The NBA announced on Wednesday that it will conduct an investigation into a potential violation of salary cap rules related to a $28 million endorsement contract between star player Kawhi Leonard and a California-based sustainability services company, Aspiration Fund Adviser, LLC. This decision follows a report by journalist Pablo Torre, raising questions about the Los Angeles Clippers' compliance with league regulations.
The Los Angeles Clippers have categorically denied any wrongdoing, asserting that they welcome the league's investigation. The inquiry will explore the connections among Leonard, the Clippers, and Aspiration, which filed for bankruptcy earlier this year. At that time, Aspiration listed numerous creditors, including the Clippers, who were owed approximately $30 million, and a company named KL2 Aspire LLC, which was owed $7 million. Notably, Leonard is identified as the manager of KL2 Aspire in California filings, with “KL” representing his initials and “2” his jersey number.
NBA spokesman Mike Bass confirmed the initiation of the investigation, stating, “We are aware of this morning’s media report regarding the LA Clippers and are commencing an investigation.” This scrutiny follows a history of claims concerning Leonard's representatives allegedly seeking salary cap circumventions during his free agency several years prior.
In September 2021, Clippers owner Steve Ballmer made a substantial $50 million investment in Aspiration, leading to a reported $300 million partnership between the company and the team. This partnership was announced shortly after Leonard signed a four-year, $176 million contract extension with the Clippers. However, the team ended its relationship with Aspiration after two years, citing the contract's default.
The Clippers firmly rejected allegations of cap circumvention, stating, “Neither the Clippers nor Steve Ballmer circumvented the salary cap. The notion that Steve invested in Aspiration to funnel money to Kawhi Leonard is absurd.” They emphasized that the investment was made based on Aspiration’s cofounders’ commitment to environmental sustainability and customer service. Furthermore, the team claimed ignorance of any improper activities by Aspiration until after a government investigation was initiated.
Joseph Sanberg, cofounder of Aspiration, agreed to plead guilty last month to federal charges of wire fraud, accused of defrauding investors and lenders out of $248 million. Prosecutors highlighted that Aspiration’s financial statements misrepresented the company’s revenue, indicating that the reported figures were significantly inflated.
Torre's report revealed that the endorsement deal between Aspiration and KL2 Aspire stipulated an annual payment of $7 million to Leonard for four years. Consequently, Leonard would still be owed the last $7 million at the time of Aspiration’s bankruptcy filing. However, there is no evidence that Leonard actively endorsed Aspiration publicly.
The Clippers reiterated that “there is nothing unusual or untoward about team sponsors doing endorsement deals with players on the same team.” They stressed that neither Steve Ballmer nor the Clippers organization had any oversight of Leonard’s independent endorsement agreement with Aspiration, calling any contrary claims “flat-out wrong.”
The NBA has the authority to impose severe penalties if any violations of salary cap rules are confirmed, including fines up to $7.5 million, voiding contracts, and the forfeiture of future draft picks. As the investigation unfolds, the implications for Leonard, the Clippers, and Aspiration remain to be seen.
