NBA Punishes Steve Ballmer and Los Angeles Clippers for Salary Cap Violations

When Steve Ballmer bought the Los Angeles Clippers for $2bn in 2014, it was widely regarded as a coup for the NBA.

Not only is Ballmer one of the richest men in the world – worth an estimated $152.7bn – but his passion and enthusiasm for the sport stood in stark contrast to the team’s embattled former owner. Donald Sterling, who bought the Clippers for $12.5m in 1981, was forced to sell after being handed a lifetime ban by the NBA in response to a series of racist comments.

Ballmer was the kind of owner NBA fans dream of, especially ones as downtrodden as the Clippers. He invested hundreds of millions of dollars towards improving the roster, growing the brand, and developing the new state-of-the-art Intuit Dome in Inglewood, California. When it opened in 2024, it gave the Clippers a home of their own for the first time since moving from San Diego in 1984. Ballmer’s Clippers constantly pushed the envelope, installing the first “halo” scoreboard, a wall of a supporters’ section strategically positioned to throw off opponents, a team with future Hall of Famers Kawhi Leonard and Paul George. Ballmer turned a laughingstock that had been living in the shadows of the crosstown rival Lakers into a relevant organization.

But on Wednesday afternoon, after a year of allegations that Ballmer’s Clippers circumvented the NBA’s salary cap to pay superstar Leonard back in 2021, it was confirmed that Ballmer had taken it all a little bit too far. NBA commissioner Adam Silver handed down the harshest punishment in league history, stripping the Clippers of five first-round draft picks and fining them $30m, while suspending Ballmer for a year.

“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,” Silver said in a statement. “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.”

NBA fans have been looking for clarity for a year. Last September, journalist Pablo Torre released the first in a series of podcast episodes alleging that Ballmer’s Clippers violated the salary cap circumvention rules designed to punish teams for spending too much on player salaries. Citing legal documents, Torre claimed 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.

The NBA-hired New York law firm of Wachtell, Lipton, Rosen & Katz has been conducting an independent investigation into the allegations since then, saying on Wednesday 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.” It also found that the Clippers facilitated the fulfillment of those endorsement agreements and induced the companies to enter into the agreements by offering and providing them with business from the Clippers, such as an Aspiration jersey patch and Daktronics scoreboard.

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, meanwhile, 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 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. But given that Leonard basically got off scot-free – his only punishment is to pay the league $700,000, probably because the league wanted to avoid a battle with its Players Association – the Raptors will be incentivized to see the deal through while the Clippers will have a hard time going back to the negotiating table given that most of their front office has been suspended.

Still, the Clippers are desperate for a way out of this situation, and for good reason. After having to forfeit five first round draft picks, the Clippers now have no natural pick in the draft from 2029 through 2033. It’s a dire situation considering that 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 bluechip 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.”

Prolonged litigation between one of the world’s richest men and one of its wealthiest sports leagues could be ahead of us. But while this all may seem like a harsh penalty for an organization that only recently climbed out of the dregs of the NBA – one that could be forced to sell or relocate in the aftermath of this news in the worst-case scenario – 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, as ridiculous as this sounds, “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.

Hopefully it’s not already too late.