Semi-OT: Pablo Torre Investigation into Kawhie/Clippers

[MGB8]

I actually would be surprised at a contract cancellation or even a suspension.

I think the Clips will get fined a large amount and lose a chunk of draft picks, but that will be it.

[DASMACKDOWN]

I think how Steve can slide out of this, is just to completely deny that he didn't have any knowledge of the transaction.

The NBA should still be very very concerned though.

Because it still does not explain why Kawhi Lenard got offered to receive 28 million dollars to do absolutely nothing.

If the Feds were investigating, it would sound nefarious in nature.

This isnt unlawful. This is just illegal to a private company that is the NBA.

I think Silver can say that cant pin it on Ballmer but they also acknowledge that something wrong happened. I think they are trying to pin this on someone but cant fully put it in Ballmer.

[jnrjr79]

we know kawhi is guilty. i care more about what happens to him

I'd assume contract termination, even in the Juwon Howard case which was pretty light for illegal cap moves, Howard's contract was terminated and he had to find a new one for less than MLE. Kawhi would forfeit $100M on his current contract, I think even he would feel that. Wonder if the PA would fight it.

Michael McCann who Lowe calls "the Sports Lawyer" on the case:

And not only that, I could see the Player's Union saying wait a second, You don't have a right to be policing endorsement deals.

Honestly other teams, they may be rooting for a punishment, they better be careful what they root for. They may get a new policy that changes how they interact with sponsors.

could the league somehow claw back the amount of the endorsement deal plus interest and potentially also punitive damages? or just impose an equivalent fine? i'd assume that'd have to go through the legal system, so kawhi would get off scot free on that count. the clippers might have to take the hit instead

From my read of the CBA, if the NBA is going to impose a financial punishment on Kawhi, it would be in the form of voiding his Clippers contract and/or fining him. From a legal perspective, I don't see how they would be able to invalidate the sponsorship deal (EDIT: but see my next post, they theoretically have the right to make Kawhi give up the compensation he received). They might have some sort of tortious interference with contract claim (i.e. Aspiration knew that Kawhi was under a contract with the Clippers that would prohibit him from doing this deal and Aspiration interfered with those contractual rights), but that would be sort of pointless with Aspiration in bankruptcy, as best I can tell (though I'm not a bankruptcy expert).

[jnrjr79]

could the league somehow claw back the amount of the endorsement deal plus interest and potentially also punitive damages? or just impose an equivalent fine? i'd assume that'd have to go through the legal system, so kawhi would get off scot free on that count. the clippers might have to take the hit instead

My guess is that they can't. They have very limited ability on player fines.

I would guess they can only say the contract was entered into illegally and cancel it. Thinking it through, they probably can't even suspend him or really do anything else to him, though canceling his contract would be plenty punishment, but they probably don't have the right to do anything else to him.

The CBA sets forth what they can do. The Circumvention rules start on page 339 here:

https://imgix.cosmicjs.com/25da5eb0-15eb-11ee-b5b3-fbd321202bdf-Final-2023-NBA-Collective-Bargaining-Agreement-6-28-23.pdf

The penalties available are: fines (it doesn't say so expressly, but this appears to be limited to teams - that said, there are general conduct rules that could also apply for fines for Kawhi), draft pick forfeiture, voiding of the player contract, "void any other transaction or agreement found to have violated" the section, suspend team personnel found to have willfully engaged in the violation, and "direct the disgorgement by the player of anything of value received in connection with such transaction or agreement," except for $$ already received in your player contract.

There's no reference to being able to suspend the player, as far as I can see, just team personnel. But voiding Kawhi's contract would be a big deal because he's not getting $50 million from another team.

[jnrjr79]

I actually would be surprised at a contract cancellation or even a suspension.

I think the Clips will get fined a large amount and lose a chunk of draft picks, but that will be it.

I think it depends on how the investigation shakes out. If it's what Mark Cuban thinks it was - Uncle Dennis doing a shady deal without the Clippers knowing - then it would seem like Kawhi may bear the brunt of it. If the Clippers were in on the deal, then I'd expect them to be punished severely. If not, then maybe nothing or a slap on the wrist.

