The Clippers are in hot water because of Kawhi Leonard.
You’ve probably picked up the broad details by now of Pablo Torre’s expansive (and ever-expanding) investigation into Aspiration, a socially-conscious banking company that:
- Went bankrupt
- Was led by a co-founder who pled guilty to wire fraud last month
- Gave Kawhi Leonard a $28 million contract with an additional $20 million in stock options for promotional services he never performed nor attempted by any record
- Received a $50 million investment from Steve Ballmer
- Received a $2 million payment from Clippers minority owner Dennis Wong, suspiciously after a $1.75 million payment to Leonard was late
Those are the facts as a matter of public record or via official documents obtained by Pablo Torre Finds Out, part of the Athletic Podcast Network.
What did the Clippers do exactly?
Great question!
The NBA and NBPA’s Collective Bargaining Agreement has a clause (Article XIII, Section 2) that prohibits any deals between a player and team outside of official salaries within the parameters and restraints of the CBA.
It basically says you can’t pay players on the side.
And it looks very much like the Clippers did so.
Something you’ll read much more about is the difference in the NBA’s investigation and potential punishment and proof of criminal wrongdoing.
For obvious reasons, the threshold for criminal conviction is significantly higher, i.e. “beyond a reasonable doubt.” A reasonable doubt, to this point, definitely exists that the Clippers did not knowingly enter into a side-payment with Leonard for a no-show job by using this company to “launder the money.”
However, the NBA has given itself broad powers in discovering these types of violations. Here’s the actual language from the CBA, emphasis mine:
“A violation of Section 2(a) or 2(b) above may be proven by direct (or circumstantial) evidence, including, but not limited to, evidence that a Player Contract or any term or provision (thereof cannot rationally be explained) in the absence of conduct violative of Section 2(a) or 2"
So the NBA does not need to find beyond a shadow of a doubt that the Clippers did something illicit here, simply that there’s enough circumstantial evidence that cannot be rationally explained to show violative conduct.
Which is not great for the Clippers.
Here’s what looks bad:
- Ballmer invested $50 million into the company vs. a return to Leonard of $48 million
- Leonard never performed any services for Aspiration, from social media posts to promotional appearances to any evidence of their relationship whatsoever
- Multiple outlets have reported similar asks by Dennis Robertson, Kawhi’s uncle, to other teams during his free agency courtship in 2019, including Robertson requesting part ownership in the Toronto Maple Leafs from the Raptors
- The investment by minority owner Dennis Wong was for $2 million vs. the $1.75 million that was late to Leonard due to the company’s financial trouble, and Wong’s daughter also held a position with the company
If you’re wondering what’s bad about this, it’s pretty simple. The NBA salary cap is designed to level the playing field, ensuring that all teams can operate financially within the same restraints and limits. Any side deal to ensure Leonard’s status as a Clipper beyond that violates the spirit of those rules.
Additionally, under the current rules, any money paid to Leonard by the team over the luxury tax lines would result in luxury tax payments, which go into a shared revenue hold that is disbursed in revenue sharing to non-tax-paying teams. So the owners will feel like this deal was literally stealing from them, something billionaires do not take lightly.
How do we know for sure the Clippers arranged a no-show job for Kawhi in violation of the CBA?
The short answer is: we don’t and probably won’t.
As of now, there is no “smoking gun.” A smoking gun would be an official paper trail, recorded voice message, something concrete outlining that the Ballmer investment in the company was directionally and intentionally paying Leonard for a job he did not have to do, as part of extra payment for his services to the Los Angeles Clippers.
You need a document or recording of Steve Ballmer or another person in the Clippers organization saying to Kawhi, “as part of your extension, we will provide $48 million through a corporate partner of ours for which you have to perform no services.”
It is unlikely that that will be found.
However, here’s where that “circumstantial” clause from above once again shows how crucial it is.
The league doesn’t need to know without any doubt in order to determine that the Clippers violated the terms of the CBA. They just have to decide that the evidence is strong enough to be considered rationally unexplainable.
What was Kawhi's role in all this?
Man, is that a great question.
There are four possibilities.
- Kawhi knew everything, was involved the entire way, and purposefully entered into a contractual agreement with no intention of performing the duties listed within the contract and did so in full knowledge that it violated the terms of the CBA.
- Kawhi willingly entered into this contract but was not aware that it violated the terms of the CBA. You’ll scoff at this, but most players do not know the terms of the CBA their union, of which they are a member, agreed to.
- Kawhi had no idea what any of this was; his uncle Dennis Robertson told him to sign this thing, and he signed it. He had no idea he needed to actually do anything for this contract.
- Kawhi understood the terms of the contract and chose not to participate according to the terms anyway. This is effectively the best Clippers defense, that they invested in a company that had a deal with Kawhi assuming he would do what he was supposed to, and he just didn’t, because, well, he’s Kawhi.
What can the NBA do?
