Semi-OT: Pablo Torre Investigation into Kawhie/Clippers

[jnrjr79]

List of Aspiration investors other than Ballmer:
- Bill Lee (Tesla)
- Dan Rosensweig (Yahoo)
- Joe Lonsdale (Palantir)
- Oaktree Capital Management (manages $190B)
- Leo Di Caprio
- Robert Downey Jr
- Drake

Pretty impressive con job.

Or it isn't a con job, and all of them are like Ballmer and this is just a shell company created by a bunch of rich people to do nefarious things, and we know why Ballmer was in on it, but others also had a need to move money around in some weird way.

One thing noted in the follow-up Torre pod with Mark Cuban is that Ballmer was the first really big name to invest, and Aspiration leveraged his investment (b/c not only is he rich and famous, he has a super successful track record in investing post-Microsoft) to recruit other big names.

The company also just fraudulently claimed they had investment commitments from a bunch of people they didn’t actually have signed up.

[jnrjr79]

The Torres interview with Mark Cuban was pretty interesting with Cuban's view as an owner.

- Ballmer did try a side endorsement deal with Deandre Jordan and Cuban knew the little details because it involved the Mavs. Ballmer was fined $250k and told not to do it again by NBA general counsel. This seems remarkably light? I wonder how seriously the NBA actually takes cap circumvention.

- Cuban doesn't think the Deandre Jordan thing is happening here, he just thinks Ballmer got scammed. Says its not that uncommon and it's happened to him. At their level you trust your people, if your people say this group is legit you just trust it. You can't dig into the books of every company you invest in, there's too many of them.

- Cuban said money could be routed to Mavs player through companies he's dealt with and he wouldn't know it, he doesn't know the details of every company he's invested in

- He questions why someone as rich as Ballmer let the company go bankrupt which discloses this deal as public, he thinks it's crazy that Ballmer is OK with a fake company used to send Kawhi money making all their dealings go public.

Cuban seems to have contradictory ideas on this: "Steve isn't so dumb that he'd let the fraud be revealed" and also "Steve's pretty dumb and got scammed and doesn't do due diligence when spending $50,000,000".

Not buying it. Either he circumvented the cap because he thought he was invincible and wouldn't be caught or he's incompetent and negligent. Either way, the result is the same and there ought to be real consequences. Does he really expect us to believe he didn't know that $28mil went to one of his players? If he didn't know it, he still shouldn't be in charge of an NBA franchise.

If I had to guess, Ballmer intentionally circumvented the cap, but I think Cuban’s position is something more like “$50 million isn’t all that much to Ballmer, so he might not have looked into it super closely.”

I don’t really buy it - Ballmer wasn’t just a passive investor, but was actively helping Aspiration do biz dev.

EDIT: to put it in perspective, $50 million to Steve Ballmer (who is worth $170 billion) is .03% of his wealth. Insane. If you had a million dollars in the bank, this is the equivalent of 300 bucks.

[SalmonsSuperfan]

The Torres interview with Mark Cuban was pretty interesting with Cuban's view as an owner.

- Ballmer did try a side endorsement deal with Deandre Jordan and Cuban knew the little details because it involved the Mavs. Ballmer was fined $250k and told not to do it again by NBA general counsel. This seems remarkably light? I wonder how seriously the NBA actually takes cap circumvention.

- Cuban doesn't think the Deandre Jordan thing is happening here, he just thinks Ballmer got scammed. Says its not that uncommon and it's happened to him. At their level you trust your people, if your people say this group is legit you just trust it. You can't dig into the books of every company you invest in, there's too many of them.

- Cuban said money could be routed to Mavs player through companies he's dealt with and he wouldn't know it, he doesn't know the details of every company he's invested in

- He questions why someone as rich as Ballmer let the company go bankrupt which discloses this deal as public, he thinks it's crazy that Ballmer is OK with a fake company used to send Kawhi money making all their dealings go public.

Cuban seems to have contradictory ideas on this: "Steve isn't so dumb that he'd let the fraud be revealed" and also "Steve's pretty dumb and got scammed and doesn't do due diligence when spending $50,000,000".

Not buying it. Either he circumvented the cap because he thought he was invincible and wouldn't be caught or he's incompetent and negligent. Either way, the result is the same and there ought to be real consequences. Does he really expect us to believe he didn't know that $28mil went to one of his players? If he didn't know it, he still shouldn't be in charge of an NBA franchise.

If I had to guess, Ballmer intentionally circumvented the cap, but I think Cuban’s position is something more like “$50 million isn’t all that much to Ballmer, so he might not have looked into it super closely.”

I don’t really buy it - Ballmer wasn’t just a passive investor, but was actively helping Aspiration do biz dev.

EDIT: to put it in perspective, $50 million to Steve Ballmer (who is worth $170 billion) is .03% of his wealth. Insane. If you had a million dollars in the bank, this is the equivalent of 300 bucks.

