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NBA Penalizes L.A. Clippers, Steve Ballmer, Lawrence Frank, and Gillian Zucker for Salary Cap Circumvention Pertaining to Kawhi Leonard

A 35 page report issued by the law firm Wachtell, Lipton, Rosen & Katz concluded that the L.A. Clippers circumvented the salary cap to sign Kawhi Leonard:

The investigation finds that the Clippers organization 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 ("Boingo"), Daktronics, and Lockton Insurance
("Lockton"), (ii) facilitating the consummation of endorsement agreements between each
of these companies and Mr. Leonard, including in some cases by participating in the development and communication of deal terms, (iii) inducing the companies to enter into
these agreements by offering and providing them with business from the Clippers,
(iv) paying expenses on behalf of Mr. Leonard and his representatives not authorized by
League rules, and (v) failing to report improper solicitations for off-court income
opportunities made by Mr. Leonard’s uncle and business manager, Dennis Robertson.
The pattern of conduct reflected here—involving four separate arrangements sharing
many common characteristics—further demonstrates the clear violations of NBA rules
set forth in this report.

The Clippers' most senior executives—President of Business Operations Gillian
Zucker and President of Basketball Operations Lawrence Frank—are primarily and
directly culpable for this misconduct. In addition, Steve Ballmer, owner of the Clippers
and its affiliates, knowingly sought to help Mr. Leonard obtain off-court income
opportunities and, in at least one instance, engaged in a significant act of team
facilitation. Mr. Ballmer also failed to create conditions under which his organization
abided by the NBA’s circumvention rules—an especially egregious lapse because the
Clippers are a prior offender of those rules and were previously and specifically
investigated by the NBA with respect to Mr. Leonard. 

The NBA issued an official press detailing the penalties for the salary cap circumvention documented in the report:

Based on this misconduct, the NBA has imposed the following penalties:

• The Clippers shall forfeit five first-round draft picks, one in each of the 2029, 2030, 2031, 2032, and 2033 NBA Drafts.
• The Clippers are fined $30 million.
• Clippers owner Steve Ballmer is suspended from all league and team activities for one year for knowingly seeking to help Mr. Leonard obtain off-court income opportunities, for approving a business deal that he knew was a precondition for Aspiration to enter into an endorsement agreement with Mr. Leonard, and for his failure to create conditions under which his organization abided by the NBA’s circumvention rules.
• Clippers President of Business Operations Gillian Zucker is suspended without pay for one year for being primarily and directly culpable for the impermissible endorsement arrangements and for providing false and misleading statements to investigators.
• Clippers President of Basketball Operations Lawrence Frank is suspended without pay for six months for his involvement with the impermissible endorsement arrangements and for approving impermissible expenses incurred by Mr. Leonard and his family.
• The Clippers organization and personnel are subject to a compliance and monitoring program overseen by the league office for a period of five years.
• In connection with his violations, Mr. Leonard is required to pay the league $700,000.
• Mr. Robertson is banned from conducting business or otherwise engaging with NBA teams and their affiliates on behalf of or with respect to any player, employee, or other league or team personnel for a period of five years.

The NBA and the NBPA have entered into an agreement confirming these penalties are final and binding on all parties. Wachtell Lipton continues to receive information relevant to the investigation, and the league will consider further action as appropriate.

These penalties constitute the harshest punishment directed at one organization in NBA history. Under the Collective Bargaining Agreement, the maximum penalty for salary cap circumvention is $7.5 million. It appears that the NBA applied that penalty regarding each of the four companies with whom the Clippers conspired to circumvent the salary cap, thus resulting in a $30 million total fine for the Clippers. 

It is important to understand that the NBA has no authority to impose any penalties on the companies directly, and it is limited--if not by law and the terms of the CBA, then by the reality of maintaining a good working relationship with the NBA Players Association--regarding the penalties that it can impose on Leonard. When the NBA punished the Minnesota Timberwolves for circumventing the salary cap to sign Joe Smith, the league voided Smith's contract, and vacated Smith's Larry Bird Rights. By comparison, in this situation Kawhi Leonard received a mere slap on the wrist: a $700,000 fine relating to improper benefits provided directly to Leonard by the Clippers (as opposed to money funneled to Leonard from outside corporations).

