The NBA has imposed major penalties on the Los Angeles Clippers after a nearly yearlong investigation into salary cap circumvention involving Kawhi Leonard. The team has been fined $30 million and must forfeit five future first-round draft picks. Clippers owner Steve Ballmer has also been suspended for one year. Team president of business operations Gillian Zucker received a one-year suspension without pay, while president of basketball operations Lawrence Frank was suspended for six months. Leonard has been fined $700,000 for his role in the violations.
A major issue in the investigation was the way the LA Clippers helped arrange endorsement opportunities for Kawhi Leonard. The team argued that its actions were allowed because it made affirmative introductions between Leonard and companies interested in working with him. However, investigators strongly rejected that explanation. The official statement read, “The Clippers advanced a novel theory addressing one part of the conduct at issue here: that NBA rules permit affirmative (not responsive) introductions of players to business partners for the purpose of helping them generate off-court income if such introductions are requested by the player or his representative.” Investigators said the Clippers appeared to deliberately make their emails look as if companies had requested introductions. They also found suspicious financial links between the companies and the team. “In early June 2020, at the time of Ms. Zucker’s ‘introductions,’ none of Boingo, Daktronics, and Lockton had commercial agreements with the Clippers, but all three companies were in active discussions to provide business services to the team or its arena. Within weeks following the ‘introductions,’ either before or on the same day as the companies signed endorsement agreements with Mr. Leonard, each company entered into a multi-million dollar consulting agreement with the Clippers”, the statement added. The report also highlighted the Daktronics agreement. Investigators concluded that Leonard’s endorsement deal was connected to the company’s business relationship with the Clippers. “The facts surrounding the Daktronics-Leonard endorsement agreement make the conclusion explicit: that company’s agreement with Mr. Leonard was not arranged independently of the Clippers, by virtue of Daktronics’ affirmative interest in Mr. Leonard’s services as an endorser or as a result of any request it made to Ms. Zucker for an “introduction.” Rather, investigators conclude, it was procured by the Clippers in exchange for other business that the team would and did supply to Daktronics”, the statement further stated. The report also raised concerns about payments and benefits given to Leonard and his representatives. Investigators found hundreds of instances where the Clippers paid for travel, accommodation, gifts and tickets without properly deducting those expenses from Leonard’s salary.
The NBA’s punishment is similar to the historic Minnesota Timberwolves case involving Joe Smith in 2000. The Clippers now face serious restrictions on their future. They must surrender first-round picks in 2029, 2030, 2031, 2032 and 2033. The findings could also have major consequences for the franchise’s future plans, including Leonard’s position with the team and the previously agreed blockbuster trade involving the Toronto Raptors. The Clippers have rejected the NBA’s findings and are expected to challenge the penalties.