Here's my question: why would Aspiration agree to pay Kawhi a $28 million no-show endorsement deal if nobody at the Clippers asked them to do it. What's in it for them? Just enhancing the value of their sponsorship deal for the Clippers by virtue of Kawhi being a member of the team? Maybe, but it seems a little tenuous to me.

[MGB8]

I actually would be surprised at a contract cancellation or even a suspension.

I think the Clips will get fined a large amount and lose a chunk of draft picks, but that will be it.

I think it depends on how the investigation shakes out. If it's what Mark Cuban thinks it was - Uncle Dennis doing a shady deal without the Clippers knowing - then it would seem like Kawhi may bear the brunt of it. If the Clippers were in on the deal, then I'd expect them to be punished severely. If not, then maybe nothing or a slap on the wrist.

Here's my question: why would Aspiration agree to pay Kawhi a $28 million no-show endorsement deal if nobody at the Clippers asked them to do it. What's in it for them? Just enhancing the value of their sponsorship deal for the Clippers by virtue of Kawhi being a member of the team? Maybe, but it seems a little tenuous to me.

yeah, that's why I don't put this on Kawhi. Shady, sure, and given the TO allegations, maybe he pushed for it. But unless it is clear that the player conspired to circumvent the cap, as opposed to benefited (while viewing it as a more typical deal with a sponsor)"....

It's the Ballmer money to the company that covers (and then some) the payment to Leonard (plus it being no show) that makes this stink to high heaven.

Though that thing about the NBA recouping /"disgorgement of value received in connection" does seem to suggest that they could basically dock him any of the millions that were actually paid to him by the company.

[jnrjr79]

I actually would be surprised at a contract cancellation or even a suspension.

I think the Clips will get fined a large amount and lose a chunk of draft picks, but that will be it.

I think it depends on how the investigation shakes out. If it's what Mark Cuban thinks it was - Uncle Dennis doing a shady deal without the Clippers knowing - then it would seem like Kawhi may bear the brunt of it. If the Clippers were in on the deal, then I'd expect them to be punished severely. If not, then maybe nothing or a slap on the wrist.

Here's my question: why would Aspiration agree to pay Kawhi a $28 million no-show endorsement deal if nobody at the Clippers asked them to do it. What's in it for them? Just enhancing the value of their sponsorship deal for the Clippers by virtue of Kawhi being a member of the team? Maybe, but it seems a little tenuous to me.

yeah, that's why I don't put this on Kawhi. Shady, sure, and given the TO allegations, maybe he pushed for it. But unless it is clear that the player conspired to circumvent the cap, as opposed to benefited (while viewing it as a more typical deal with a sponsor)"....

It's the Ballmer money to the company that covers (and then some) the payment to Leonard (plus it being no show) that makes this stink to high heaven.

Though that thing about the NBA recouping /"disgorgement of value received in connection" does seem to suggest that they could basically dock him any of the millions that were actually paid to him by the company.

IMO, the one thing that is clear is that Kawhi was in on it. He signed a contract that entitled him to $28 million, the contract says he does not have to do anything in exchange for the money, and he then in fact did nothing in exchange for the money. He's not going to skate by saying "oh, I don't know, Uncle Dennis did that deal and I just signed it without reading it." At a minimum, he knew he was being paid a fortune in exchange for bupkus.

I assume Kawhi's defense is going to be something like "I intended to perform services, but then the company was in so much turmoil that they had bigger fish to fry and just never asked me to do it."

That would make little sense to me, though. The company was already paying the money. Might as well get something out of it. And having a famous athlete cut some promos for you probably becomes more important, not less, when times are tough, if the money is already out the door.

[MrSparkle]

Can’t entirely blame the league and players for the non-basketball-related de-evolution of the game, but it’s really hard to take the NBA seriously.

- TV/stream deals went for the quick money, but less people are gonna have regular access to games than ever with how randomly distributed these games are gonna be shown.

- Sports betting is a taint on it all, and everybody knows it. At the most basic level, how is every player supposed to tune out an entire world rooting for them to cover a spread?

- This Kawhi situation. We’ll see what happens, but for a league with the tight circles… Ballmer knew nothing? Uh, the slap on the wrist shall be interesting.

