Some interesting tidbits from the CBA on circumvention, starting on page 339:
https://imgix.cosmicjs.com/25da5eb0-15eb-11ee-b5b3-fbd321202bdf-Final-2023-NBA-Collective-Bargaining-Agreement-6-28-23.pdfIt shall constitute a violation of Section 1(a) above for a Team (or
Team Affiliate) to enter into an agreement or understanding with any
sponsor or business partner or third party under which such sponsor,
business partner, or third party pays or agrees to pay compensation for
basketball services (even if such compensation is ostensibly designated as
being for non-basketball services) to a player under Contract to the Team.
Such an agreement with a sponsor or business partner or third party may be
inferred where: (i) such compensation from the sponsor or business partner
or third party is substantially in excess of the fair market value of any services
to be rendered by the player for such sponsor or business partner or third
party; and (ii) the Compensation in the Player Contract between the player
and the Team is substantially below the fair market value of such Contract.
Section 2. No Unauthorized Agreements.
(a) At no time shall there be any agreements or transactions of any kind
(whether disclosed or undisclosed to the NBA), express or implied, oral or
written, or promises, undertakings, representations, commitments,
inducements, assurances of intent, or understandings of any kind (whether
disclosed or undisclosed to the NBA), between a player (or any person or
entity controlled by, related to, or acting with authority on behalf of, such
player) and any Team (or Team Affiliate):
***
(ii) except as permitted by this Agreement or as set forth in a
Uniform Player Contract (provided that the Team has not
intentionally delayed submitting such Uniform Player
Contract for approval by the NBA), involving compensation
or consideration of any kind or anything else of value, to be
paid, furnished, or made available by, to, or for the benefit
of the player, or any person or entity controlled by, related
to, or acting with authority on behalf of the player; or
(iii) except as permitted by this Agreement, involving an
investment or business opportunity to be furnished or made
available by, to, or for the benefit of the player, or any person
or entity controlled by, related to, or acting with authority on
behalf of the player.
(d) A violation of Section 2(a) or 2(b) above 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).
Section 3. Penalties.
(a) Upon a finding of a violation of Section 1 above by the System
Arbitrator, but only following the conclusion of any appeal to the Appeals
Panel, the Commissioner shall be authorized to:
(i) impose a fine of up to $4,500,000 (fifty percent (50%) of
which shall be payable to the NBA, and fifty percent (50%)
of which shall be payable to the NBPA-Selected Charitable
Organization (as defined in Article VI, Section 6(a))) on any
342 Article XIII
Team found to have committed such violation for the first
time;
(ii) impose a fine of up to $5,500,000 (fifty percent (50%) of
which shall be payable to the NBA, and fifty percent (50%)
of which shall be payable to the NBPA-Selected Charitable
Organization) on any Team found to have committed such
violation for at least the second time;
(iii) direct the forfeiture of one First Round Draft Pick;
(iv) void any Player Contract, or any Renegotiation, Extension,
or amendment of a Player Contract, between any player and
any Team when both the player (or any person or entity
acting with authority on behalf of such player) and the Team
(or Team Affiliate) are found to have committed such
violation; and/or
(v) void any other transaction or agreement found to have
violated Section 1 above.
(b) Upon a finding of a violation of Section 2 above by the System
Arbitrator, but only following the conclusion of any appeal to the Appeals
Panel, the Commissioner shall be authorized to:
(i) impose a fine of up to $7,500,000 on any Team found to
have committed such violation (fifty percent (50%) of which
shall be payable to the NBA, and fifty percent (50%) of
which shall be payable to the NBPA-Selected Charitable
Organization);
(ii) direct the forfeiture of draft picks;
(iii) when both the player (or any person or entity acting with
authority on behalf of such player) and the Team (or Team
Affiliate) are found to have committed such violation,
(A) void any Player Contract, or any Renegotiation,
Extension, or amendment of a Player Contract, between
such player and such Team, (B) impose a fine of up to
$350,000, on any player (fifty percent (50%) of which shall
be payable to the NBA, and fifty percent (50%) of which
Article XIII 343
shall be payable to the NBPA-Selected Charitable
Organization), and/or (C) prohibit any future Player
Contract, or any Renegotiation, Extension, or amendment
of a Player Contract, between such player and such Team;
(iv) suspend for up to one (1) year any Team personnel found to
have willfully engaged in such violation; and/or
(v) void any transaction or agreement found to have violated
Section 2 above and direct the disgorgement by the player of
anything of value received in connection with such
transaction or agreement (except Compensation received for
services already performed pursuant to a Player Contract),
unless the player establishes by a preponderance of the
evidence that he was unaware of the violation.
So, a couple of quick takeaways: you get in hot water when you're having third parties pay players because you want them to be paid for playing basketball for you, rather than that third party legitimately paying a player for services. You can infer the purpose by looking at whether the player was paid fair market value for the thing they were doing (in this case, a sponsorship). This will be exceedingly easy to prove in this case, I would think, given Kawhi was to be paid $28 million and literally never did anything. I'd think the only way around that would be if the explanation was the company did legitimately want him to did endorsements, but went bankrupt/fell apart before seeing it through. The thing here, as I understand it, would not support that explanation.
The penalties for Section 1 violations are less severe than Section 2. It seems clear to me that this involves potential Section 1 violations. For Section 2, I wonder if subpart (ii) has been triggered. That would open up the potential forfeiture of multiple picks.
There's more at the link - I felt like I was already quoting a lot of material and didn't want the post to be unreadable. (I was too lazy, though, to fix the formatting after pasting).
