Lawyer's Perspective on the Kawhi/Clippers/Aspiration Case

[Dino-Might]

As a practicing lawyer in labor arbitration, I thought I could provide some insight on the legal process behind the NBA's investigation and potential decision.

We are dealing with internal rules under both the NBA Constitution (which governs relationships between teams and the League) as well as the CBA (which governs relationships between the NBA and the players union) - we are not talking about a violation of US laws (although there is a separate fraud investigation by government agencies).

Under the NBA Constitution, Adam Silver as commissioner, has broad powers to enforce the NBA's rules and agreements and his decisions are "final, binding, conclusive and unappealable" (Article 24(h) of Constitution). Except for specified exceptions, there is no appeal process for Teams to fight the commissioner's decisions. Courts can only review such internal arbitration decisions on very narrow and limited grounds (such as unfair process, corruption, etc.)

Further, any NBA team's violation of the CBA relating to salary cap are incorporated under Article 3.01 of the Constitution, which says that penalties issued to teams are at the discretion of the commissioner. This means if Adam Silver finds a violation and issue penalties to the Clippers, they will have very little recourse to fight it.

Section 13.1 of the CBA SPECIFICALLY addresses the salary cap circumvention alleged with Kawhi. It says:

1) If a team arranges for a sponsor to pay a player money for playing basketball, even if it is made to look like it is for other services on paper, that is a circumvention.
2) The league can infer such an arrangement if the sponsor pays MORE than fair market value PLUS the team pays below fair market value for the player's official contract.

While Kawhi got the max, so his situation would likely not fall within 2), section 13.2 goes on to say that a salary cap circumvention can be
may be proven by "direct or circumstantial evidence, including, but not limited to, evidence that a Player Contract or any term or provision thereof cannot rationally be explained in the absence of conduct violative of Section 2(a) or 2(b)."

What will happen next

Adam Silver has hired an external law firm to investigate the allegations. That firm will provide Silver with an investigation report (I will note that given the NBA is paying the legal bill, these type of investigations are not always completely neutral and in borderline cases, the firm will tend to reach the conclusion the customer wants).

The investigation will likely be based on a civil standard of proof, not a criminal standard, which is on a balance of probability; does the evidence establish that it is more likely than not (more than 50% chance) that there was a violation. This is the standard that would apply to any arbitration of the dispute afterwards.

I know some journalists have said the NBA need a smoking gun. This is absolutely false. They do not need direct evidence that Ballmer told Aspiration to pay Kawhi or that he agreed with Kawhi to be paid extra through Aspiration. All of the surrounding facts, including the fact that Ballmer invested $50 million, that Aspiration agreed to pay Kawhi $28 million plus $20 million in stocks to do nothing, may be enough to lead to the inference that this was to circumvent the cap. At the very least, there needs to be a good explanation of WHY Aspiration made the deal with Kawhi and there does not seem to be any (That being said, if Silver were so inclined, it would be easier without a smoking gun for him to say there was not sufficient evidence and close the file).

Based on the law firm's investigation, Silver may then find a violation and issue penalties to the Clippers and Kawhi. Any penalty to the team is unappealable and it would be very difficult for Ballmer, even with his money, to get it overturned. However, the same is not true of Kawhi and the players association. The union would likely grieve the penalty and the issue would be decided by what the CBA calls a "system arbitrator". In this forum, Kawhi would have the opportunity to fight both the findings of a violation as well as the severity of any penalty imposed on him.

TLDR; Ballmer F'd.

[clippertown]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

[Curmudgeon]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap.

For the umpteenth time, no he does not.
3/4ths of the other owners need to think that Ballmer was circumventing the cap. They are calling the shots and their decision is unreviewable in a court. Silver doesn't have to establish anything. He will do what the other owners want.

[Texas Chuck]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

Oh I get as a fan wanting this to be nothing. I wanted Pants DJ and Earl K to be nothing instead there being rampant sexual harassment going on in the Mavs org. It was beyond embarrassing.

But you don't really believe there are a bunch (any?) of other players who got $50M in endorsement money for doing nothing(yes I know he didn't end up with all that in the end, but that was the agreement). Nobody could believe this. If a player got a small endorsement deal and never did anything? Sure maybe, but nothing close to this scope.

And its hilarious that just take Ballmer at his word when he says I just thought this was an amazing investment and its a pure coincidence my star player got the same amount I invested in an endorsement deal that required him to make no endorsement.

