NBA rocked by alleged $43m salary cap breach

The NBA said it will investigate if a $42.7 million ($28 million USD) endorsement contract between Kawhi Leonard and a California-based sustainability services company allowed the Los Angeles Clippers to circumvent salary cap rules, following a report by ESPN.

The probe will focus on ties between Leonard, the Clippers and a company called Aspiration Fund Adviser, LLC, which filed for bankruptcy this year. It listed several creditors at that time, among them the Clippers (who were owed about $45.9 million) and a company called KL2 Aspire LLC that was owed $10.7 million.

Leonard is listed as the manager of that company in California filings. KL is his initials, and 2 is his jersey number. Emails sent to his listed representatives seeking comment Wednesday were not immediately returned.

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“We are aware of this morning’s media report regarding the LA Clippers and are commencing an investigation,” NBA spokesman Mike Bass said.

The Clippers denied that any league rules were broken. Clippers owner Steve Ballmer made a $76.4 million AUD investment in Aspiration, and the company and the team announced a $459 million partnership in September 2021. That was about a month after Leonard signed a four-year, $269 million extension with the Clippers.

“Neither Mr. Ballmer nor the Clippers circumvented the salary cap or engaged in any misconduct related to Aspiration,” the Clippers said in a statement released to several media outlets, including The Associated Press.

“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.”

Aspiration’s co-founder, Joseph Sanberg, agreed to plead guilty last month after facing federal charges of wire fraud. Prosecutors said he defrauded investors and lenders out of $US248 million, adding that “Aspiration’s financial statements were inaccurate and reflected much higher revenue than the company in fact received.”

An ESPN report obtained a copy of the endorsement agreement between Aspiration and KL2 Aspire, one that called for Leonard to be paid $10.7 million AUD annually for four years. Given that timetable, Leonard still would have been owed the final $10.7 million at the time of Aspiration’s bankruptcy filing.

There is no evidence that Leonard did anything to publicly endorse Aspiration.

“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 Clippers said. “The team and Mr. Ballmer stand ready to assist law enforcement in any way they can.”

The league — which previously looked into claims that Leonard's representatives asked for certain things that would be considered cap circumventions when he was a free agent several years ago — can issue stiff penalties if cap rules are found to have been broken by a team, including a fine of up to $11.5 million AUD, the voiding of contracts and the forfeiture of future draft picks.