One could make a good argument that Leonard should have to repay every dollar that he received above and beyond his legitimate player salary and legitimate endorsement deals, but no enforcement mechanism exists legally or within the NBA's rules to accomplish this. Shareholders and stakeholders in the various companies involved in the salary cap circumvention could possibly have a cause of action against the leaders of those companies if the shareholders and stakeholders can prove that those leaders took actions that caused the value of those companies to decline in a foreseeable and preventable manner. In other words, if the companies lost money or their stock values declined as a result of funneling money to Kawhi Leonard then the shareholders and stakeholders could sue for a breach of fiduciary duty. Perhaps shareholders and stakeholders could also argue that even if the companies did not directly lose money in these deals the companies ran the risk of reputational damage and other negative consequences as a result of participating in circumvention of the NBA's salary cap rules.

The audacity of the conduct of the Clippers' owner and top executives makes one wonder if those people are bolder and more reckless than other NBA owners and top executives, or if what they did is commonplace in the NBA but that other teams are better at covering their tracks. The Clippers publicly responded to the report and the NBA's penalties by stating "We vehemently reject the NBA's findings, which are the result of a heavily biased investigation seeking to justify a predetermined narrative rather than facts and evidence. What the league told us privately differs from what it announced today publicly, and they have not held themselves close to the standard Commissioner Silver set at the start of the investigation to ensure its fairness and accuracy. For the past year, we cooperated fully and in good faith and we will now fight just as hard to demonstrate our innocence. 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." However, it is unclear what recourse is available to the Clippers to overturn the penalties issued by the NBA other than filing a lawsuit.

The past year or so has not been good for the NBA legally or from a reputational standpoint. In addition to the Clippers' significant circumvention of the NBA's salary cap rules, a wide-ranging, two-pronged federal investigation into illegal gambling implicated Hall of Fame player/then-Portland coach Chauncey Billups, retired player Damon Jones, and current player Terry Rozier. In 2024, the NBA banned for life player Jontay Porter for conduct connected to the prop bet manipulation allegations that also involve Jones and Rozier. Porter pleaded guilty to one count of conspiracy to commit wire fraud. Jones subsequently pleaded guilty to two counts of conspiracy to commit wire fraud. The cases involving Billups, Rozier, and alleged mafia-connected co-conspirators are ongoing. Much like one wonders if the Clippers were unusually bold and reckless or if the team's misconduct is part of a broader salary cap circumvention trend among the league's teams, one wonders if Porter, Jones, and the others were unusually bold and reckless with their criminal conduct (alleged criminal conduct for Billups and Rozier, pending the outcomes of their cases) or if there is a widespread problem of illegal gambling activity within the NBA; that would seem to be a matter worthy of close investigation: the Clippers' actions affected the league's competitive balance, but criminal activity connected with the mafia has a much broader societal impact in addition to affecting the league's credibility and integrity.

The NBA's punishment of the Clippers will likely be viewed in some quarters as vindication for Pablo Torre, whose debut podcast focused on speculation from anonymous accusers that the Clippers had violated the NBA's salary cap rules. Torre's podcast created a media storm. In Analyzing the Media Storm Surrounding the L.A. Clippers, I wrote, "I deliberately left the words 'accusation' and 'scandal' out of this article's title because I don't know if the L.A. Clippers violated the NBA's salary cap rules. You don't know, either, even though you may think that you do. The only things that we know are (1) there is a media storm surrounding the L.A. Clippers, and (2) the NBA is investigating the Clippers for a possible violation of the league's salary cap rules." While the law firm's investigation was still in process, Torre won a Pulitzer Prize for his series of podcasts that speculated about the Clippers allegedly circumventing the NBA's salary cap rule--and I asserted that regardless of the outcome of the investigation, it was premature to award a Pulitzer Prize to Pablo Torre before verifying the veracity of his allegations and speculations.

During the investigative process, many commentators complained about how long the investigation lasted, and some speculated that the NBA was engaging in a coverup. Mike Wilbon asserted that the NBA would never penalize Balmer because Balmer is too wealthy and too important to the league. The report explains that investigators conducted 73 interviews of 60 different people while also reviewing 200,000 pages of documents. The investigation was prolonged because the Clippers did not respond on a timely basis to some of the questions. There is a big difference in substance and quality between putting together a podcast--for which there are no standards of evidence or investigation protocols--compared with drafting a report with findings of fact and conclusions based on careful evaluation of evidence. What matters is the findings of fact and evidence-based conclusions of the law firm's report, not what is said and speculated about on a podcast or in other media outlets.