A system arbitrator is required to determine guilt in this instance. If the Clippers are found in violation, the CBA states that the league can:
- Fine the team up to $7.5 million. For reference, that is 0.005 percent of Steve Ballmer’s net worth. Not 5 percent, 0.005 percent.
- Direct forfeiture of draft picks, with no limits on how many they can remove
- Void Kawhi’s extension with the Clippers
- Prohibit him re-signing with the Clippers, making him a free agent
- Fine Kawhi $350,000 (0.11% of his career earnings)
- Suspend up to one year any team personnel found to have willingly engaged in the action
- Suspend Dennis Robertson from acting on behalf of Kawhi in any league business for at least one year
And the biggie for Kawhi, per the CBA language:
- They can: “void any transaction or agreement found to have violated Section 2 above and direct the disgorgement by the player of anything of value received in connection with such transaction or agreement (except Compensation received for services already performed pursuant to a Player Contract), unless the player establishes by a preponderance of the evidence that he was unaware of the violation”
In plain English, they can require Kawhi to surrender the $50 million or whatever chunk of that he wound up or winds up with at the conclusion of Aspiration’s bankruptcy proceedings.
You can bet the NBPA and Leonard will fight to the bone on that one.
To sum up, they can take away any number of picks they want, void Kawhi’s contract, and make him a free agent who has to sign with another team, causing utter chaos, or fine the team up to $7.5 million, suspend Dennis Robertson from being at any NBA event or engaging in any NBA business, and potentially require Kawhi give up the $48 million or whatever chunk of that he received, suspend for a year any member of the Clippers organization they find to have been involved including Ballmer, and fine Kawhi a little.
What will the NBA do?
This one is divisive.
Adam Silver has been far more permissive than David Stern was as commissioner. He’s been in charge of the Player Empowerment Era, and he’s overseen the most gentle approach to player conduct in pursuit of labor peace that we’ve seen.
The secret here is that Silver has done this while being the architect of the last three CBAs which have each provided major gains to the owners and no gains to the players. Each of the last three CBAs has been more beneficial to the owners. In the 2011 CBA, Silver was reportedly the “bad cop” in the room with the players while Stern played peacemaker.
But all of this fundamentally misunderstands the bigger factor — how Silver views the office of commissioner.
Stern viewed the office of commissioner as a powerful position overseeing the health of the league and the sport of basketball, in partnership with the owners and players. Stern was, despite his draconian tendencies and brimstone temper, the first to embrace the idea of this being a players’ league. He’s on record with those statements.
Silver, on the other hand, has viewed his position as a servant of ownership, to pursue the direction of the Board of Governors while overseeing and maintaining the peace and well-being of the players (in pursuit of the Board of Governors’ direction).
In this instance, however, it doesn’t mean protecting Ballmer, the hundred-billionaire, but instead seeing compensation for the other 29 owners who view themselves as having been cheated by the Clippers.
Remember, it’s not just that the Clippers broke the CBA if they were complicit here and gave Kawhi more money than the CBA allows, but they did so behind closed doors which shielded those funds from potential tax penalties.
(NOTE: Ballmer probably wouldn’t care about the tax part; if he could just pay off the other owners for the owed tax on this deal and be done with it, he likely would. You just can’t really bribe the tax guy to hide your money laundering when the tax guy wants you to fail because it helps them.)
The league has precedent here. The Minnesota Timberwolves were found to have violated the CBA in their dealings with Joe Smith. They removed five first-round picks (two were returned later), gave a $3.5 million fine (roughly $8.71 million adjusted for today’s salary cap), voided Smith’s illegally agreed-upon contracts and removed his bird rights, removing the Wolves’ ability to retain him, and suspended owner Glen Taylor and GM Kevin McHale for over nine months.
This situation could be considered a worse violation than the Joe Smith situation. It is not a stretch to believe the NBA could give the Clippers a draft pick punishment that would be the NBA equivalent of the NCAA “death penalty.”
However, it remains unlikely that Kawhi is punished significantly here. The NBPA will riot over the idea of a player losing money or earning potential due to deals that a team allegedly provided, even if his uncle, Robertson, solicited them.
Will the commissioner, who has provided star players more power than ever (while crushing the NBPA’s average member’s earning potential), really remove his ability to re-sign with the team close to his family?
It seems, based on history, that the Clippers are much more likely to suffer than Leonard.
What happens next?
This will take some time, with Jake Fischer of the Stein Line reporting that the investigation could take up to a year. The league has to make sure it gets all the facts because it can’t conduct an investigation, issue punishment, and then watch Torre drop another bombshell on things they didn’t find the following day.
In the meantime, the Clippers will not have any immediate consequences and will start their season. The Clippers are a veteran team, so while media day and subsequent media sessions may be annoying, whenever a piece of news comes out, they’re equipped to put it aside and compete. Leonard will either refuse to speak with the media or provide terse, non-compliant answers.
There will be a shadow over the Clippers all season because of this scandal unless the league finds evidence to act swiftly. But if there’s one team used to operating under the cover of darkness, it’s the Kawhi Leonard Clippers.