[dougthonus]

I think it depends on how the investigation shakes out. If it's what Mark Cuban thinks it was - Uncle Dennis doing a shady deal without the Clippers knowing - then it would seem like Kawhi may bear the brunt of it. If the Clippers were in on the deal, then I'd expect them to be punished severely. If not, then maybe nothing or a slap on the wrist.

Here's my question: why would Aspiration agree to pay Kawhi a $28 million no-show endorsement deal if nobody at the Clippers asked them to do it. What's in it for them? Just enhancing the value of their sponsorship deal for the Clippers by virtue of Kawhi being a member of the team? Maybe, but it seems a little tenuous to me.

The owner wrote the check. It's hard to imagine a scenario where the Clippers aren't in on it.

[sco]

I think it depends on how the investigation shakes out. If it's what Mark Cuban thinks it was - Uncle Dennis doing a shady deal without the Clippers knowing - then it would seem like Kawhi may bear the brunt of it. If the Clippers were in on the deal, then I'd expect them to be punished severely. If not, then maybe nothing or a slap on the wrist.

Here's my question: why would Aspiration agree to pay Kawhi a $28 million no-show endorsement deal if nobody at the Clippers asked them to do it. What's in it for them? Just enhancing the value of their sponsorship deal for the Clippers by virtue of Kawhi being a member of the team? Maybe, but it seems a little tenuous to me.

yeah, that's why I don't put this on Kawhi. Shady, sure, and given the TO allegations, maybe he pushed for it. But unless it is clear that the player conspired to circumvent the cap, as opposed to benefited (while viewing it as a more typical deal with a sponsor)"....

It's the Ballmer money to the company that covers (and then some) the payment to Leonard (plus it being no show) that makes this stink to high heaven.

Though that thing about the NBA recouping /"disgorgement of value received in connection" does seem to suggest that they could basically dock him any of the millions that were actually paid to him by the company.

IMO, the one thing that is clear is that Kawhi was in on it. He signed a contract that entitled him to $28 million, the contract says he does not have to do anything in exchange for the money, and he then in fact did nothing in exchange for the money. He's not going to skate by saying "oh, I don't know, Uncle Dennis did that deal and I just signed it without reading it." At a minimum, he knew he was being paid a fortune in exchange for bupkus.

I assume Kawhi's defense is going to be something like "I intended to perform services, but then the company was in so much turmoil that they had bigger fish to fry and just never asked me to do it."

That would make little sense to me, though. The company was already paying the money. Might as well get something out of it. And having a famous athlete cut some promos for you probably becomes more important, not less, when times are tough, if the money is already out the door.

You raise a good question!

So would any of this be an issue if Kawhi actually did something nominal like show up for an awareness event? Was the issue really that the money was effectively given and not nominally earned? If so, it would seem ridiculously easy to circumvent the rule by just making sure that the payout isn't so blatantly for doing nothing.

I'm also not sure that the Clippers wouldn't be benefitted if they could get out of Kawhi's contract. That dude is almost in the Embiid level of "good on paper, but paper don't score points".

[jnrjr79]

I think it depends on how the investigation shakes out. If it's what Mark Cuban thinks it was - Uncle Dennis doing a shady deal without the Clippers knowing - then it would seem like Kawhi may bear the brunt of it. If the Clippers were in on the deal, then I'd expect them to be punished severely. If not, then maybe nothing or a slap on the wrist.

Here's my question: why would Aspiration agree to pay Kawhi a $28 million no-show endorsement deal if nobody at the Clippers asked them to do it. What's in it for them? Just enhancing the value of their sponsorship deal for the Clippers by virtue of Kawhi being a member of the team? Maybe, but it seems a little tenuous to me.

The owner wrote the check. It's hard to imagine a scenario where the Clippers aren't in on it.

He wrote *a* check, but not *the* check. I suspect they're just laundering the money through Aspiration, effectively, but the Clippers did not directly pay the $28 million. I'm sure Clippers will try to simply say this was a separate, unrelated investment. They were probably smart enough not to write anything down, but I'm surprised all the time with how often that ends up not being the case, so maybe the NBA will be able to find something.