The outcome of the investigation does not invalidate my previous assertions: from September 2025 until the NBA released the law firm's report on September 2, 2026, it had not been proven that the Clippers violated any NBA rules, and thus it was premature to award one of the journalism field's most prestigious honors to Torre and his team. It is worth noting that the law firm's report states that its conclusions are not based on "public allegations or theories of misconduct by the Clippers or Mr. Leonard that were not ultimately substantiated by the investigative record."

Labels: Dennis Robertson, Gillian Zucker, Kawhi Leonard, L.A. Clippers, Lawrence Frank, Pablo Torre, Steve Ballmer

posted by David Friedman @ 10:43 PM

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Pablo Torre's Pulitzer Win is the Latest Example of Declining Journalistic Standards

Jay Mariotti made an excellent point about the Pulitzer Prize that has been awarded to Pablo Torre's New York Times-sponsored podcast: 

In Analyzing the Media Storm Surrounding the L.A. Clippers, I raised some of the same concerns that Mariotti mentioned:

I deliberately left the words "accusation" and "scandal" out of this article's title because I don't know if the L.A. Clippers violated the NBA's salary cap rules. You don't know, either, even though you may think that you do. The only things that we know are (1) there is a media storm surrounding the L.A. Clippers, and (2) the NBA is investigating the Clippers for a possible violation of the league's salary cap rules. 

Unless you avoid all media outlets and social media outlets--which may not be the worst way to live--you are aware that podcaster Pablo Torre accused the L.A. Clippers and their majority owner Steve Ballmer of circumventing the NBA's salary cap rules by arranging for Kawhi Leonard to be paid $28 million by a sustainability startup called Aspiration for an allegedly "no show" job that involved no work (feel free to insert a joke about Leonard also not working at his main job due to load management).

Torre was armed mainly with anonymous sources speaking about a stack of documents allegedly pertaining to the business dealings, bankruptcy proceedings, and federal prosecution for fraud of Aspiration. Joe Sanberg, Aspiration's founder, pleaded guilty to two counts of wire fraud for his role in a $248 million scam...

It is fascinating to listen to non-lawyers talk about legal issues. An anonymous source speaking on a podcast is not presenting evidence from a legal standpoint; a person testifying under oath or a person submitting a sworn affidavit is presenting evidence.

So, not only do we not know for sure the facts concerning the relationships that may or may not exist among the L.A. Clippers, Kawhi Leonard, and Aspiration, we also do not know the legal significance of such relationships.

It is wise to reserve judgment about the credibility and motives of the anonymous sources interviewed on a podcast sponsored by "The Athletic," which is owned by The New York Times. The New York Times has been a shady organization in a variety of ways for a long time, including treating writers shabbily, and refusing to apologize after falsely accusing three Duke student athletes of rape. Torre assures everyone that he has total editorial independence, notwithstanding the funding he receives from The New York Times. It must be just a fortunate coincidence that Torre happened to break such a big story in the first edition of his podcast after his partnership with "The Athletic"/The New York Times was formalized; there is no doubt that Torre and "The Athletic"/The New York Times are not motivated at all by such crass concerns as money or clicks, and that they live by a credo consisting of truth, justice, and defending the sanctity of the NBA's salary cap rules...

All we have for sure right now is a media storm generating clicks, page views, ratings, and social media activity. That is not to say that there is no substance here; the NBA will investigate the assertions, and make a determination regarding whether the L.A. Clippers circumvented salary cap rules. The NBA's announcement of the results of that investigation is news; Torre's podcast and the ensuing media storm is what Daniel J. Boorstin called a "pseudo-event" in his seminal book The Image. Boorstin described what constitutes a pseudo-event (p. 11):

1) It is not spontaneous, but comes about because someone has planned, planted, or incited it. Typically, it is not a train wreck or an earthquake, but an interview.

2) It is planted primarily (but not always exclusively) for the immediate purpose of being reported or reproduced...The question "Is it real?" is less important than, "Is it newsworthy?"

3) Its relation to the underlying reality of the situation is ambiguous...

4) Usually it is intended to be a self-fulfilling prophecy...

