NBA Commissioner Adam Silver said he has broad powers that could be wielded to punish the Los Angeles Clippers and owner Steve Ballmer if it is proven that they circumvented the salary cap to get Kawhi Leonard more money through an endorsement deal with a team sponsor. However, he also said he would be reluctant to use that power for the "mere appearance of impropriety."
Mostly, Silver sounded like a cautious, patient lawyer when speaking after the NBA's Board of Governors meeting on Wednesday.
"I'm a big believer in due process and fairness, and we need to now let the investigation run its course," Silver said.
When asked about possible punishments the Clippers could face if it is proven the franchise knowingly circumvented the salary cap, Silver sounded like a man who understands he has a hammer to bring down.
"My powers are very broad," Silver said. "Full range of financial penalties — draft picks, suspensions, et cetera. I have very broad powers in these situations."
However, sounded cautious about using that hammer. While the NBA's Collective Bargaining Agreement (CBA) says a case for cap circumvention can be based on circumstantial evidence — which is all that is public right now, although there is a flood of it — Silver sounded like a lawyer who wants something more concrete.
"We and our investigators look at the totality of the evidence... I would be reluctant to act if there was sort of a mere appearance of impropriety," Silver said. "I think that the goal of a full investigation is to find out if there really was impropriety."
The Clippers and Ballmer have vehemently denied any impropriety, Ballmer saying he was "dupped" by the company Aspiration and its CEO Joe Sanberg (who has pled guilty to bilking investors of $248 million).
The appearance of impropriety in this case is still pretty damning. In early August of 2021, Ballmer made a personal investment of $50 million in Aspiration, a "green bank" company planting trees to gain carbon credits they could sell to clients. A couple of weeks later, Leonard signed a four-year, $176 million max contract extension with the Clippers. By the opening of Clippers training camp that year, Aspiration was a $300 million key sponsor of the Clippers, as Ballmer was building the Intuit Dome and had made a priority of making it a green building. A couple of months later, Leonard formed an LLC and, through that, signed a $28 million endorsement deal with Aspiration. This deal eventually grew to $48 million after a later $20 million stock deal (stock that is now worthless as the company went bankrupt).
The core of the problem for the Clippers and Leonard is this: He did nothing, absolutely nothing, for this endorsement money. No appearances, marketing or advertising, not even a social media post. He got the money for nothing.
That all smells fishy, but proving that Ballmer and the Clippers knew about this or orchestrated it is a much higher bar. The original report from Pablo Torre and the Pablo Torre Finds Out podcast reported that there were seven people in the office who said they were told Leonard's endorsement deal was lined up to help the Clippers circumvent the salary cap. Okay, but investigators will want to know "told by whom?" and where did that person learn of it? What is the source of this knowledge, and is it verifiable?
There are too many coincidences here for this all to be random, but is it more likely that the Clippers orchestrated this, or that "Uncle Dennis" — Leonard's uncle and business manager, who had asked for “no show” endorsements before in Toronto — just worked this out with Aspiration, and the Clippers really did know nothing? Every option is on the table. All the existing evidence we know matters, but how much weight will Silver and the other owners give it?
"The answer is we're not a court of law at the end of the day, either," Silver said. "We have broad authority to look at all information and to weigh it accordingly."
Silver said that his cautious approach has been echoed by the other owners he has spoken to on the matter.
"At least what's being said to me is a reservation of judgment," Silver said. "I think people recognize that that's what you have a league office for. That's what you have a commissioner for, someone who is independent of the teams... At least what those governors have said directly to me, to the extent we have had discussions, they've been limited."
Some around the league feel, considering all that is already known, that there is a burden on the Clippers to prove they didn't put this together, or at least know about it. The NBA CBA suggests there is some burden on the Clippers. However, Silver said the burden of proof remains with the NBA and investigators.
"The burden is on the league if we’re going to discipline a team, an owner, a player or any constituent members of the league," Silver said. "I think as with any process that requires a fundamental sense of fairness, the burden should be on the party that is, in essence, bringing those charges."
It's possible that when all this ends, the NBA will realize its current system of oversight on player endorsements needs updating (something the NBA players' union would have strong opinions about). NBA owners may be hesitant to want to punish Ballmer if it sets a precedent where they could be in trouble if one of their sponsors goes rogue with a player. When asked about that oversight, Silver's patient, cautious side came to the front.
"Let's get through this investigation. We'll reassess," Silver said. "We'll see what happened here. Then we'll sit down both among our owners and then potentially with the Players Association because some of that is a function of collective bargaining, and see if there's additional things we need to do."
For now, Silver is willing to sit back and let the New York law firm of Wachtell, Lipton, Rosen & Katz lead the investigation. What Silver does with that hammer he wields will depend on what the investigation finds.