One small issue here is the NBA can force the Clippers and Ballmer to give them anything they want in the investigation, but won't have any recourse against Aspiration, so if those folks don't come forward non-anonymously, it may be difficult to prove anything via testimony.

[jnrjr79]

yeah, that's why I don't put this on Kawhi. Shady, sure, and given the TO allegations, maybe he pushed for it. But unless it is clear that the player conspired to circumvent the cap, as opposed to benefited (while viewing it as a more typical deal with a sponsor)"....

It's the Ballmer money to the company that covers (and then some) the payment to Leonard (plus it being no show) that makes this stink to high heaven.

Though that thing about the NBA recouping /"disgorgement of value received in connection" does seem to suggest that they could basically dock him any of the millions that were actually paid to him by the company.

IMO, the one thing that is clear is that Kawhi was in on it. He signed a contract that entitled him to $28 million, the contract says he does not have to do anything in exchange for the money, and he then in fact did nothing in exchange for the money. He's not going to skate by saying "oh, I don't know, Uncle Dennis did that deal and I just signed it without reading it." At a minimum, he knew he was being paid a fortune in exchange for bupkus.

I assume Kawhi's defense is going to be something like "I intended to perform services, but then the company was in so much turmoil that they had bigger fish to fry and just never asked me to do it."

That would make little sense to me, though. The company was already paying the money. Might as well get something out of it. And having a famous athlete cut some promos for you probably becomes more important, not less, when times are tough, if the money is already out the door.

You raise a good question!

So would any of this be an issue if Kawhi actually did something nominal like show up for an awareness event? Was the issue really that the money was effectively given and not nominally earned? If so, it would seem ridiculously easy to circumvent the rule by just making sure that the payout isn't so blatantly for doing nothing.

I'm also not sure that the Clippers wouldn't be benefitted if they could get out of Kawhi's contract. That dude is almost in the Embiid level of "good on paper, but paper don't score points".

It would still be an issue because the CBA requires the sponsorship deal to be fair market value for the services. So just cutting one TikTok video or liking some social media posts wouldn't get you $28 million. But doing something would at least be in the right direction of trying to prove it's above-board, so I think this just makes it much more egregious.

I agree the question of voiding the contract, at this point, maybe doesn't punish the Clippers at all, so that in and of itself wouldn't be an appropriate punishment if the Clippers were in on it.

[Evil_Headband]

It would still be an issue because the CBA requires the sponsorship deal to be fair market value for the services. So just cutting one TikTok video or liking some social media posts wouldn't get you $28 million. But doing something would at least be in the right direction of trying to prove it's above-board, so I think this just makes it much more egregious.
.

This is interesting to think through. The Clippers aren't supposed to be involved in these deals, they can only make introductions between the player and sponsor. For the sake of argument, let's say the Clippers are innocent. How could they be held responsible for something they aren't supposed to be involved with? It would seem to be more of a potential Kawhi problem than a Clipper problem. Of course, if it were to tie back to the Clippers, that's a different story.

[jnrjr79]

It would still be an issue because the CBA requires the sponsorship deal to be fair market value for the services. So just cutting one TikTok video or liking some social media posts wouldn't get you $28 million. But doing something would at least be in the right direction of trying to prove it's above-board, so I think this just makes it much more egregious.
.

This is interesting to think through. The Clippers aren't supposed to be involved in these deals, they can only make introductions between the player and sponsor. For the sake of argument, let's say the Clippers are innocent. How could they be held responsible for something they aren't supposed to be involved with? It would seem to be more of a potential Kawhi problem than a Clipper problem. Of course, if it were to tie back to the Clippers, that's a different story.

Right - it is theoretically possible that this is cap circumvention without the Clippers' involvement. (I don't really know how that would happen b/c why would Aspiration want to pay the $28 million for nothing absent it being a quid pro quo for the Ballmer investment, but just for the sake of argument...). If the Clippers weren't involved, but Aspiration was paying Kawshi to sign with the Clippers, then I'd agree that the punishment may be limited to Kawhi in the form of voiding his contract. That theoretically could also punish the Clippers, but as noted in the thread, given Kawhi's big salary and limited availability, how much would they care?

