The Los Angeles Clippers have been accused of participating in wage cap circumvention with star ahead Kawhi Leonard, in line with a bombshell Wednesday report from investigative journalist Pablo Torre. The story stems from a March 2025 chapter submitting of Aspiration, a now-bankrupt sustainability firm that obtained $50 million in funding from Clippers proprietor Steve Ballmer.
Aspiration has since handled accusations of fraud, and co-founder Joseph Sanberg has since pleaded responsible to defrauding a number of buyers. That submitting included a listing of collectors to whom Aspiration nonetheless owed cash. Amongst them? KL2 Aspire LLC, a company that lists Kawhi Leonard as its supervisor.
These filings present that Aspiration nonetheless owes Leonard $7 million. But Torre’s reporting didn’t discover a single occasion through which Leonard endorsed and even talked about Aspiration, as one would anticipate in an endorsement association. Various different celebrities, together with Milwaukee Bucks head coach Doc Rivers, did present endorsements for the corporate. A doc Torre obtained, which Leonard signed, confirmed that Leonard was to be paid $28 million in money over the course of 4 years between 2022 and 2025 so long as he was enjoying for the Clippers. One former Aspiration worker within the finance division stated on Torre’s podcast, Pablo Torre Finds Out, that the deal “was to avoid the wage cap, lol.”
The NBA stated on Wednesday afternoon that it was launching an investigation into the allegations.
So, what does all of this imply? Let’s dig into the NBA’s guidelines on wage cap circumvention in an try to search out out.
What’s wage cap circumvention?
If you would like the authorized definition of cap circumvention, it may be discovered between pages 339 and 346 of the NBA’s Collective Bargaining Settlement. The related part for our functions may be present in Part 1(b):
“It shall represent a violation of Part 1(a) above for a Workforce (or Workforce Affiliate) to enter into an settlement or understanding with any sponsor or enterprise associate or third celebration underneath which such sponsor, enterprise associate, or third celebration pays or agrees to pay compensation for basketball providers (even when such compensation is ostensibly designated as being for non-basketball providers) to a participant underneath Contract to the Workforce. Such an settlement with a sponsor or enterprise associate or third celebration could also be inferred the place: (i) such compensation from the sponsor or enterprise associate or third celebration is considerably in extra of the truthful market worth of any providers to be rendered by the participant for such sponsor or enterprise associate or third celebration; and (ii) the Compensation within the Participant Contract between the participant and the Workforce is considerably under the truthful market worth of such Contract.”
So what does this imply? Basically, wage cap circumvention is when a workforce makes use of a 3rd celebration to pay a participant greater than he’s contractually owed or legally allowed to earn underneath the phrases of wage cap. The best means to do that can be by means of an endorsement contract with an organization that the workforce or proprietor is in a roundabout way concerned in.
It’s exceedingly uncommon {that a} workforce is definitely confirmed to have circumvented the wage cap. Nevertheless, there are a variety of eventualities that the foundations are supposed to defend towards. The obvious can be a celebrity making an attempt to earn greater than his league-mandated most wage, however there are others. One instance of cap circumvention might be a workforce signing a participant to a below-market contract as a free agent with the understanding that they’ll later pay that participant extra once they have gathered the requisite Chook Rights to take action. One other can be paying a participant who’s underpaid and ineligible for a contract extension underneath league guidelines. These guidelines exist to stop groups from making an attempt to achieve a aggressive benefit by paying gamers greater than the wage cap permits.
Leonard, who initially signed with the Clippers in the summertime of 2019, signed a three-year contract extension value practically $150 million in 2024.
Has anybody ever been caught circumventing the cap?
In 1993, the NBA argued that the Portland Path Blazers circumvented the wage cap as a result of uncommon construction of a contract they gave to heart Chris Dudley. That deal, a seven-year, $11 million pact, included an opt-out after the primary season. That was important as a result of at the moment, a free agent gained full Chook Rights with a brand new workforce after just one 12 months, so Dudley would have had the flexibility to decide out and develop into a free agent, at which level the Blazers might have gone above the wage cap to re-sign him for extra money. This contract was finally upheld in arbitration, and Dudley didn’t train that decide out as he acquired harm in his first 12 months in Portland. The league’s guidelines on contract buildings have since gotten considerably stricter. Different gamers on the time, akin to Toni Kukoc and Craig Ehlo, had comparable clauses of their contracts.
In 1996, superagent David Falk reportedly hatched a cap circumvention scheme meant to permit the New York Knicks to make a aggressive monetary provide to signal Michael Jordan as a free agent. Each the Knicks and Sheraton Accommodations had been owned by the identical dad and mom firm, ITT Company. Whereas the Knicks had cap house, at that time, there was no most wage, that means the Bulls, with Jordan’s Chook Rights, had been able to providing actually any amount of cash to retain him. Subsequently, the plan was for Jordan to be paid $15 million to endorse Sheraton Accommodations. The plan was by no means formally introduced earlier than the league, nonetheless, as Jordan finally re-signed with the Bulls.
Essentially the most well-known case of cap circumvention in league historical past, although, concerned former No. 1 general decide Joe Smith. Whereas Smith had not changed into the celebrity Golden State had hoped when utilizing the highest decide on him in 1995, he was nonetheless considered as a prime free agent in 1998. It was stunning, subsequently, when he signed an inexpensive, one-year deal to hitch the Minnesota Timberwolves.
