endorsement deal

Kawhi Leonard mumbled his way through a few answers to questions Monday about his endorsement deal with Aspiration Partners that has triggered an NBA investigation into whether the Clippers circumvented the league salary cap.

The Clippers allowed only two reporters to ask about the deal during media day at Intuit Dome, refusing to give the microphone to additional reporters — including one from The Times — who raised their hands to ask questions. Leonard was ushered off the dais and out of sight.

“The NBA is going to do their job,” Leonard said. “None of us did no wrongdoing and, yeah, that’s it. We invite the investigation.”

Asked about his understanding of the endorsement deal and whether he performed any services, Leonard replied, “I understand the full contract and services that I had to do. Like I said, I don’t deal with conspiracies or the click-bait analysts or journalism that’s going on.

“I don’t think it’s accurate” that he provided no endorsement services to Aspiration, he said. “It’s old. This is all new to you guys. But the company went bankrupt a while ago, so we already knew this was going to happen.”

He added that he wasn’t paid all the money due to him, saying “I’m not sure [how much I’m owed]. I’ve got to go back and look at the books. … The company went belly up and it was fine.”

Clippers forward Kawhi Leonard speaks during media day at the Intuit Dome on Monday.

(Eric Thayer / Associated Press)

Lawrence Frank, Clippers president of basketball operations, was insistent that the investigation will exonerate owner Steve Ballmer and the franchise.

“We appreciate that there will be a clear-eyed look at these allegations,” Frank said. “And we are eager for the truth to come out.

“The assumptions and conclusions that have been made are disappointing and upsetting. And we expect the investigation will show that these allegations are wrong.”

The salary cap limits what teams can spend on player payroll to ensure parity and prevent the wealthiest teams from outspending smaller-market teams to acquire the best player. NBA Commissioner Adam Silver has called attempts to circumvent it a “cardinal sin.”

In this case, Leonard agreed to a $28-million contract for endorsement and marketing work for Aspiration, which went out of business in March. Players are allowed to have separate endorsement and other business deals. At issue in this case is whether the Clippers participated in arranging the side deal beyond simply introducing Aspiration executives to Leonard.

The most painful penalties the NBA could impose would be suspending Ballmer for a maximum of one year and docking the Clippers their first-round draft picks for up to five years. The team already is without a first-round pick in 2026 and 2028, having traded them away. Forfeiting the remaining picks through 2032 would make it harder for the Clippers to compete for their first-ever NBA championship.

“I hurt for Steve,” Frank said. “He’s one of the best people, most honorable people I’ve met. He does things the right way for the right reasons. And he constantly reminds us to stay on the right side of the rules.

“I also hurt for our players, our staff and fans. And, on a larger level, as I’ve learned about this over the past month, I feel bad for all the people defrauded by [Aspiration].”

Frank said a partition exists between team executives and companies that signed players for endorsements.

“Endorsement contracts are completely separate from player contracts,” he said. “So what a player makes, Kawhi, or any of our other players, in endorsement contracts, I have no idea.”

Ballmer, however, had a 2-3% ownership share in Aspiration and made separate investments of $50 million and $10 million in the company. Whether that same partition applied to him is something NBA investigators will examine, according to Michael McCann, a visiting professor of law at Harvard who has followed the situation closely.

Frank emphasized that the Clippers front office takes the salary cap rules seriously.

“The salary cap governs everything we do,” he said. “Our mission every day is to build the best team we can under the constraints of the cap. There is no gray area. There are no secret shortcuts. It’s clear what we are and are not allowed to do.”

Whether Leonard was as clear about the rules remains unknown. The forward who is under contract for two more seasons and $100 million said the upcoming season is all he’s thinking about.

“I’m not getting into any conspiracy theories or anything like that,” he said. “It’s about the season and what we’ve got ahead of us right now.”

More details are emerging about a company that allegedly paid Los Angeles Clippers star Kawhi Leonard millions to circumvent the NBA’s salary cap, including that the team came close in 2021 to granting naming rights for its Inglewood arena to Aspiration Partners.

Clippers owner Steve Ballmer nearly granted naming rights to the company, but ended up choosing financial services firm Intuit to grace the $2-billion venue, a source familiar with the matter said. Intuit, which has a $186-billion net worth and developed TurboTax, Credit Karma and QuickBooks, ended up paying a reported $500 million over 23 years for the naming rights.

Four years later, Aspiration, a sustainability firm that also generated and sold carbon credits, is out of business. Co-founder Joseph Sanberg has agreed to plead guilty to defrauding multiple investors and lenders. Listed among creditors in Aspiration’s bankruptcy documents is Leonard, raising questions about whether his $28-million endorsement deal with the company skirted NBA salary cap rules.

One of the investors Sanberg defrauded was Ballmer, listed by Fortune magazine as the sixth-richest person in the world, with a net worth of $157 billion. The Clippers owner invested $50 million in Aspiration, which in turn entered into a $330-million sponsorship agreement with the team.

