Did the Clippers use a $28M endorsement deal to skirt NBA salary cap rules?

Los Angeles Clippers forward Kawhi Leonard, right, looks toward the scoreboard during the second half of an NBA basketball game, May 1, 2025, in Inglewood, Calif. (AP Photo/Mark J. Terrill, file)

The NBA’s offseason got a big shakeup this week when the league confirmed it was investigating whether a $28 million endorsement contract between Kawhi Leonard and a California-based sustainability services company allowed the Los Angeles Clippers to circumvent league salary cap rules.

The investigation comes after a report from journalist Pablo Torre.

Several hours after Torre’s report, the Clippers denied any rules were broken and said they would cooperate with the league’s investigation.

Here’s more about the NBA’s probe into Leonard and the Clippers:

What is the NBA’s salary cap?

The NBA is one of three major American sports leagues that has a salary cap, joining the NFL and NHL. Major League Baseball is the only one of the big four that has no salary cap.

The NBA’s salary cap changes yearly and is calculated as a percentage of the league’s basketball-related revenues. For the 2025-26 season, the amount is set at $154.647 million. The minimum team salary is $139.182 million.

Teams can go over the salary cap, but there are progressively tougher penalties — like luxury taxes and roster construction restrictions — that make things tougher for organizations.

The idea of a salary cap is to provide a relatively even playing field for the league’s 30 teams, which are located in different-sized markets ranging from New York to Memphis.

What is the focus of the NBA’s investigation?

The league’s probe will focus on the connection between Leonard, the Clippers and a company called Aspiration Fund Adviser LLC, which filed for bankruptcy this year. It listed several creditors at that time, including the Clippers and a company called KL2 Aspire LLC that was owed $7 million.

Leonard — a six-time All-Star and two-time NBA Finals MVP — is listed as the manager of KL2 Aspire in California filings.

Clippers owner Steve Ballmer made a $50 million investment in Aspiration, and the company and the team announced a $300 million partnership in September 2021. That was about a month after Leonard signed a four-year, $176 million extension with the Clippers.

The team ended its relationship with Aspiration after two years, saying the contract was in default.

Aspiration’s co-founder, Joseph Sanberg, agreed to plead guilty last month after facing federal charges of wire fraud. Prosecutors said he defrauded investors and lenders out of $248 million, adding that “Aspiration’s financial statements were inaccurate and reflected much higher revenue than the company in fact received.”

Torre, in his reporting, obtained a copy of the endorsement agreement between Aspiration and KL2 Aspire, one that called for Leonard to be paid $7 million annually for four years. Given that timetable, Leonard still would have been owed the final $7 million at the time of Aspiration’s bankruptcy filing.

How did the Clippers respond?

The Clippers flatly denied any wrongdoing in a statement Wednesday.

“Neither the Clippers nor Steve Ballmer circumvented the salary cap,” the team said. “The notion that Steve invested in Aspiration in order to funnel money to Kawhi Leonard is absurd. Steve invested because Aspiration’s co-founders presented themselves as committed to doing right by their customers while protecting the environment.

“After a long campaign of market manipulation, which defrauded not only Steve but numerous other investors and sports teams, Aspiration filed for bankruptcy. ... Neither Steve nor the Clippers had knowledge of any improper activity by Aspiration or its co-founder until after the government initiated its investigation.”

The Clippers added that the fact that Aspiration and Leonard had a deal was not uncommon.

“There is nothing unusual or untoward about team sponsors doing endorsement deals with players on the same team,” the Clippers said. “Neither Steve nor the Clippers organization had any oversight of Kawhi’s independent endorsement agreement with Aspiration. To say otherwise is flat-out wrong.”

What are the possible penalties?

The NBA can issue stiff penalties if cap rules are found to have been broken by a team, including a fine of up to $7.5 million, the voiding of contracts and stripping the team of future draft picks.

In 2000, then-commissioner David Stern came down hard on the Minnesota Timberwolves after the league found the franchise circumvented salary cap rules in contracts involving forward Joe Smith.

Stern fined the Timberwolves $3.5 million, suspended owner Glen Taylor and coach Kevin McHale for a year, and took away multiple first-round draft picks.

AP Basketball Writer Tim Reynolds contributed to this story.

David Brandt, The Associated Press