Now maybe there turns out there is an innocent explanation. But its not everyone is doing this and Ballmer is a bastion of honesty and straightforwardness lol.

[clippertown]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap.

For the umpteenth time, no he does not.
3/4ths of the other owners need to think that Ballmer was circumventing the cap. They are calling the shots and their decision is unreviewable in a court. Silver doesn't have to establish anything. He will do what the other owners want.

Ok, so its the owners who make the final decision. Makes no difference. Silver is still spearheading the investigation.

Do you think none of these owners have even completed a hush-hush deal to incentivize a player to sign? I think many of us would be very suprised to actually see some of these signed contracts and get a sneak peek into the negotiations. Kawhi is not the only entitled star in the NBA.

What goes for Ballmer will go for the rest of them and I think they are all pretty aware of that.

[Kordic27]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

Just on your last point there, one issue going against the Clippers is that Kawhi's reputation seems to be right in line with the findings. They won't be destroying his reputation, they'll be adding to it.

[og15]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap.

For the umpteenth time, no he does not.
3/4ths of the other owners need to think that Ballmer was circumventing the cap. They are calling the shots and their decision is unreviewable in a court. Silver doesn't have to establish anything. He will do what the other owners want.

Ok, so its the owners who make the final decision. Makes no difference. Silver is still spearheading the investigation.

Do you think none of these owners have even completed a hush-hush deal to incentivize a player to sign? I think many of us would be very suprised to actually see some of these signed contracts and get a sneak peek into the negotiations. Kawhi is not the only entitled star in the NBA.

What goes for Ballmer will go for the rest of them and I think they are all pretty aware of that.

You're assuming that others are being discovered. Sure, we all know that everything isn't PG in negotiations. Even something as simple as how deals with free agents were announced right at the start of free agency even though teams and players weren't supposed to be talking yet.

There's a difference between theoretical and something that is out. The Clippers situation is not theory, it was discovered, it is out.

[clippertown]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

Oh I get as a fan wanting this to be nothing. I wanted Pants DJ and Earl K to be nothing instead there being rampant sexual harassment going on in the Mavs org. It was beyond embarrassing.

But you don't really believe there are a bunch (any?) of other players who got $50M in endorsement money for doing nothing(yes I know he didn't end up with all that in the end, but that was the agreement). Nobody could believe this. If a player got a small endorsement deal and never did anything? Sure maybe, but nothing close to this scope.

And its hilarious that just take Ballmer at his word when he says I just thought this was an amazing investment and its a pure coincidence my star player got the same amount I invested in an endorsement deal that required him to make no endorsement.

Now maybe there turns out there is an innocent explanation. But its not everyone is doing this and Ballmer is a bastion of honesty and straightforwardness lol.

Its not about whether all of the owners are doing this, but if any of them have ever done this in the past. The number of $50M is irrelavant. It could be for $500 and the cap is still circumvented. I doubt the penalty will scale with the scope - an infraction is an infraction.

In the past 20 years, only Ballmer and Kawhi have a secret deal and nobody else cared enough to even try - not buying it.

[ATLTimekeeper]

Ballmer has to successfully argue that he was the victim of fraud that directly benefitted him. Good luck with that.

I still don't think the league wants to punish him. The immediate response from their propaganda arm was to protect Ballmer. If they chose this law firm to get a response they wanted, I would still lean to them finding nothing that would warrant a significant penalty a la Joe Smith. The other owners can huff and puff and get rid of Silver, but I think Silver would just argue that the Clippers have won jack **** since Ballmer took over and teams that aren't throwing money around carelessly are doing just fine. Are they going to turn away their biggest whale?

[clippertown]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

Just on your last point there, one issue going against the Clippers is that Kawhi's reputation seems to be right in line with the findings. They won't be destroying his reputation, they'll be adding to it.

LeBron is notoriously tough to sign - should the NBA start looking at his deal? Kawhi's reputation is for privacy at all costs. The idea that his legal team did not cover their tracks is just not plausible. Kawhi is not seen as greedy, he is seen as private. His greed is limited by the fact that he always gets the max allowable in every contract (except for the last one). This was not like the Joe Smith sweetheart deal. Kawhi got the money from Ballmer that he deserved and nobody can prove otherwise, at least not yet.

[clippertown]

For the umpteenth time, no he does not.
3/4ths of the other owners need to think that Ballmer was circumventing the cap. They are calling the shots and their decision is unreviewable in a court. Silver doesn't have to establish anything. He will do what the other owners want.