Torre could have presented to the NBA privately the information that he found. If the NBA determined that the Clippers had violated rules, that announcement would have been a news event--but a debut podcast sponsored by a legacy media outlet and expected to deliver a big attention-grabbing splash is not a news event: it is Torre talking about something less from the standpoint of "Is it real?" and more from the standpoint of "Is it newsworthy?" or how much attention it will bring to Torre and his new partnership with "The Athletic"/The New York Times.

It is important to be able to distinguish events from "pseudo-events" and to distinguish journalism from sensationalism. Media members--and consumers of media content/social media content--would do well to read The Image and learn from Boorstin's wise words:

Boorstin notes that the traditional expectation of news reporters was that they would report on significant events that happened; if nothing significant happened, "He could not be expected to report what did not exist" (p. 8). Boorstin observes that in the twentieth century, the expectation of what a news reporter should do shifted dramatically: "If he cannot find a story, then he must make one--by the questions he asks of public figures, by the surprising human interest he unfolds from some commonplace event, or by 'the news behind the news'" (p. 8). Boorstin adds, "Demanding more than the world can give us, we require that something be fabricated to make up for the world's deficiency" (p. 9). Boorstin calls these fabrications "pseudo-events," a neologism based on the Greek word "pseudo," which means false. 

The incessant attempt to create news and excitement where no news and no excitement exists can be observed in the ridiculous questions asked by many reporters at basketball games, at the World Chess Championship, and at almost any press conference pertaining to politics or public affairs.

If the NBA's investigation of the L.A. Clippers finds that the Clippers did not violate any NBA rules then Torre and the Pulitzer Prize Board will look foolish--but even if the Clippers violated NBA rules, Mariotti is correct that it is premature to honor Torre for "seemingly" breaking a story. 

The collapse of journalism as a serious profession is sad. During my writing career, I have encountered a lot of shady people doing shady things in this profession, and I have called them out by name when they steal my ideas without proper attribution (Ming Wong) or added insult to injury by plagiarizing my words while also making factually incorrect statements (Vincent Mallozzi); these are just some examples of the general decline in the quality of published writing that has been taking place for decades, and it is unfortunate that this decline appears to be accelerating.

Labels: Daniel Boorstin, Jay Mariotti, Kawhi Leonard, L.A. Clippers, Ming Wong, Pablo Torre, Steve Ballmer, Vincent Mallozzi

posted by David Friedman @ 10:46 PM

7 comments

Analyzing the Media Storm Surrounding the L.A. Clippers

I deliberately left the words "accusation" and "scandal" out of this article's title because I don't know if the L.A. Clippers violated the NBA's salary cap rules. You don't know, either, even though you may think that you do. The only things that we know are (1) there is a media storm surrounding the L.A. Clippers, and (2) the NBA is investigating the Clippers for a possible violation of the league's salary cap rules. 

Unless you avoid all media outlets and social media outlets--which may not be the worst way to live--you are aware that podcaster Pablo Torre accused the L.A. Clippers and their majority owner Steve Ballmer of circumventing the NBA's salary cap rules by arranging for Kawhi Leonard to be paid $28 million by a sustainability startup called Aspiration for an allegedly "no show" job that involved no work (feel free to insert a joke about Leonard also not working at his main job due to load management).

Torre was armed mainly with anonymous sources speaking about a stack of documents allegedly pertaining to the business dealings, bankruptcy proceedings, and federal prosecution for fraud of Aspiration. Joe Sanberg, Aspiration's founder, pleaded guilty to two counts of wire fraud for his role in a $248 million scam. "This so-called ‘anti-poverty’ activist has admitted to being nothing more than a self-serving fraudster, by seeking to enrich himself by defrauding lenders and investors out of hundreds of millions of dollars," Acting United States Attorney Bill Essayli said Aug. 21 in a statement. "I commend our law enforcement partners for their efforts in this case, and I urge the investing public to use caution and beware of wolves in sheep's clothing."

It is not clear at this point if the Clippers were victims of Sanberg's fraud--as they assert--or if they were using Aspiration to funnel money to Leonard while circumventing the NBA's salary cap rules. Legally, it does not matter how things "look" or how a podcaster and his podcasting buddies present things; the only thing that matters legally is evidence. 

