NBA Penalizes Los Angeles Clippers for Salary Cap Violations
The NBA imposed one of the largest penalties ever on an NBA franchise, fining the Los Angeles Clippers $30 million and star player Kawhi Leonard $700,000. The league suspended team owner Steve Ballmer and two top executives and revoked five first-round picks. The penalties followed allegations that the Clippers circumvented salary cap rules.
Ballmer will face a one-year suspension from all league and team activities. This decision stems from his involvement in facilitating off-court income opportunities for Leonard. Ballmer approved a business deal as Aspiration’s endorsement agreement precondition with Leonard. His failure to ensure his organization complied with NBA rules contributed to this outcome.
The NBA commissioner Adam Silver expressed his disappointment, stating, “The NBA’s collectively bargained system for determining player compensation is a fundamental component of the basketball competition that the league oversees for the benefit of the teams and players and ultimately the fans.”
The podcast “Pablo Torre Finds Out” previously reported an undisclosed endorsement deal over millions involving Leonard with fintech company Aspiration. The NBA thus commissioned law firm Wachtell, Lipton, Rosen and Katz for an independent investigation, eventually conducting interviews with 60 people.
Investigation results revealed rule violations by the Clippers by initiating off-court income opportunities and organizing endorsement deals between Leonard and Aspiration, Boingo Wireless, Daktronics, and Lockton Insurance. These companies also engaged in business with the team.
The investigation team reported on Clippers inducements to companies for agreements by offering business with the team. Personal expenses for Leonard and his representatives were also paid without proper reporting on improper solicitations by Leonard’s uncle, Dennis Robertson.
Leonard violated rules, pressuring the Clippers to facilitate off-court income opportunities, obtaining such opportunities, and failing to reimburse personal expenses paid by the Clippers. Leonard must repay $700,000 to the NBA, while his uncle faces a five-year ban from conducting business with NBA teams.
A trade for Leonard to Toronto Raptors was agreed upon in July. Leonard stated his regret and accepted responsibility for the judgment lapses within his circle, acknowledging the distraction this situation posed to fans and his family.
Steve Ballmer bought the Clippers in 2014 after the NBA compelled Donald Sterling to sell following recordings showcasing Sterling’s racist remarks. Ballmer’s wealth positioned him to invest in enhancing the franchise’s reputation, building a new arena in Inglewood, California.
Signing Kawhi Leonard, reigning MVP of the NBA Finals, alongside Paul George in 2019 catapulted the Clippers to championship contender status despite failing to reach the NBA Finals.
With the upcoming season starting in October, the Clippers will continue without their top basketball executive Lawrence Frank, suspended for six months without pay owing to impermissible endorsement arrangements and expenses approved for Leonard’s family.
Top business executive Gillian Zucker will also face a year-long suspension without pay for her involvement in impermissible endorsement arrangements and providing misleading investigator statements. Compliance with the penalties will be monitored for the next five years, following noted adversarial approaches by Clippers and their external counsel during investigation.