On Wednesday, investigative journalist Pablo Torre shocked the NBA by revealing a series of documents, alleging that the Los Angeles Clippers tried to go around the salary cap and give Kawhi Leonard more money. Salary cap circumvention is a serious crime in the league, and while some expect the NBA to put a strong response to it, others backed the Clippers. After two days, Clippers owner Steve Ballmer responded to the whole Kawhi situation.
Steve Ballmer Shuts Down the Kawhi Leonard Criticism
In a recent interview, Steve Ballmer talked openly about the allegations against Leonard and the Clippers. He said,
“We, the Clippers, have abided by the salary cap circumvention rules because that’s the right thing to do, and we have done that. We cannot pay a player anything beyond what’s in his standard player contract, and we cannot cause anybody else to pay the player what’s beyond their standard contract. And that would include, for example, sponsors and endorsers. That is forbidden. We cannot do that. And we didn’t certainly in this instance. We can have sponsors. Players can do endorsement contracts. We can do sponsorship deals with the same companies. But we cannot have any involvement in their negotiation with the companies who sponsor them.”
This is the first time since the report came out that Ballmer addressed the Kawhi situation. Some might say that, as one of the wealthiest people in the world, he should have sniffed a fraud the moment they approached him. However, in the interview, he discusses how the company arrived at the perfect moment. They were getting ready to reduce the carbon footprint in the Inuit Dome, and a company supporting the same values wanted to do a sponsorship deal. And like he said, he was not the only investor. Aspiration had a long list of investors.
Getting a Sense of the Timeline
In the same interview, Ballmer also specifically mentioned the timeline and how that works in their favor.
“They did request to be introduced to Kawhi under the rules. We can introduce our sponsors to our athletes, but we just can’t be involved. We made an introduction in early November, well past when all of this happened. Recently, we had a chance to go through all of our relations with Aspiration. This is where you get to how you prove this stuff. We even found the email that makes the first introduction. It was in early November. So, where could any of this circumvention have happened?”
With that in mind, here is a detailed breakdown of the Kawhi timeline in Los Angeles.
- Signed with the LA Clippers in 2019 as a free agent after winning a title with the Toronto Raptors. At the time, it was talked around the league that his uncle asked for things like a private plane, equity stakes, sponsorship deals, and more. The Clippers were never charged, and they were cleared of any accusations on that matter.
- In August 2021, Kawhi signed a max contract extension, despite having a torn ACL, which would have him miss a significant chunk of the season. He signs for four more years, not a short extension, and not a long one.
- In September 2021, Ballmer invested $50 million in Aspiration, the non-profit organization that turned out to be a fraudulent company.
- A month later, Aspiration announces a $300 million deal with the Clippers to be one of the big sponsors of the team, just as the Clippers are moving into the Inuit Dome. They get names on the back of the Courtside Seats.
- In November 2021, Kawhi formed an LLC called KL2 Aspire.
- Five months later, in April 2022, Kawhi and Aspiration struck a four-year, $28 million sponsorship deal. The deal includes a clause that they will pay him, even if he doesn’t do anything. But he has to remain with the Clippers.
While it is not unprecedented for a company to give a player a sponsorship deal to do nothing, it is the amount of money that raises questions. For comparison, Kawhi signed a four-year, $22 million shoe deal with New Balance. And that delivered a great marketing campaign. His $28 million deal didn’t produce anything.
What is Next for the NBA?
Well, there should be a heated debate at the NBA’s board of governors meeting scheduled for next week. The meeting was scheduled long before the Clippers situation, with expansion considered the big topic. But now, everything changes. Under Adam Silver, the NBA has fought for parity and equal chance for all teams to compete. Yet, wealthy owners like Steve Ballmer are a danger to it. We can expect many small markets and owners to ask the NBA to do something about this speculation. If the Clippers get out of it without any punishment, what is stopping other wealthy owners from using their contacts and friends as leverage?
For example, can owners like Joe Tsai, the co-founder of Alibaba, potentially open endorsement opportunities for his players from China? Robert Perra is another wealthy owner, part of the tech business. Dan Gilbert, the owner of the Cleveland Cavaliers, has a net worth of almost $30 billion. Mark Walter, who just bought the Los Angeles Lakers, spent millions making the Dodgers an unstoppable force in baseball. The list goes on, and it is the CBA and the apron that prevent wealthy owners from getting any player they want.
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