Ok, so its the owners who make the final decision. Makes no difference. Silver is still spearheading the investigation.

Do you think none of these owners have even completed a hush-hush deal to incentivize a player to sign? I think many of us would be very suprised to actually see some of these signed contracts and get a sneak peek into the negotiations. Kawhi is not the only entitled star in the NBA.

What goes for Ballmer will go for the rest of them and I think they are all pretty aware of that.

You're assuming that others are being discovered. Sure, we all know that everything isn't PG in negotiations. Even something as simple as how deals with free agents were announced right at the start of free agency even though teams and players weren't supposed to be talking yet.

There's a difference between theoretical and something that is out. The Clippers situation is not theory, it was discovered, it is out.

It was discovered 5 years too late. It was also discovered that the deal was between Aspiration and Kawhi and not between the Clippers and Kawhi.

What goes for one goes for all in the NBA ownership class. Very few of the owners wants to open up this closet, especially 2/3 of them.

[The Master]

Amazing job, OP.

The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

The main problem of what Kawhi / Aspiration / Clippers allegedly did isn't even per se a fake endorsement deal financed by Ballmer - but the extent of this fake endorsement deal. 28 mil $ in payments and 20 mil $ in stocks promised for four years is literally an additional year of max contract not included in luxury tax, or a deal equivalent to the shoe deal for a legit star. In CBA, one of the conditions of salary cap circumvention happening is external payment over player's market value: and we know that Kawhi was paid more than 4 times than what DiCaprio, Drake, Cindy Crawford or Robert Downey Jr received COMBINED for an actual promotion. If this is true, and Pablo Torre was literally saying some time ago that he has documents proving it, IT WILL BE SO EASY TO PROVE that Kawhi was paid 20-30 times more than his actual market value, just based on very basic Aspiration's financial records, from the Clippers' sponsor financed by the Clippers' owner. And this is something the NBA probably already knows at this stage of their investigation.

Now, it's possible that such outrageous things happened in the past and it will soften reaction from some owners? Sure, but to pay a 50 mil $ deal under the table (or promise to pay, being more precise) from the owner's own pocket, that much over player's market value in this instance, has to be pretty extreme. And to be honest, it looks like something beyond reach of 2/3 organizations in the league. Anthony Edwards recently signed a multi-year 50 mil $ shoe deal extension with Adidas, for comparison. Hard to imagine Timberwolves orchestrating such gigantic under the table deal in Minnesota with their ownership situation.

[ReggiesKnicks]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

Actually, this isn't a court of law. Silvier doesn't need to establish facts and prove he is guilty.

[Dino-Might]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

No. Silver does not need to establish "intent". This is not a criminal case that requires a mens rea component. It is enough that given all of the surrounding circumstantial evidence it is more probable than not that the $50 million was to divert money to Kawhi for playing for the Clippers. It's as simple as that.

You're probably right that other teams have done something similar, but only the Clippers have been caught for using the sponsorship angle. The Wolves were also caught - for a slightly different scenario of agreeing to take small one year deals for a future payoff - and hey were heavily penalized. I mean the only reason the Clippers got caught was because Aspiration went bankrupt and their financial records were made public. Otherwise, no would be the wiser.

But if Silver does find a violation, based on the Wolves example, I think its wishful thinking on your part that the penalty will be small.

[druggas]

Silver would have to establish that Ballmer knowingly did what he did with the intention of circumventing the salary cap. We do not know that this exists. Ballmer says he was defrauded. Aspiration was not owned by Ballmer and had many other sponsor contracts. This is not clear cut.

Even if Silver does deem an infraction, the penalty would not have significant teeth. The idea that in the last 20 years, the only NBA athlete who has received an endorsement deal and did not do anything material to help the company out was limited to Kawhi Leonard is just bonkers. The NBA will not do a review on every endorsement deal signed by every player, so they will not want to shine a light on this one.

I get that Kawhi is probably guilty, but there is little chance that the NBA will embarrass themselves by destroying a very well respected FMVP's reputation and severely handicapping a popular team with a very rich owner who is investing billions into the NBA brand, especially when you consider the amount of time that has already passed and the fact that the NBA did nothing in all these years to resolve it. This is a nothing-burger.

Just on your last point there, one issue going against the Clippers is that Kawhi's reputation seems to be right in line with the findings. They won't be destroying his reputation, they'll be adding to it.