Two years later, Smith’s agent left his former agency and a messy lawsuit allowed the reality to come back to gentle: Smith had signed three separate one-year offers with the Timberwolves, which might have allowed Minnesota to achieve his full Chook Rights after the third season after which give him a brand new, long-term deal after that which might have paid him as a lot as $86 million.
Then-NBA commissioner David Stern issued a historic punishment for that circumvention. The Timberwolves had been fined $3.5 million. All of Smith’s contracts had been voided, and with them his Chook Rights with Minnesota. Then-owner Glen Taylor was barred from working the Timberwolves for a 12 months. However most notably, Stern stripped the Timberwolves of their subsequent 5 first-round picks. The penalty was so extreme that he finally returned their picks in 2003 and 2005, however they nonetheless misplaced three within the course of.
What’s the penalty for cap circumvention right now?
Happily for the Clippers if they’re certainly discovered to have circumvented the wage cap, the punishments for doing so aren’t practically as excessive as they as soon as had been. As detailed by the Collective Bargaining Settlement, the commissioner is allowed to difficulty the next penalties for cap circumvention:
- A effective of as much as $4.5 million for a primary offense.
- A effective of as much as $5.5 million for the second and any subsequent offenses.
- The forfeiture of 1 first-round draft decide.
- Contracts or transactions that violated league guidelines may be voided.
Subsequently, not less than based mostly on the CBA as it’s written, the Clippers wouldn’t be topic to the identical multi-year penalty that crippled the Timberwolves 25 years in the past until they dedicated a number of violations. For now, Torre has solely reported the potential violation involving Leonard.
Have there ever been accusations towards Leonard or the Clippers?
In 2015, the Clippers had been fined $250,000 for providing DeAndre Jordan an unauthorized endorsement contract. Brad Turner of The Los Angeles Instances reported on the time that they provided him a $200,000 per 12 months endorsement contract with Lexus. Ballmer had owned the Clippers for lower than a 12 months on the time of the Jordan negotiation.
Neither Leonard nor the Clippers have ever been confirmed to have circumvented the wage cap with regard to their relationship with each other. Nevertheless, rumors have abounded since Leonard agreed to signal with the Clippers in 2019.
Within the speedy aftermath of Leonard’s resolution, The Athletic’s Sam Amick reported {that a} grievance was issued to the league workplace accusing Dennis Robertson, Leonard’s uncle, of asking for improper advantages throughout the free company course of. From Amick’s reporting on the time:
“The tales about Robertson’s want listing made their option to the league workplace quickly after Leonard made his resolution, with involved events reporting that Leonard’s uncle had requested pursuing groups for a lot, rather more than a max contract (Kawhi finally signed a three-year, $103 million deal with the Clippers). Sources say the league was advised that Robertson requested workforce officers for half possession of the workforce, a personal aircraft that may be obtainable always, a home and — final however actually not least — a assured quantity of off-court endorsement cash that they might anticipate if Leonard performed for his or her workforce. All of these gadgets, to be clear, would fall nicely exterior the confines of the league’s collective bargaining settlement.”
Amick reported that Robertson made these request of the Lakers and Raptors. Nevertheless, the NBA didn’t discover any proof that these requests had been met by the Clippers. Adam Silver addressed the investigation on to The Athletic.
“We did inform our groups (on the Board of Governors assembly in New York in late September) that we’re trying into and proceed to look into actions from this summer season,” Silver advised The Athletic in 2019 when requested if the Clippers had been underneath investigation. “I will even say that we (had been) attempting to attract a line at this board assembly, and focus everybody on the (free company) guidelines going ahead. I feel that (I will) simply go away it at that. We’re trying on the conduct from the summer season. We’ve and we proceed to have a look at it, however at first we need to change the best way enterprise is completed going ahead.”
Notably, Amick reported that “if any related proof of improper advantages surfaces sooner or later, the league will re-open the investigation and pursue the fees but once more.” In 2020, the NBA was compelled to research the Clippers but once more when Johnny Wilkes, an alleged pal of each Leonard and Robertson, sued the Clippers and workforce advisor Jerry West alleging that he was owed $2.5 million for serving to the Clippers safe Leonard’s providers. In 2022, that lawsuit was dismissed in Los Angeles Superior Courtroom.
Leonard signed with the Clippers in July of 2019. Nevertheless, the the time period of the deal obtained by Torre started on April 1, 2022 and was set to finish on March 31, 2026. Leonard’s preliminary contract with the Clippers was for 3 years and $104 million. In 2021, he re-signed on a four-year, $176 million deal, after which in 2024, he prolonged once more for $149.5 million over three years.
How have the Clippers and the league responded?
The NBA launched an announcement on Wednesday afternoon by means of a spokesperson saying, “we conscious of this morning’s media report relating to the LA Clippers and are commencing an investigation.”
The Clippers, in the meantime, wrote in an announcement to Torre that “Neither Mr. Ballmer nor the Clippers circumvented the wage cap or engaged in any misconduct associated to Aspiration. Any opposite assertion is provably false.”
Mark Cuban, the outspoken former Mavericks proprietor, shared his ideas on Wednesday, posting on social media that he is “Workforce Ballmer.”
“As a lot as I want they circumvented the wage cap, first Steve is not that dumb,” Cuban wrote. “If he did attempt to feed KL cash, figuring out what was at stake for him personally, and his workforce, do you assume he would let the corporate go bankrupt? Realizing all collectors can be seen to the world?”
Leonard has not commented publicly.
