Controversy is brewing in the NBA over an alleged illegal payment made to NBA star Kawhi Leonard by the owner of the Los Angeles Clippers and former Microsoft CEO, Steve Ballmer.
In July 2019, Leonard signed a three-year contract with the Clippers for $100 million and later signed a three-year extension worth $50 million per year. However, it seems that wasn’t enough to keep Leonard in a Clippers jersey.
To avoid violating the NBA salary cap rules, Ballmer reportedly funneled over $28 million to Leonard through a no-show endorsement deal. Ballmer claims the payment was legit, but the NBA is currently investigating the matter.
So far, it doesn’t look great. If the NBA finds violations, there could be serious consequences for both Leonard and Ballmer, as well as the entire Los Angeles Clippers organization. The implications of the controversy could extend well beyond the NBA.
ESPN reporter Pablo Torre tracked down the story — but how many stories like this, in college and the pros, are left untold?
On his podcast, “Pablo Torre Finds Out,” Torre revealed that Leonard allegedly signed a four-year endorsement deal through his LLC, KL2 Aspire, with a sustainability company, Aspiration, which subsequently went bankrupt. Its co-founder, Joe Sanberg, pleaded guilty to fraud.
According to Torre, if Leonard remained in a Clippers jersey, he was to be paid an additional, unreported, $28 million over the course of the 2022-2025 seasons. He even uncovered an alleged delayed payment of $1.75 million to Leonard’s company immediately following a Clippers minority owner’s $2 million investment in Aspiration.
The Clippers and Ballmer have denied the accusations that any illegal payments were made, and even claim that they were misled and defrauded by the sustainability company Aspiration, having made investments for the environmental sustainability of their new stadium, the Intuit Dome.
On the other hand, ESPN reported that an anonymous employee who worked for Aspiration told Torre that Leonard’s payments were “to circumvent the salary cap.”
If Torre’s findings prove to be true, the payment to Leonard effectively acted as an illegal bonus to remain with the Clippers. It would violate the salary cap rules, which exist to maintain a competitive balance in the league and to allow smaller market teams to compete with the heavy-hitting billion-dollar franchises. The consequences could range from fines and a loss of draft picks to suspension and potential contract penalties.
Accusations like these are rare in the NBA and in college sports. However, we have seen a few: the Minnesota Timberwolves in 2000, the NCAA sanctions against the University of Southern California for improper benefits given to Reggie Bush and his family. We’re left wondering just how many scandals like these never come to light.
In the era of player empowerment, in college and the pros, players are incentivized to obtain every last benefit they can for their immense value. Organizations and schools are left competing to provide athletes with the best resources. These benefits are supposed to be legally provided, whether it be through name, image and likeness deals or NBA contracts, but as Pablo Torre found out, this isn’t always the case.
Suppose the NBA, with its structured oversight, lawyers and accountants, fails to uncover the Ballmer-Leonard payments. What chance does college sports have of providing effective oversight of payments to their athletes? Especially under the NIL system, where the financial stakes have become enormous for college athletes. Large Division I programs will always have incentives to use their resources to skirt the rules or push at the edges, putting pressure on smaller programs like Tulane University to keep up or fall further behind.
Let’s hope that the NCAA figures out how to police infractions sooner rather than later, so that we don’t have to rely on intrepid reporters like Torre to even up the playing field for the Green Wave.