The National Basketball Association announced today that they have opened an investigation into Kwahi Leonard’s recent endorsement deal with Aspiration. This move comes as worries mount about potential breaches of salary cap rules. Leonard currently plays for the Los Angeles Clippers and is well known for his pride in wearing #2. At the time of Aspiration’s bankruptcy filing, the company was indebted to him in the amount of $7 million. The sunny outlook has come under some scrutiny after allegations against Aspiration’s cofounder Joseph Sanberg. He’s admitted to committing $248 million in federal wire fraud.
The Clippers have issued various public denials of any wrongdoing in securing Leonard’s contract. In a statement, they applauded the league’s investigation, claiming the team and owner Steve Ballmer broke no salary cap regulations. The organization touted its transparency and promise to follow all applicable rules and regulations set by the NBA.
The Relationship with Aspiration
The Clippers had first signed the deal with Aspiration to encourage fans to have a greener lifestyle with their money. Ballmer’s investment was predicated on the belief that Aspiration’s cofounders were genuinely committed to serving customers while protecting the environment. Emergency ban for Aspiration After two years of partnership with the Clippers, the front office ended their partnership with Aspiration. They pointed to a contract default that left them owed some $30 million at the time of Aspiration’s bankruptcy.
“The notion that Steve invested in Aspiration in order to funnel money to Kawhi Leonard is absurd. Steve invested because Aspiration’s cofounders presented themselves as committed to doing right by their customers while protecting the environment.” – The team (Los Angeles Clippers)
Leonard’s private equity firm, KL2 Aspire LLC, is named as being owed $7 million by Aspiration. Not surprisingly, given these financial ties, we have no evidence that Leonard openly endorsed the company. Throughout the process, and now in legal proceedings, the Clippers have referred to these types of mutual endorsements between team sponsors and league players as commonplace in the league.
Legal Implications and Potential Penalties
The NBA has proposed serious penalties for teams caught evading salary cap regulations. Some of these penalties might involve fines as high as $7.5 million, nullifying contracts, and possibly even losing future draft picks. That investigation is still ongoing, and the league is currently investigating the financial relationship between Leonard, his LLC, and Aspiration. Their goal is to find out whether a violation has happened.
“Neither the Clippers nor Steve Ballmer circumvented the salary cap,” – The team (Los Angeles Clippers)
The Clippers have consistently suggested that they did not know about any illegal or unethical goings on at Aspiration until federal investigations started. They boldly claim they have done nothing wrong per league policy. They say the chaos has more to do with market manipulation from Sanberg.
“After a long campaign of market manipulation, which defrauded not only Steve but numerous other investors and sports teams, Aspiration filed for bankruptcy … Neither Steve nor the Clippers had knowledge of any improper activity by Aspiration or its cofounder until after the government initiated its investigation.” – The team (Los Angeles Clippers)
Future Outlook
Until the NBA’s investigation is over, both Kawhi Leonard and the Los Angeles Clippers will be under a dark cloud. The outcome will not only impact Leonard’s financial dealings but could affect the team’s roster and future strategies.
“There is nothing unusual or untoward about team sponsors doing endorsement deals with players on the same team,” – The team (Los Angeles Clippers)