This week, the Athletic reported allegations that Aspiration agreed to pay Leonard $28 million for a job with no responsibilities, in an effort to circumvent the NBA salary cap. Ballmer was interviewed Thursday night by ESPN’s Ramona Shelburne and denied involvement in Leonard’s deal with Aspiration, but the NBA has launched an investigation.

Ballmer said he was “conned” by the company and that the Clippers did not circumvent NBA salary cap rules, which the team was accused of doing in a podcast report by Pablo Torre of the Athletic.

A plane flies over the Intuit Dome in Inglewood.

(Wally Skalij / Los Angeles Times)

Ballmer told Shelburne that Aspiration offered more than Intuit for dome naming rights, and a Clippers spokesman confirmed that account. However, Ballmer insisted that the Clippers did not violate NBA rules against skirting the salary cap, and the team had agreed to a contract extension with Leonard and the sponsorship deal with Aspiration before the player and the company met.

“We were done with Kawhi, we were done with Aspiration,” Ballmer said. “The deals were all locked and loaded. Then, they did request to be introduced to Kawhi, and under the rules, we can introduce our sponsors to our athletes. We just can’t be involved.”

The Clippers signed Leonard to a four-year, $176-million contract in August 2021 even though he was recovering from a partially torn ACL in his right knee that kept him sidelined the entire 2021-22 season. Ballmer said the sponsorship deal with Aspiration was completed in September 2021 and that the Clippers introduced Leonard to Aspiration two months later.

“As part of our cooperation with the Department of Justice and Securities and Exchange Commission, we produced texts and emails,” Ballmer said. “It was part of the document production in their investigation. We even found the email that made the first introduction [between Aspiration and Leonard]. It was early in November.

“Where could any of this circumvention happened? It couldn’t have, it didn’t. The introduction got made and they were off to the races on their own. We weren’t involved.”

The Boston Sports Journal reported that Leonard did not appear in promotional material as other endorsers did because Aspiration executives “saw no brand synergy with Leonard and chose not to use his services. They instead preferred to partner with climate-focused influencers.”

Ballmer couldn’t explain why Leonard did no marketing or endorsement work for Aspiration, telling Shelburne that he never spoke with the player about his deal with the company.

“I don’t know why they did what they did and I don’t know how different it is, I really don’t,” he said. “And, frankly, any speculation would be crazy. These were guys who committed fraud. Look, they conned me. I made an investment in these guys thinking it was on the up-and-up and they conned me. At this stage, I have no ability to predict why they did anything they did.”

The salary cap is a dollar amount that limits what teams can spend on player payroll. The purpose of the cap is to ensure parity, preventing the wealthiest teams from outspending smaller markets to acquire the best players.

Circumventing the cap by paying a player outside of his contract is strictly prohibited. Teams that exceed the cap must pay luxury tax penalties that grow increasingly severe. Revenues from the tax penalties are then distributed in part to smaller-market teams and in part to teams that do not exceed the salary cap.

The NBA said it will investigate the allegations laid out by Torre. Ballmer said he welcomes the probe. If allegations were made against a team other than the Clippers, “I’d want the league to investigate, to take it seriously,” he said.

“We know the rules, and if anything is not clear, we remind ourselves what the rules are. And we make it absolutely clear we will abide by those rules.”

The cap was implemented before the 1984-85 season at a mere $3.6 million. Ten years later, it was $15.9 million, and 10 years after that it had risen to $43.9 million. By the 2014-15 season it was $63.1 million.

The biggest spike came before the 2016-2017 season when it jumped to $94 million because of an influx of revenue from a new nine-year, $24-billion media rights deal with ESPN and TNT.

Salary cap rules negotiated between the NBA and the players’ union are spelled out in the Collective Bargaining Agreement. Proven incidents of teams circumventing the cap are few, with a violation by the Minnesota Timberwolves in 2000 serving as the most egregious.

The Timberwolves made a secret agreement with free agent and former No. 1 overall draft pick Joe Smith, signing him to a succession of below-market one-year deals in order to enable the team to go over the cap with a huge contract ahead of the 2001-02 season.

The NBA voided his contract, fined the Timberwolves $3.5 million, and stripped them of five first-round draft picks — two of which were later returned. Also, owner Glen Taylor and general manager Kevin McHale were suspended.

Then-NBA commissioner David Stern told the Minnesota Star Tribune at the time: “What was done here was a fraud of major proportions. There were no fewer than five undisclosed contracts tightly tucked away, in the hope that they would never see the light of day. … The magnitude of this offense was shocking.”

According to Article 13 of the CBA, if the Clippers were found to have circumvented the cap, it would be a first offense punishable by a $4.5-million fine, the loss of one first-round draft pick, and voiding of Leonard’s contract. However, the Clippers don’t have a first-round pick until 2027.