50 million dollars is still 50 million dollars regardless of the proportion. I mean, if you rob a wealthy person for $1000 or a poor person for $1000, it's still a felony. Anecdotally, I do contractual work for some billionaire's family sometimes. If I tried to bill $1500 when I only did $1200 worth of work, they'd definitely notice it because they have a team of accountants working for them who occasionally (rarely) ask me to elaborate on some minuscule line item. If some low level employee of Ballmer stole $2000 from him, he'd probably be aware of it.

Now think about $50mil. It's such a huge amount of money that someone is definitely going to notice how it's being spent. It's not just a regular joe not noticing a few hundred bucks missing. It's possible Cuban spends his money this way because he lucked into his billions.

[dougthonus]

If I had to guess, Ballmer intentionally circumvented the cap, but I think Cuban’s position is something more like “$50 million isn’t all that much to Ballmer, so he might not have looked into it super closely.”

I don’t really buy it - Ballmer wasn’t just a passive investor, but was actively helping Aspiration do biz dev.

EDIT: to put it in perspective, $50 million to Steve Ballmer (who is worth $170 billion) is .03% of his wealth. Insane. If you had a million dollars in the bank, this is the equivalent of 300 bucks.

I agree the 50M isn't a meaningful amount of money to Ballmer, and he could easily not notice that amount of money in some set of circumstances. Like I'm sure he has 3rd parties moving those amounts of money around for him all the time.

That said, in this particular case? I'm with you, I don't buy it. There's absolutely zero chance that this wasn't intentional and that this investment wasn't specifically to move money to Kawhi.

[dice]

I’m not being specific and I’m referring only to team-related sponsorships. Like doing ads like Bulls players do for the team’s corporate partners and sponsors.

I agree the Kawhi situation appears to be very different and a potential “earthquake” moment. Even potentially beyond basketball.

The point is that there is so much potential for abuse that there should be tight, well defined parameters and I was just noodling through what some could look like.

IDK, I fully expect the Clipps to face a few million fine and lose a first. There will be some additional NBA guidelines that come out to clarify things further. Then I expect the issue to be forgotten.

If in fact it is as cut and dry as reported - he was gifted $30 million from a company Ballmer had a stake in for doing nothing in return - it definitely will not simply be forgotten. It will be huge.

silver has already said regarding this that salary cap circumvention is a cardinal sin. given the joe smith precedent...

in terms of effects on the integrity of the game, this case doesn't mean much IMO. because he signed for the max. whereas joe smith intentionally took a discount to manipulate the cap

hopefully this will lead to any endorsements connected to the team being reviewed to make sure they are market value

[coldfish]

IDK, I fully expect the Clipps to face a few million fine and lose a first. There will be some additional NBA guidelines that come out to clarify things further. Then I expect the issue to be forgotten.

If in fact it is as cut and dry as reported - he was gifted $30 million from a company Ballmer had a stake in for doing nothing in return - it definitely will not simply be forgotten. It will be huge.

silver has already said regarding this that salary cap circumvention is a cardinal sin. given the joe smith precedent...

in terms of effects on the integrity of the game, this case doesn't mean much IMO. because he signed for the max. whereas joe smith intentionally took a discount to manipulate the cap

hopefully this will lead to any endorsements connected to the team being reviewed to make sure they are market value

I would think that the biggest concern for the owners would that this would create a bidding war for max contract free agents. The team that can create the biggest shell company wins. I don't know the timing of this transaction. Was Ballmer trying to lure KL from Toronto or was he trying to keep him from going to a different team?

As others have got to, Ballmer was stupid and arrogant here and he ended up getting caught. How many NBA owners aren't getting caught?

[dougthonus]

As others have got to, Ballmer was stupid and arrogant here and he ended up getting caught. How many NBA owners aren't getting caught?

Feels like pretty rare based on looking at the contracts players sign and the player movement. You don't see a bunch of deals that just don't make sense out there.

[kodo]

IDK, I fully expect the Clipps to face a few million fine and lose a first. There will be some additional NBA guidelines that come out to clarify things further. Then I expect the issue to be forgotten.

If in fact it is as cut and dry as reported - he was gifted $30 million from a company Ballmer had a stake in for doing nothing in return - it definitely will not simply be forgotten. It will be huge.

silver has already said regarding this that salary cap circumvention is a cardinal sin. given the joe smith precedent...

in terms of effects on the integrity of the game, this case doesn't mean much IMO. because he signed for the max. whereas joe smith intentionally took a discount to manipulate the cap

hopefully this will lead to any endorsements connected to the team being reviewed to make sure they are market value

Joe Smith was notable because it was a huge outlier. As Cuban brought up, Ballmer was caught doing this before and got fined $250k. So is the next one $500k? $1M? There was also a case of Juwon Howard where the contact was voided, but no extra penalties.

Not sure about how this one will be handled because there's a huge range in how the NBA handles cap violations. Stern was also a much more tyrannical commish, Silver is incredibly owner friendly.

[dougthonus]

Not sure about how this one will be handled because there's a huge range in how the NBA handles cap violations. Stern was also a much more tyrannical commish, Silver is incredibly owner friendly.

