The National Basketball Association’s investigation into whether the Los Angeles Clippers used an outside endorsement deal to sidestep the salary cap in paying Kawhi Leonard could remain unresolved until 2027 if the matter proceeds to arbitration, according to sources familiar with the case.
Possible Arbitration Looms
Because salary-cap circumvention is considered a violation of the collective bargaining agreement, any league discipline can be challenged through arbitration. Sources close to the National Basketball Players Association told ESPN that the union is prepared to seek arbitration if it believes evidence is insufficient to justify penalties. A Clippers source said the organization, which has denied wrongdoing throughout the probe, will also fight any sanctions in that forum.
Scope of the Investigation
The NBA retained law firm Wachtell, Lipton, Rosen & Katz nearly 11 months ago to examine links among Leonard, the Clippers, team owner Steve Ballmer and the financial services company Aspiration. The inquiry began after journalist Pablo Torre reported that Ballmer was an Aspiration investor and that Leonard received a lucrative endorsement agreement requiring no actual promotional work.
Current and former Aspiration employees described the arrangement as a way to funnel additional compensation to Leonard beyond his on-court salary, investigators were told. The Clippers have countered that Ballmer and Leonard independently entered deals with a team sponsor and that any unusual terms stemmed from mismanagement at Aspiration, not a coordinated cap-bypass scheme.
The case gained further attention when Aspiration co-founder Joe Sanberg pleaded guilty to two wire-fraud counts for defrauding investors and lenders of nearly $250 million; he was sentenced last month to 14 years in federal prison.
While examining the Aspiration relationship, investigators also explored a second endorsement involving Leonard and whether the Clippers improperly covered certain expenses for the forward, according to earlier reporting by The Athletic.
How Arbitration Could Unfold
If the NBA presents clear evidence of cap circumvention, the parties could settle without arbitration, sources said. If the findings are largely circumstantial and disputed, the case could move to a neutral arbitrator jointly selected by the league and the NBPA. That arbitrator would have authority to demand documents, compel witness testimony and order discovery. Any ruling could be appealed to a three-person panel appointed by both sides, and that decision would be final.
Impact on Pending Trade
Commissioner Adam Silver has said the investigation is in its final phase and hopes to conclude it this summer or before the regular season starts. Urgency rose after the Clippers and Toronto Raptors agreed on June 30 to a trade sending Leonard to Toronto. Completion of the deal is on hold because any discipline against Leonard would follow him to his new team, and the Raptors want clarity before finalizing the transaction.
How a potential arbitration might affect the timing of that trade remains uncertain.
Source: Hoops Rumors
