The NBA has handed down one of the biggest punishments in the history of the league to the Los Angeles Clippers after finding that the franchise circumvented salary cap rules when it courted Kawhi Leonard as a free agent. The league has stripped the team of five first-round draft picks, giving the team no natural pick in the draft from 2029 through 2033. The NBA also fined the Clippers $30m, and suspended owner Steve Ballmer from all league and team activities for a year.
In addition, the league issued suspensions without pay to president of basketball operations Lawrence Frank (six months) and president of business operations Gillian Zucker (one year) for their involvement in the scheme. Leonard was also fined $700,000. Leonard is due to make $50m in salary this season, while Ballmer, the former CEO of Microsoft, has an estimated wealth of $152.7bn, according to Forbes.
The severity of the penalties reflects the seriousness of the violations.” In a statement through his agent, Leonard said he took “full responsibility for lapses in judgment by people within my inner circle and regret the distraction this situation has caused the fans and my family. I entered into my contract with the Clippers as well as the agreements in question in good faith, fully committed to fulfilling my obligations and with no knowledge of any intent on anyone’s part to circumvent the salary cap.” New York law firm Wachtell Lipton conducted the NBA’s investigation into the matter after reporting by journalist Pablo Torre last year. Torre, citing legal documents, claimed Ballmer employed Leonard for a non-existent role in one of his companies to circumvent the NBA salary cap, which punishes teams for spending too much on player salaries.
Torre claims that Ballmer partially funded a now defunct tree-planting company called Aspiration. That company then allegedly entered into a $28m agreement with KL2 Aspire, LLC, a company owned by Leonard. Torre says he could find no evidence that Leonard had ever performed any work for Aspiration, and there was a clause in the contract between KL2 Aspire and Aspiration effectively allowed Leonard to be paid even if he did no work.
Another clause said the deal would be voided if Leonard left the Clippers. One former employee of Aspiration told Torre he had heard the deal with Leonard had been set up to “circumvent the salary cap.” Wachtell Lipton’s report concluded that the Clippers broke NBA rules after “initiating off-court income opportunities between Mr Leonard and four companies doing business with the team: Aspiration Partners, Boingo Wireless, Daktronics, and Lockton Insurance; facilitating endorsement agreements between these companies and Mr Leonard; inducing the companies to enter into these agreements by offering them business from the team; paying personal expenses on behalf of Mr Leonard and his representatives; and failing to report improper solicitations for off-court income opportunities made on Mr Leonard’s behalf through his then-business manager, Dennis Robertson.”
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