It is fascinating to listen to non-lawyers talk about legal issues. An anonymous source speaking on a podcast is not presenting evidence from a legal standpoint; a person testifying under oath or a person submitting a sworn affidavit is presenting evidence.

So, not only do we not know for sure the facts concerning the relationships that may or may not exist among the L.A. Clippers, Kawhi Leonard, and Aspiration, we also do not know the legal significance of such relationships.

It is wise to reserve judgment about the credibility and motives of the anonymous sources interviewed on a podcast sponsored by "The Athletic," which is owned by The New York Times. The New York Times has been a shady organization in a variety of ways for a long time, including treating writers shabbily, and refusing to apologize after falsely accusing three Duke student athletes of rape. Torre assures everyone that he has total editorial independence, notwithstanding the funding he receives from The New York Times. It must be just a fortunate coincidence that Torre happened to break such a big story in the first edition of his podcast after his partnership with "The Athletic"/The New York Times was formalized; there is no doubt that Torre and "The Athletic"/The New York Times are not motivated at all by such crass concerns as money or clicks, and that they live by a credo consisting of truth, justice, and defending the sanctity of the NBA's salary cap rules.

The Clippers have issued two statements of denial. In the second statement, they termed allegations against the team "absurd" and declared, "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."

All we have for sure right now is a media storm generating clicks, page views, ratings, and social media activity. That is not to say that there is no substance here; the NBA will investigate the assertions, and make a determination regarding whether the L.A. Clippers circumvented salary cap rules. The NBA's announcement of the results of that investigation is news; Torre's podcast and the ensuing media storm is what Daniel J. Boorstin called a "pseudo-event" in his seminal book The Image. Boorstin described what constitutes a pseudo-event (p. 11):

1) It is not spontaneous, but comes about because someone has planned, planted, or incited it. Typically, it is not a train wreck or an earthquake, but an interview.

2) It is planted primarily (but not always exclusively) for the immediate purpose of being reported or reproduced...The question "Is it real?" is less important than, "Is it newsworthy?"

3) Its relation to the underlying reality of the situation is ambiguous...

4) Usually it is intended to be a self-fulfilling prophecy...

Torre could have presented to the NBA privately the information that he found. If the NBA determined that the Clippers had violated rules, that announcement would have been a news event--but a debut podcast sponsored by a legacy media outlet and expected to deliver a big attention-grabbing splash is not a news event: it is Torre talking about something less from the standpoint of "Is it real?" and more from the standpoint of "Is it newsworthy?" or how much attention it will bring to Torre and his new partnership with "The Athletic"/The New York Times.

As part of the media firestorm, Mark Cuban--once the majority owner of the Dallas Mavericks, now one of the team's minority owners--blasted Torre, and stated that Steve Ballmer is way too smart to participate in the type of scheme that Torre described. My first thought about Cuban's statement is that it is absurd: our prisons are full of people who thought that they were too smart, too wealthy, or too powerful to be caught, let alone punished. If there is substance to the allegations then Ballmer will need a much more robust defense than "I'm too smart to do something that stupid." My second thought is that Cuban's seemingly off the cuff outburst--which may not be as off the cuff as it seems--is a dream come true for Torre and "The Athletic"/The New York Times, providing yet another pseudo-event for talking heads to discuss. 

The fact that none of the people who are pontificating publicly about this topic actually know for sure what happened will not stop Torre and other media members from profiting from all of the attention that they are receiving. 

My first instinct was to not write about this at all until the NBA announces its findings, but the situation reminds me so much of Boorstin's brilliant insight about pseudo-events that I could not resist making that connection. The Image was published in 1961, and it is as timely and relevant now as it was over 60 years ago.

If it can be proven that the Clippers violated salary cap rules, then the punishment should be swift and harsh--but we live in a society that is governed (or supposed to be governed) by the principles of (1) innocent until proven guilty, and (2) the accused has a right to confront his accusers under oath. This is not a matter of public safety that Torre had to publicize far and wide to save lives; this is a pseudo-event that may subsequently prove to be a legitimate news story--and that may prove to be as false as the accusations that The New York Times published about the Duke lacrosse players. 

Labels: Aspiration, Joe Sanberg, Kawhi Leonard, L.A. Clippers, New York Times, Pablo Torre, Steve Ballmer, The Athletic

posted by David Friedman @ 1:11 AM

2 comments