[dougthonus]

He wrote *a* check, but not *the* check. I suspect they're just laundering the money through Aspiration, effectively, but the Clippers did not directly pay the $28 million. I'm sure Clippers will try to simply say this was a separate, unrelated investment. They were probably smart enough not to write anything down, but I'm surprised all the time with how often that ends up not being the case, so maybe the NBA will be able to find something.

One small issue here is the NBA can force the Clippers and Ballmer to give them anything they want in the investigation, but won't have any recourse against Aspiration, so if those folks don't come forward non-anonymously, it may be difficult to prove anything via testimony.

In a legal scenario, this would be totally cut and dry IMO.

In a CBA discussion, who knows is laundering cap money illegal if you jump through one hoop and click your heels? If it is, the NBA has a lot of problems. At the same time, feels like this type of stuff will be really hard to enforce if just done a little smarter.

[jnrjr79]

He wrote *a* check, but not *the* check. I suspect they're just laundering the money through Aspiration, effectively, but the Clippers did not directly pay the $28 million. I'm sure Clippers will try to simply say this was a separate, unrelated investment. They were probably smart enough not to write anything down, but I'm surprised all the time with how often that ends up not being the case, so maybe the NBA will be able to find something.

One small issue here is the NBA can force the Clippers and Ballmer to give them anything they want in the investigation, but won't have any recourse against Aspiration, so if those folks don't come forward non-anonymously, it may be difficult to prove anything via testimony.

In a legal scenario, this would be totally cut and dry IMO.

I think it's even easier under the CBA than it would be in a legal case, but that's if the NBA wants to make it a deal. You have that provision the says that if a contract is not FMV it's presumed to be cap circumvention. This puts the burden on Kawhi/the Clippers to prove otherwise. That looks like a challenge here.

In a CBA discussion, who knows is laundering cap money illegal if you jump through one hoop and click your heels? If it is, the NBA has a lot of problems. At the same time, feels like this type of stuff will be really hard to enforce if just done a little smarter.

Heck, it only gets discovered here because of the BK filing. So even doing it rather stupidly may be fine most of the time, in terms of "will I get away with this?"

If you really wanted to root this out, you'd need the league auditing all player sponsorship contracts, I'd think. You might want to vet the players' tax returns as well. I'm not sure the NBA would want to do that and I'm quite sure what the union would think.

In this instance, I do think the NBA may take a hard position because 1) other owners are likely pissed and 2) this changed actual basketball outcomes. Of course, #1 is less true if all NBA teams are doing this like some speculate, but I don't buy in to that speculation (at least not to this degree).

[dougthonus]

In this instance, I do think the NBA may take a hard position because 1) other owners are likely pissed and 2) this changed actual basketball outcomes. Of course, #1 is less true if all NBA teams are doing this like some speculate, but I don't buy in to that speculation (at least not to this degree).

I doubt this is widespread only because it only makes sense to pay a guy through cap circumvention if you can't pay him normally which should mean you see weird contracts that don't make sense. I don't see lots of those.

[jnrjr79]

In this instance, I do think the NBA may take a hard position because 1) other owners are likely pissed and 2) this changed actual basketball outcomes. Of course, #1 is less true if all NBA teams are doing this like some speculate, but I don't buy in to that speculation (at least not to this degree).

I doubt this is widespread only because it only makes sense to pay a guy through cap circumvention if you can't pay him normally which should mean you see weird contracts that don't make sense. I don't see lots of those.

Yeah, here's it's the case where the problem is "this guy is worth more than the max," but in most instances you'd use it in connection with smaller contracts.

[Evil_Headband]

It would still be an issue because the CBA requires the sponsorship deal to be fair market value for the services. So just cutting one TikTok video or liking some social media posts wouldn't get you $28 million. But doing something would at least be in the right direction of trying to prove it's above-board, so I think this just makes it much more egregious.
.

This is interesting to think through. The Clippers aren't supposed to be involved in these deals, they can only make introductions between the player and sponsor. For the sake of argument, let's say the Clippers are innocent. How could they be held responsible for something they aren't supposed to be involved with? It would seem to be more of a potential Kawhi problem than a Clipper problem. Of course, if it were to tie back to the Clippers, that's a different story.