LeBron is notoriously tough to sign - should the NBA start looking at his deal? Kawhi's reputation is for privacy at all costs. The idea that his legal team did not cover their tracks is just not plausible. Kawhi is not seen as greedy, he is seen as private. His greed is limited by the fact that he always gets the max allowable in every contract (except for the last one). This was not like the Joe Smith sweetheart deal. Kawhi got the money from Ballmer that he deserved and nobody can prove otherwise, at least not yet.

"I have to have Paul George or I'm not signing." "I have to play only in Los Angeles."
Are you serious?

[Lockdown504090]

There are too many alternate explanations. Ive read the same as OP and have a similar read, but I think its important to understand what Aspiration is accused of doing outside of the clippers dealing. They defrauded investors over 300 million dollars.

They told investors that they had clients and revenue, and the revenue really came from entities controlled by the CEO, sandberg.This was 2021. That means they needed a really big fish to fix the books.I can see a situation where they quietly approached leonard on a deal that was too good to be true to get ballmer to keep their company afloat when he found out they had kawhi signed and how it would look. They also offerred ballmer a crazy deal for the naming rights as to the new arena and a sponsorship deal. he gave them 50 and got back 300. could that 300 be to show aspiration was legit? idk, but theres just so many different ways to spin this.

Not to say that whats being reported isnt the most likely story, I just think this is much more challenging from a punishment perspective than the average person realizes.

[SkyBill40]

I've read in another place that the evidence doesn't need to be concrete: Circumstantial evidence is enough for Silver to put down the hammer. There's different scenarios in which the Clippers and Ballmer get penalized, from something relatively light to scorched earth like the T-Wolves got in the Smith situation. Hard to say as of yet since all we can do is speculate, but I'm guessing it falls somewhere in the middle.

Silver is no Stern and that's quite clear. That's likely to the benefit of the Clippers and Ballmer, but what the end game is remains to be seen. Either way, this is a damning situation that will put some tarnish on what's been a pretty clean ownership tenure by Ballmer.

[clippertown]

In addition for all those who will attack me for speaking the truth:

https://www.espn.com/nba/story/_/id/46161800/clippers-ballmer-details-affiliation-aspiration-wake-kawhi-leonard-report

1. Ballmer states that the deal with Aspiration came 3 months after the deal to sign Kawhi. Meaning Kawhi signed the deal without that guarentee.
2. Aspiration has over $250M in bad debts upon bankruptcy. Kawhi was just one small component of this.
3. Aspiration did the deal in the hopes of getting naming rights to the arena. Signing Kawhi helped this failed endeavour.
4. Ballmer was just a 3% owner in Aspiration. Nowhere near having control of the company or even having significant influence.
5. The league already investigated the deal in 2019 and came up empty. They did this twice - one for a private plane and home promise and another for a $2.5M payment from Jerry West to secure the signing. The latter has a lawsuit filed that was ultimately dismissed without penalty.

I get that everybody here loves to pile on the Clippers, but this will end up going nowhere.

[clippertown]

Just on your last point there, one issue going against the Clippers is that Kawhi's reputation seems to be right in line with the findings. They won't be destroying his reputation, they'll be adding to it.

LeBron is notoriously tough to sign - should the NBA start looking at his deal? Kawhi's reputation is for privacy at all costs. The idea that his legal team did not cover their tracks is just not plausible. Kawhi is not seen as greedy, he is seen as private. His greed is limited by the fact that he always gets the max allowable in every contract (except for the last one). This was not like the Joe Smith sweetheart deal. Kawhi got the money from Ballmer that he deserved and nobody can prove otherwise, at least not yet.

"I have to have Paul George or I'm not signing." "I have to play only in Los Angeles."
Are you serious?

I said greedy, not intelligent. Greed is based on money. Asking for a better team in order to sign is just smart decision making.

[SNPA]

Silver has no choice, nor do the other owners. They have to solve this issue. If you allow the transfer of funds from owner to X to player then any cap circumvention rules and basically large parts of the CBA breakdown. The rules would be meaningless.

All any owner would need was to create a BS “plausible” rationale incase they get caught. Hell, they wouldn’t even need that since Ballmer is just saying he didn’t know. Either there are going to be cap rules or there aren’t, this is the test. Funds cannot go owner to X to player, that’s just create a cap circumvention lane that everyone will drive down.