Under The Table Dealings

Established athletes tend to be a source of income for some businesses. This comes in the form of endorsements. It's beneficial for both parties. The athlete gets paid, usually a huge amount and the corresponding business gets more sales. All of this is legal and nothing to fear. However, lately an NBA endorsment has the authorities investigating an ulawful one.

Kawhi Leonard had a $28 million endorsement deal with a now bankrupt environmental start up where he did no work, essentially a, "no-show job," for a company Clippers owner, Steve Ballmer, had made a $50 million investment in. That investigation claims the Clippers tried to circumvent the salary cap with this deal.

That company in question was called Aspiration, a "green bank" whose model was to do large amounts of tree planting to gain carbon credits for its corporate clients. Aspiration had a long list of celebrity endorsements including Leonardo DiCaprio, Robert Downey Jr. and Drake. Leonard agreed to his endorsement deal in 2021; however, the deal was not made public and Leonard never made an appearance or so much as a social media post for Aspiration.

In 2021, prior to Leonard's endorsement deal (but after Leonard signed a four-year, $176 million contract extension to stay in Los Angeles), Clippers owner Steve Ballmer made a $50 million investment in Aspiration. The company became a founding partner in the Clippers' then-under-construction new home, the Intuit Dome, a potentially $300 million deal. Ballmer often emphasised his plans to make the arena a green building.

One source, described as a former Aspiration finance employee, said: "We went through a litany of really, really top-tier name contracts. And then, 'Oh, by the way, we also have a marketing deal with Kawhi Leonard' — and that if I had any questions about it, essentially don't, because it was to circumvent the salary cap." Leonard's deal with Aspiration gave him the ability to reject anything he didn't want to do for the company with no consequences.

The Clippers vehemently deny all the accusations, stating that neither Ballmer nor the Clippers had ties to Leonard's endorsement deal. They also state that the team severed ties with Aspiration after the company failed to fulfill its end of the agreement with the team and Intuit Dome, and that they were one of the victims of Aspiration's scam, nothing more.

The Clippers sent this statement to NBC Sports earlier on Wednesday:

"Neither Mr. Ballmer nor the Clippers circumvented the salary cap or engaged in any misconduct related to Aspiration. Any contrary assertion is provably false. The team ended its relationship with Aspiration years ago, during the 2022–23 season, when Aspiration defaulted on its obligations. Neither the Clippers nor Mr. Ballmer was aware of any improper activity by Aspiration or its co-founder until after the government instituted its investigation. The team and Mr. Ballmer stand ready to assist law enforcement in any way they can."

Aspiration, described as a “financial technology and sustainability services company,” filed for bankruptcy in March.

Last month, the co-founder of Aspiration Partners, Inc., agreed to plead guilty to defrauding investors and lenders, resulting in over $248 million in losses, according to the US Department of Justice.

Leonard originally joined the Clippers in 2019. He later signed extensions with the team in 2021 for a reported four-year, $176 million deal and again in 2024.

According to the NBA’s 2023 collective bargaining agreement, a team proven to have bypassed the salary cap can be issued penalties, including a fine up to $7.5 million, the voiding of contracts and the forfeiture of future draft picks.

According to the report, the contract was only valid as long as Leonard was playing for the Clippers. When asked for comment, NBA spokesman, Mike Bass, told Sportsnet: "We are aware of this morning’s media report regarding the LA Clippers and are commencing an investigation."

For Toronto Raptors fans, it might offer some small measure of gratification, if not any actual satisfaction. When Leonard bolted for the Clippers while the champagne from the championship celebration was still sticky in the summer of 2019, there were rumours that Ballmer and the Clippers had used financial incentives above and beyond the three-year, $104-million contract Leaonard signed with the Los Angeles team to close the deal.

Remember, the Raptors were prepared to offer Leonard a deal worth $190 million over five years, the richest deal any team could offer since he was a returning player. At the time, the ‘somewhat’ plausible explanation for Leonard — plagued by injuries even then — leaving $86 million guaranteed on the table was because he wanted to go home to Southern California above all else.