Right - it is theoretically possible that this is cap circumvention without the Clippers' involvement. (I don't really know how that would happen b/c why would Aspiration want to pay the $28 million for nothing absent it being a quid pro quo for the Ballmer investment, but just for the sake of argument...). If the Clippers weren't involved, but Aspiration was paying Kawshi to sign with the Clippers, then I'd agree that the punishment may be limited to Kawhi in the form of voiding his contract. That theoretically could also punish the Clippers, but as noted in the thread, given Kawhi's big salary and limited availability, how much would they care?

For full disclosure, I am the one person on the Internet who believes that Ballmer is likely innocent. I reserve the right to change my mind as more evidence is released, but this is where I am at as of now.

What I think is most likely is that Aspiration originally planned for Kawhi to do stuff. I also believe they paid him an above market deal due to financial carelessness. We know next to nothing about what happened between November 2021 when Aspiration emailed the Clippers for an introduction to Kawhi and the completed contract in, I believe, April 2022. My guess is Kawhi through Uncle Dennis negotiated the deliverables and the "beliefs" clause. Aspiration should have defined "Beliefs" but failed to do so. It has also been reported that the Marketing folks at Aspiration didn't think Kawhi was a good spokesman for the company. They likely didn't push him to do stuff or maybe they tried and then gave up. I think the Kawhi signing was Sanberg's idea.

[jnrjr79]

This is interesting to think through. The Clippers aren't supposed to be involved in these deals, they can only make introductions between the player and sponsor. For the sake of argument, let's say the Clippers are innocent. How could they be held responsible for something they aren't supposed to be involved with? It would seem to be more of a potential Kawhi problem than a Clipper problem. Of course, if it were to tie back to the Clippers, that's a different story.

Right - it is theoretically possible that this is cap circumvention without the Clippers' involvement. (I don't really know how that would happen b/c why would Aspiration want to pay the $28 million for nothing absent it being a quid pro quo for the Ballmer investment, but just for the sake of argument...). If the Clippers weren't involved, but Aspiration was paying Kawshi to sign with the Clippers, then I'd agree that the punishment may be limited to Kawhi in the form of voiding his contract. That theoretically could also punish the Clippers, but as noted in the thread, given Kawhi's big salary and limited availability, how much would they care?

For full disclosure, I am the one person on the Internet who believes that Ballmer is likely innocent. I reserve the right to change my mind as more evidence is released, but this is where I am at as of now.

What I think is most likely is that Aspiration originally planned for Kawhi to do stuff. I also believe they paid him an above market deal due to financial carelessness. We know next to nothing about what happened between November 2021 when Aspiration emailed the Clippers for an introduction to Kawhi and the completed contract in, I believe, April 2022. My guess is Kawhi through Uncle Dennis negotiated the deliverables and the "beliefs" clause. Aspiration should have defined "Beliefs" but failed to do so. It has also been reported that the Marketing folks at Aspiration didn't think Kawhi was a good spokesman for the company. They likely didn't push him to do stuff or maybe they tried and then gave up. I think the Kawhi signing was Sanberg's idea.

I'd need to look at the timeline again to be sure, but I suppose it's possible that Aspiration wasn't thinking about cap circumvention, exactly, but "if we give Kawhi a $28 million deal, then Ballmer will invest $50 million in the company." That secures both the Ballmer investment and allows them to go trade on Ballmer's name to get other investors.

But in that instance, it would seem Ballmer would be doing it to make sure Kawhi got paid and was happy to be a clipper (aka cap circumvention).

I don't really think it's possible that they signed him to a $28 million deal and thought he was not charismatic or whatever and therefore didn't have him do stuff. It's not that they didn't bother to have him cut actual promos (though that matters), but they could have at least used his likeness! Did they think he was so toxic that they didn't even want to slap his name or picture on stuff? That seems unlikely.

If anything, I think it's more likely Aspiration was fine with the no-show nature of the contract because they never wanted Kawhi to do anything publicly b/c it would just draw attention to the existence of the sponsorship and increase the chance the numbers would get out and people would discover the cap circumvention.