The NBA has handed down the harshest punishment in league history to the Los Angeles Clippers, fining the team $30m and stripping five first-round draft picks for circumventing salary cap rules to pay superstar Kawhi Leonard. Commissioner Adam Silver also suspended owner Steve Ballmer for one year, sending a clear message to the league's increasingly wealthy ownership class.
The penalties stem from allegations that the Clippers violated the NBA's collectively bargained system for determining player compensation. In a statement, Silver said: "The NBA's collectively bargained system for determining player compensation is a fundamental component of the basketball competition that the league oversees for the benefit of the teams and players and ultimately the fans. I am deeply disappointed by the flagrant violations of our rules and by the Clippers' institutional and leadership failures that led to this misconduct. The severity of the penalties reflects the seriousness of the violations."
Investigation Findings
The NBA-hired New York law firm of Wachtell, Lipton, Rosen & Katz conducted an independent investigation into the allegations. It found that the Clippers violated "the circumvention rules in numerous independent ways by (i) affirmatively initiating off-court income opportunities between Mr Leonard and four different companies doing business with the team: Aspiration, Boingo Wireless, Daktronics, and Lockton Insurance." The firm also found that the Clippers facilitated the fulfillment of those endorsement agreements and induced the companies to enter into them by offering and providing them with business from the Clippers, such as an Aspiration jersey patch and Daktronics scoreboard.
Last September, journalist Pablo Torre released podcast episodes alleging that Ballmer went under the table to sign Leonard to a no-show endorsement deal with Aspiration, a now-bankrupt sustainability services company that Ballmer invested in to pay Leonard $28m.
Clippers' Response and Leonard's Role
The Clippers "vehemently reject the NBA's punishments," according to a statement released by the organization, calling them "the result of a heavily biased investigation seeking to justify a predetermined narrative rather than facts and evidence." Leonard announced on Instagram that "I accept full responsibility for lapses in judgment by people within my inner circle," referring to his uncle and former business manager, Dennis Robertson, who solicited these agreements on Leonard's behalf and was banned from the league for five years as a result.
Leonard's only punishment is to pay the league $700,000. He appears to be on his way to Toronto, as the previously announced trade between the Clippers and Raptors is expected to go through within the next few days, according to ESPN. The Raptors will send Brandon Ingram, Gradey Dick, two first-round picks, two second-round picks and a pick-swap to Los Angeles to reunite Leonard with the franchise he won an NBA championship with in 2019. The deal was put on hold in late July after the NBA announced that the Raptors had to commit in writing to assume any risk of penalties Leonard might incur from the investigation.
Impact on the Clippers
After having to forfeit five first-round draft picks, the Clippers now have no natural pick in the draft from 2029 through 2033. The franchise only recently pivoted to a rebuild after trading veterans James Harden, Ivica Zubac, and (almost certainly) Leonard – leaving them without any superstars or blue-chip prospects to build around. They can't really attract veteran talent given the damage this year-long soap opera has done to their brand, while finding good young players through the draft just became nearly impossible.
"We intend to vigorously challenge these findings and penalties through every avenue available to us and look forward to an ethical and impartial arbitration process," announced the Clippers, who also sent a letter to Silver confirming that "we are exploring every legal remedy to address this gross injustice."
A Message to the League
Prolonged litigation between one of the world's richest men and one of its wealthiest sports leagues could be ahead. But Silver had no choice but to drop the hammer on Ballmer given what he represents not only to sports fans, but to the swell of big-pocketed owners who have recently bought into the NBA as well. "Many fans have expressed apathy about the entire cap circumvention fiasco," Stephen Noh wrote in Sporting News. "But if the league simply gave a finger wag, then other deep-pocketed ownership groups would surely have started their own cap circumvention techniques."
Whether it's Bob Iger and Josh Kushner buying the Lakers for $12.5bn this summer, or casino mogul and Donald Trump megadonor Miriam Adelson buying the Dallas Mavericks for $3.5bn in 2023, the new wave of NBA owners have a lot more in common with Ballmer than they do with the previous generation of NBA owners like Sterling and former Lakers owner Jerry Buss, who ran mom and pop shop operations after buying their teams for "mere" millions. Following in Ballmer's footsteps, the new money entering the NBA is tied to tech billionaires, sovereign wealth funds in the Gulf states, and private equity firms in America that have seemingly unlimited amounts of money and power. Silver had no choice but to make an example out of the Clippers, theoretically setting a precedent that is harsh enough to keep the rest of the owners in line to ensure parity and integrity for the NBA.