Also, by signing a shorter-term deal, Leonard could sign a new contract when he had finished his 10th season and was eligible for a contract that would pay him 35% of the salary cap, compared to the 30% the Raptors could have offered Leonard after his eighth season; which is how he would make up the guaranteed money he was risking by leaving Toronto.

Whispers from league sources at the time were that Leonard’s uncle and adviser, Dennis Robertson, was asking for all kinds of additional compensation for Leonard, including an ownership stake in whichever franchise he would sign with.

The Raptors weren’t the only team to complain to the league office and NBA commissioner, Adam Silver, did investigate but found no wrongdoing. That could be because nothing happened — just because a player’s relative asks for something, doesn’t mean they got it — or it could be because finding the violation was beyond the league’s investigative abilities.

What if an owner decided to offer a player an incentive via cryptocurrency? Or a suitcase full of cash? Or bricks of gold bullion? Or stock tips whispered to a third party? It's all forbidden under the league’s collective bargaining agreement, which outlines exactly how, when and how much teams can pay players in excruciating detail.

Good luck trying to track down those kinds of under-the-table dealings. Which is what makes this case so fascinating.

Allegedly, shovelling an extra $28 million to a player through a company attached to the team’s owner for doing nothing would seem to violate not only the spirit of the CBA, but the letter of it, as outlined in section 13 of the document where neither players or teams can, "undertake any action or transaction … designed to serve the purpose of defeating or circumventing" the provisions laid out in the exhaustive 560-page document.

If the allegations are proven true — and the Clippers have stoutly denied them in a statement: "Neither Mr. Ballmer nor the Clippers circumvented the salary cap or engaged in any misconduct related to Aspiration. Any contrary assertion is provably false" — the penalties could potentially be significant if Silver chooses to bring down the proverbial hammer.

The league can impose a $4.5-million penalty on first offence but fines clearly won’t be much of a deterrence to Ballmer. Having to potentially forfeit a first-round pick or picks would certainly get his attention. The CBA also allows for the league to void the player’s contract, but it’s hard to imagine the NBA going to that extreme and in any case, the timeline of the endorsement deal lines up with the contract Leonard signed in 2021 (four years, $176 million) and the Clippers star has since signed a new three-year deal that kicks in this season. The league could also suspend Ballmer and Clippers executives.

This is new territory for the league. While under-the-table payments get chattered about — NBA superstars are arguably underpaid given the hundreds of millions of dollars in equity value the likes of LeBron James, Steph Curry or Shai Gilgeous-Alexander can deliver to team owners — there is no case in league lore like this one.

There is precedent on how the matter might be dealt with. When Silver said the league office was investigating the Clippers back in 2019, he described salary-cap circumvention as the league’s "cardinal sin."

Proof is that the last time a team was caught for cap circumvention the punishment was the so-called, 'death penalty'. It was levied back in 2000 when the Minnesota Timberwolves were required to forfeit five first-round picks, fined $3.5 million and had then-owner, Glen Taylor, suspended for one year for convincing free-agent, Joe Smith, to sign a series of below-market deals so they could build a supporting cast around superstar, Kevin Garnett.

Then-Timberwolves GM, Kevin McHale, officially denied any wrongdoing in the matter. "I haven’t read a contract in four or five years," he said at the time but added that these kinds of arrangements were not uncommon. "There are eight-to-10 teams that do this all the time. They’re just good at it. We’re bad."

It turns out the Clippers might not be much better. The way this is all blowing up, maybe the play would have been to bury a sack of cash in the backyard of Leonard’s San Diego mansion. Depending on how it shakes out, it could significantly impact the Clippers’ competitive future.

Which might give Raptors fans some sense of satisfaction. Yes, what seemed like a raw deal at the time — having Leonard leave to join a worse team for less money seemed fishy at the time — could well have been fishy.

It won’t bring back Leonard or the championships he and the Raptors likely left on the table when he took the Clippers' money in any form.

I don't understand why people won't come clean on these matters. They're not doing themselves any favours by constantly denying allegations. I've seen this happen many times. People constantly deny the claims made and then suddenly come clean. It can be hard to trust those individuals further down the line.

I'm sure the Raptors are thrilled that they are no longer associated with Kawhi Leonard. The last thing a team wants is to be connected to someone involved in illegal dealings. Their hands are clean and free of any "blood."