Alex Nygren, Chair & Founder, SELS – September 2025
This story follows an on-going legal investigation with the NBA, and as such, more information is being released. What is expressed below is solely the opinion of SELS with reference to publicly available information as at September 17, 2025.
What’s Going On?
In early September, reports surfaced that Kawhi Leonard, one the NBA’s biggest stars, and the Los Angeles Clippers may be at the centre of a scandal that could reshape how we think about endorsement deals and salary cap enforcement.
Pablo Torre, a podcaster and former ESPN contributor reported that the Clippers paid Leonard through a company which owner Steve Ballmer had invested heavily in to circumvent the salary cap.
The story starts with Aspiration, a financial services start-up that filed for bankruptcy in March 2025 after its co-founder pleaded guilty to fraud. Clippers owner Steve Ballmer invested roughly $50 million in Aspiration through his personal LLC on September 14, 2021, and another $10 million in March 2023. That same month in 2021, the Clippers announced a $300 million partnership with the company. Minority owner Dennis Wong invested nearly $2 million just days before Leonard received a $1.75 million payment from the company.
Less than a year later, in April 2022, Leonard – through his company KL2 Aspire LLC – signed a four-year, $28 million endorsement contract with Aspiration. The agreement reportedly included a clause making the deal conditional on Leonard remaining a Clipper. Critics argue it was a “no-show” deal, with Leonard performing little or no promotional obligations. Torre claimed that Leonard could also “decline to proceed with any action desired” by Aspiration and continue to be paid. An anonymous employee who purportedly worked for Aspiration told Torre that the payment to Leonard “was to circumvent the salary cap.” Former Aspiration CEO Andre Cherny disputes this, claiming the contract had “three pages of extensive obligations” and could be terminated for non-performance.
Why does this matter? Because if true, it could mean that the deal was a vehicle to funnel money to Leonard outside of his official NBA salary – and end-run around the league’s salary cap rules. The NBA has now launched a formal investigation, retaining Watchell, Lipton, Rosen & Katz to determine if the Clippers and Leonard broke the Collective Bargaining Agreement (CBA).
This is not just about one player or one team. It raises fundamental legal questions about contracts, regulatory enforcement, and the governance of professional sports.
Background: What Was Aspiration?
Aspiration was co-founded in 2013, by entrepreneur and Harvard alumni Joe Sanberg, and Andrei Cherny, a lawyer and former speechwriter for the Clinton administration. The company’s goal was to provide “socially-conscious and sustainable banking services and investment products” with their slogan being: “Do Well. Do Good”.
Aspiration positioned itself as an eco-friendly alternative to traditional banks. The company promoted itself as different from mainstream financial institutions by pledging that customer deposits would never be used to finance fossil fuel projects such as pipelines, oil rigs, or coal mines.
The Legal Framework
The NBA’s CBA prohibits teams and their affiliates from providing or arranging extra compensation to players outside of their official contracts. Specifically, endorsement or sponsorship deals are problematic if:
- The compensation is far above fair market for the services provided.
- The contract is tied directly or indirectly to the player’s continued service with the team.
- There is an "understanding" that the deal is substituted for salary.
If proven, penalties can include substantial fines, loss of draft picks, and contract voiding.
Historical Precedent
The closest parallel is the Joe Smith case (1999), where Smith signed a series of one-year deals for below-market value, which was a secret agreement to allow the Timberwolves to exceed the salary cap and retain his "Bird rights" for a larger future contract, enabling them to sign other players. The league discovered the scheme, resulting in severe penalties for the Timberwolves, including the loss of draft picks and a large fine, as well as Smith being declared a free agent.
Legal Issues in Focus
Endorsement or Disguised Salary?
- If Leonard’s duties were nominal or unenforced, the contract may fail as a genuine endorsement. Regulators often apply a substance-over-form test.
Conditionality
- A clause voiding the deal if Leonard left the Clippers directly ties compensation to team service, raising red flags under the CBA.
Owner Investments
- Ballmer’s and Wong’s investments, especially when timed near payments to Leonard, may show a casual link between ownership financing and player compensation.
Performance & Enforceability
- If obligations existed only on paper, the contract could be deemed illusory consideration, supporting the “no-show” allegation.
