LA Clippers Hit With NBA’s $30M Fine, Lose 5 First-Round Picks in Kawhi Leonard Salary Cap Case

The Los Angeles Clippers were hit with a $30 million fine and stripped of five first-round draft picks Wednesday after the NBA found the franchise violated its salary cap circumvention rules by helping Kawhi Leonard obtain outside income through companies doing business with the team.

Owner Steve Ballmer was suspended from league and team activities for one year. Leonard must pay the NBA $700,000, Clippers President of Business Operations Gillian Zucker was suspended without pay for one year, and President of Basketball Operations Lawrence Frank was suspended for six months. Leonard's former business manager and uncle, Dennis Robertson, was barred from doing business with NBA teams for five years.

An independent investigation by Wachtell, Lipton, Rosen & Katz found a pattern of salary cap violations involving Aspiration Partners, Boingo Wireless, Daktronics and Lockton Insurance. Investigators concluded Clippers executives initiated or helped secure endorsement deals for Leonard and used or offered team business to encourage the companies to participate.

The Clippers rejected the findings, calling the investigation heavily biased and saying they intend to challenge the penalties through arbitration and other available avenues. The NBA said it and the National Basketball Players Association have agreed that the sanctions are final and binding.

At the center of the dispute are the NBA's salary cap circumvention rules, part of the collective bargaining agreement between the league and the players union. The rules are designed to prevent teams from giving players additional compensation or other value outside what the agreement permits.

NBA players may sign legitimate endorsement deals with outside companies. The issue is the team's role. League guidance cited by investigators allows a club to provide contact information when a sponsor independently asks about working with a player, but bars the team from recommending the player or initiating or facilitating a deal to generate outside compensation.

Investigators said the Clippers crossed that line with Daktronics while the company was competing for work at Intuit Dome. A senior team executive suggested an endorsement with Leonard as part of a proposed "spend back" arrangement and specified terms of $3 million per year for two years, according to the report. Daktronics believed refusing could jeopardize its chances of winning the arena business.

Daktronics, Boingo and Lockton ultimately agreed to pay Leonard a combined $18 million, all of which had been paid by August 2021. Investigators said the agreements shared unusual features, including limited performance obligations, no public announcements and little evidence that the companies meaningfully used Leonard in promotions.

Aspiration became the largest arrangement examined. The sustainability company signed a 23-year, $382.5 million sponsorship agreement with the Clippers in 2021, while Ballmer made a $50 million personal investment in the company.

Investigators found that Zucker later suggested Leonard as a potential Aspiration endorser, brought in a business agent to help structure the deal and provided input on its terms. Leonard's final agreement called for $7 million in cash and $5 million in equity each year for four years, for total potential compensation of $48 million.

The report also tied that endorsement to a separate Clippers agreement with Aspiration involving the Forum, the Inglewood arena owned by Ballmer. Early documents contemplated $7 million in annual Clippers spending with Aspiration, matching the annual cash portion of Leonard's endorsement deal. Aspiration co-founder Joe Sanberg later threatened not to proceed with Leonard's agreement unless the Forum deal was completed, investigators said.

Ballmer told investigators he knew about that condition before approving the Forum agreement in April 2022. Wachtell Lipton concluded that his approval amounted to prohibited facilitation under the CBA.

The Clippers had been warned about similar conduct before. The NBA fined the franchise $250,000 in 2015 for improperly facilitating a proposed endorsement involving DeAndre Jordan. After Robertson sought unauthorized benefits during Leonard's 2019 free agency, the league required teams to report requests for prohibited compensation or benefits even when rejected. Ballmer, Zucker and Frank received training on the rule that December.

Investigators found no evidence that the Clippers reported Robertson's later demands. They also identified hundreds of personal travel, accommodation, gift and ticket expenses paid for Leonard, members of his family and Robertson without the deductions required under league rules. Frank was responsible for authorizing those payments, according to the findings.

The Clippers will also be subject to five years of league monitoring. Investigators said they continue to receive information related to the matter, and the NBA said it will consider further action as appropriate.