johnson, revealed by TMZ. In 2022, the firm investigated former Phoenix Suns owner Robert Sarver for multiple instances of inappropriate language or behavior after an ESPN report on the matter.
In both of those cases — with Sterling and Sarver — ownership of those teams changed hands. Owners voted to remove Sterling, and Sarver was suspended for one season but chose to sell the team.
The Sterling investigation lasted a year, with Silver announcing a lifetime ban and a $2.5 million fine for the then-Clippers owner on April 29, 2014. The Sarver investigation lasted 10 months, with Silver announcing on Sept. 13, 2022, that the then-Suns owner was suspended for one year and fined $10 million. A week later, amid immense pressure from the public and sponsors, Sarver announced that he would sell the team (which was sold to Mat Ishbia in February of 2023). More recently, Wachtell Lipton was one of the firms that handled the legal work for the $6.1 billion sale of the Boston Celtics in March.
Ballmer, 69, is the NBA’s richest owner, with a personal worth of $153 billion, according to Forbes, and has on numerous occasions denied any wrongdoing in his dealings with Aspiration. He has said he introduced Leonard to Aspiration executives, at their request, but had no knowledge of the employment agreement between the company and Ballmer’s star player.
Ballmer agreed to invest $50 million with Aspiration in 2021. Aspiration was announced as the Clippers’ new jersey and arena sponsor, a deal that was supposed to be worth $300 million over 23 years. Aspiration and Leonard agreed to a four-year, $28 million endorsement deal in April of 2022. There does not appear to be evidence that Leonard did any work for Aspiration. His contract, obtained by The Athletic, included a provision that allowed Leonard to decline any and all requests from the company.
The Clippers and Forum Entertainment (both owned by Ballmer) are the top two creditors in Aspiration’s bankruptcy case. Leonard is owed the third most money, according to bankruptcy filings, claiming a debt of $7 million.
The root of the suspicions dates back to Leonard’s free agency in the summer of 2019, when his uncle and representative, Dennis Robertson, requested a litany of off-court perks from several teams that were outside the boundaries of the league’s rules en route to Leonard signing with the Clippers. The NBA investigated the matter, but found no evidence of wrongdoing on the part of the teams.
In January of 2024, Leonard signed an extension with the Clippers that raised eyebrows around the league because it was not a maximum-salary deal. The team-friendly choice, which paid him a combined $153 million over three years, allowed the Clippers to have more flexibility with their roster.
If the league ultimately levies punishment on Ballmer, the Clippers and/or Leonard, the CBA allows for several options. And because they have already been disciplined for breaking league rules of this kind — they were fined $250,000 in August 2015 relating to the free agency of big man DeAndre Jordan — the outcome could be more severe.
Per Section 3 of Article XIII, which details the “Penalties” within the section that covers salary cap circumvention, any team that violates league rules for a second time, as well as the player, could face the following outcomes (after their case goes to an appeals panel):
- A fine of up to $7.5 million.
- The “direct forfeiture of draft picks.”
- The voiding of the player’s contract, “or any Renegotiation, Extension, or amendment of a Player Contract, between such player and such Team.”
- A fine of up to $350,000 for the player.
- A suspension for up to one year for “any Team personnel found to have willfully engaged in such violation.”
- The voiding of any transaction or agreement found to have violated league rules, and the forced forfeiture of funds received in the deal, “unless the player establishes by a preponderance of the evidence that he was unaware of the violation.”
NBA and basketball business writer Mike Vorkunov contributed to this story.
(Photo: Ezra Shaw / Getty Images)
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