Burden of Proof
- Commissioner Adam Silver has stressed that penalties require more than bad optics – the NBA must prove intent or effect (though the CBA gives the commissioner broad discretion).
Possible Outcomes
Under the NBA’s circumvention rules of the 2023 CBA, teams can be punished for circumventing the league’s salary cap. Penalties can range from fines of up to $7.5 million, forfeiture of draft picks, voiding player contracts as well as a suspension of up to a year for any team personnel found to be engaged in the violation.
Why It Matters
This controversy goes beyond one player or one team. It illustrates the blurred line between endorsement contracts and salary compensation, the risks of ownership investment in player sponsors, and broader lessons in contract law (illusory obligations, conditionality), as well as sports governance – how far can regulators go to preserve integrity?
Responses & Denials
According to the Clippers: “Neither Mr. Ballmer nor the Clippers circumvented the salary cap or engaged in misconduct related to Aspiration.”
“...Any contrary assertion is provably false: The team ended its relationship with Aspiration years ago, during the 2022-23 season, when Aspiration defaulted on its obligations. Neither the Clippers nor Mr. Ballmer was aware of any improper activity by Aspiration or its co-founder until the government instituted an investigation. The team and Mr. Ballmer stand ready to assist law enforcement in any way they can.”
The Clippers went on to say in a second statement that “The notion that Steve invested in Aspiration in order to funnel money to Kawhi Leonard is absurd.” “... There is nothing unusual or untoward about team sponsors doing endorsement deals with players on the same team. Neither Steve nor the Clippers organization had any oversight of Kawhi’s independent endorsement agreement with Aspiration. To say otherwise is flat-out wrong."
Final Thoughts
The Kawhi Leonard Aspiration scandal is a high-stakes collision of law, business and sport. With Ballmer’s investments, the conditional “no show” endorsement, and the NBA’s looming investigation, the case is more than a headline: it is a test of the salary cap’s integrity. The NBA's investigation is expected to conclude in early 2026, so this will remain a case to follow. Although, regardless of whether the league finds misconduct or not, the scandal is already reshaping the conversation around endorsements, ownership and transparency in professional sports.
Watch this space.
Works Cited
Collective Bargaining Agreement (NBA 2023). National Basketball Association, June 2023. https://ak-static.cms.nba.com/wp-content/uploads/sites/4/2023/06/2023-NBA-Collective-Bargaining-Agreement.pdf
Holmes, Baxter. Report: Clippers skirted NBA salary cap with Kawhi Leonard payment. ESPN, 3 September 2025. https://www.espn.com/nba/story/_/id/46146871/report-clippers-skirted-nba-salary-cap-kawhi-leonard-payment
Holmes, Baxter. Ex-Aspiration CEO denies Kawhi Leonard signed ‘no-show’ deal. ESPN, 10 September 2025. https://www.espn.com/nba/story/_/id/46241767/ex-aspiration-ceo-denies-kawhi-leonard-signed-no-show-deal
Holmes, Baxter. What is Aspiration, the company behind Kawhi Leonard and Steve Ballmer’s Clippers controversy? ESPN, 11 September 2025. https://www.espn.com/nba/story/_/id/46242361/aspiration-company-kawhi-leonard-steve-ballmer-la-clippers
Toporek, Bryan. Kawhi Leonard circumvention scandal has leaguewide ramifications for NBA. Forbes, 17 September 2025. https://www.forbes.com/sites/bryantoporek/2025/09/17/kawhi-leonard-circumvention-scandal-has-leaguewide-ramifications-for-nba/
Torre, Pablo. The Richest Owner, the Silent Superstar, and the Rotten Apple Tree: A PTFO Investigation. Pablo Torre Finds Out, Meadowlark Media, 3 September 2025. https://www.pablo.show/p/the-richest-owner-the-silent-superstar
Vardon, Joe, and Sam Amick. Kawhi Leonard, Clippers used endorsement deal to ‘circumvent’ NBA salary cap: Report. The New York Times/The Athletic, 16 September 2025. https://www.nytimes.com/athletic/6629202/2025/09/16/kawhi-leonard-nba-clippers-endorsement-contract/