📰🏟️ Money trees

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How the LA Clippers used a fake tree company to circumvent the NBA salary cap (allegedly)

Last week, investigative sports journalist Pablo Torre dropped a bombshell report whose aftershocks are still being felt all across the NBA.

In an 80-minute episode of his podcast, Torre alleged that LA Clippers star Kawhi Leonard received a $28M under-the-table contract from Aspiration, a global tree-planting company with Clippers owner Steve Ballmer as a major investor, in an effort to go around the NBA salary cap.

• Further reporting by the Boston Sports Journal—later confirmed by Torre—revealed that Kawhi’s Aspiration contract was actually worth $48M, since it included a side deal for $20M in company stock (though it was never paid out).
• Clippers owner Steve Ballmer dropped $50M into Aspiration just a few months before Kawhi signed with the tree-planting company.

The initial tip-off

According to Torre, his investigation began after Aspiration—a “green bank” that promised to supply carbon credits to clients by planting trees to offset their emissions—declared bankruptcy, and its co-founder pleaded guilty to charges of defrauding investors and lenders of $248M+. 

• During Aspiration's bankruptcy proceedings, documents emerged that cited a company called “KL2 Aspire” as a creditor owed $7M.
• KL2 Aspire is a limited liability company (LLC) that names Leonard—whose jersey is #2—as its manager.

“If not for that line item [KL2] in a bankruptcy filing that no one else noticed, this would not have been a problem,” Torre recently said in an interview.

After further digging and interviews with former Aspiration employees, Torre obtained the four-year, $28M endorsement deal Leonard signed with Aspiration, which had two notable characteristics:

1. It was reportedly worth 4x more than what Aspiration paid other celebrities like Leonardo DiCaprio, Robert Downey Jr., Drake, and Orlando Bloom. 
2. It didn’t require Kawhi to do any endorsement whatsoever in exchange for the money—only that Aspiration could terminate his contract if he left the Clippers.

The timeline of events also looks pretty sus:

• August 2021: Clippers announce Leonard’s four-year, $176.3M contract extension
• September 2021: Ballmer’s personal LLC agrees to wire a $50M investment to Aspiration.
• November 2021: Leonard registers company “KL2 ASPIRE LLC” with the state of California.
• April 2022: Leonard’s four-year, $28M endorsement deal with Aspiration takes effect.

This isn’t Ballmer’s first time in the NBA’s hot seat

The former Microsoft CEO (and notoriously energetic and not-at-all awkward courtside fan) is a polarizing figure within NBA ownership circles. Ballmer’s unprecedented net worth for a team owner—$150B+, or enough cash to comfortably buy the entire NBA (worth ~$132B as of 2024; includes all 30 franchise values, plus all league media rights deals and merch revenue)—has allowed him to reinvigorate the Clippers franchise, and build a brand-new arena with one of the best fan experiences in the entire league.

But he’s also drawn the ire of other NBA owners for spending beyond the salary cap: 

• The NBA’s latest collective bargaining agreement in 2023 placed unprecedented restrictions on high-spending teams as a direct response to Ballmer’s willingness to pay financial penalties for going over the cap.
• This new apron system harshly restricts teams from signing, trading, and drafting players if they go too far over the cap, instead of just forcing them to pay increasingly larger luxury taxes.

Looking ahead…The NBA has reportedly hired law firm Wachtell, Lipton, Rosen & Katz—the same firm involved in probing former team owners Donald Sterling and Robert Sarver for misbehavior—to investigate the allegations surrounding Kawhi’s deal with Aspiration.

If Ballmer is found to have circumvented the NBA’s salary cap, an allegation that he and the Clippers have strongly denied, it’s unclear what potential punishment the Clippers might face. 

• A similar situation involving the Minnesota Timberwolves in 2000 resulted in harsh penalties, including the team forfeiting three first-round picks and having to void their contract with the player involved. 
• But some NBA insiders say the Clippers’ most likely outcome is either a slap on the wrist punishment, or the league finds no concrete evidence of wrongdoing.

…we shall see.

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