A random thought is that commissioner basically serves the owners, and the amount of anger the other owners have over this will likely play into this. Are they all doing the same thing and want to sweep it under the rug, or do they want to send a huge message? Maybe some of each. I think how much outrage there is will have an impact on what Silver does, because he's policing them.

[jnrjr79]

If in fact it is as cut and dry as reported - he was gifted $30 million from a company Ballmer had a stake in for doing nothing in return - it definitely will not simply be forgotten. It will be huge.

silver has already said regarding this that salary cap circumvention is a cardinal sin. given the joe smith precedent...

in terms of effects on the integrity of the game, this case doesn't mean much IMO. because he signed for the max. whereas joe smith intentionally took a discount to manipulate the cap

hopefully this will lead to any endorsements connected to the team being reviewed to make sure they are market value

Joe Smith was notable because it was a huge outlier. As Cuban brought up, Ballmer was caught doing this before and got fined $250k. So is the next one $500k? $1M? There was also a case of Juwon Howard where the contact was voided, but no extra penalties.

Not sure about how this one will be handled because there's a huge range in how the NBA handles cap violations. Stern was also a much more tyrannical commish, Silver is incredibly owner friendly.

The DeAndre Jordan situation (team helped find him a note all that lucrative endorsement deal) is not analogous. But Ballmer might be treated more harshly because this is his second offense, as Cuban noted in the Torrre podcast.

[jnrjr79]

Not sure about how this one will be handled because there's a huge range in how the NBA handles cap violations. Stern was also a much more tyrannical commish, Silver is incredibly owner friendly.

A random thought is that commissioner basically serves the owners, and the amount of anger the other owners have over this will likely play into this. Are they all doing the same thing and want to sweep it under the rug, or do they want to send a huge message? Maybe some of each. I think how much outrage there is will have an impact on what Silver does, because he's policing them.

If you listen to the Zach Lowe podcast about this, it appears that at least some number of other teams are genuinely pissed. It was distinguished from stuff like letting a player use your jet or vacation house, which is more commonplace.

[dougthonus]

Not sure about how this one will be handled because there's a huge range in how the NBA handles cap violations. Stern was also a much more tyrannical commish, Silver is incredibly owner friendly.

A random thought is that commissioner basically serves the owners, and the amount of anger the other owners have over this will likely play into this. Are they all doing the same thing and want to sweep it under the rug, or do they want to send a huge message? Maybe some of each. I think how much outrage there is will have an impact on what Silver does, because he's policing them.

If you listen to the Zach Lowe podcast about this, it appears that at least some number of other teams are genuinely pissed. It was distinguished from stuff like letting a player use your jet or vacation house, which is more commonplace.

If I were another owner, I'd probably get pitch forks out over this one.

1: It's clear cut cheating
2: If allowed to proliferate, it will force everyone to do under the table payments to make competitive offers which increases everyone's costs

[jnrjr79]

A random thought is that commissioner basically serves the owners, and the amount of anger the other owners have over this will likely play into this. Are they all doing the same thing and want to sweep it under the rug, or do they want to send a huge message? Maybe some of each. I think how much outrage there is will have an impact on what Silver does, because he's policing them.

If you listen to the Zach Lowe podcast about this, it appears that at least some number of other teams are genuinely pissed. It was distinguished from stuff like letting a player use your jet or vacation house, which is more commonplace.

If I were another owner, I'd probably get pitch forks out over this one.

1: It's clear cut cheating
2: If allowed to proliferate, it will force everyone to do under the table payments to make competitive offers which increases everyone's costs

Right, if you can do this stuff, it effectively eliminates the salary cap and advantages the richest owners and/or biggest markets. Owners generally would rather there be constraints on total payouts to keep their profits up. And non-taxpaying teams should be extra pissed because this sort of thing could be used to circumvent tax payments that would get distributed to the non-taxpaying teams.

[dice]

If in fact it is as cut and dry as reported - he was gifted $30 million from a company Ballmer had a stake in for doing nothing in return - it definitely will not simply be forgotten. It will be huge.

silver has already said regarding this that salary cap circumvention is a cardinal sin. given the joe smith precedent...

in terms of effects on the integrity of the game, this case doesn't mean much IMO. because he signed for the max. whereas joe smith intentionally took a discount to manipulate the cap

hopefully this will lead to any endorsements connected to the team being reviewed to make sure they are market value

Joe Smith was notable because it was a huge outlier. As Cuban brought up, Ballmer was caught doing this before and got fined $250k. So is the next one $500k? $1M? There was also a case of Juwon Howard where the contact was voided, but no extra penalties.

Not sure about how this one will be handled because there's a huge range in how the NBA handles cap violations. Stern was also a much more tyrannical commish, Silver is incredibly owner friendly.

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

[drosestruts]

If you listen to the Zach Lowe podcast about this, it appears that at least some number of other teams are genuinely pissed. It was distinguished from stuff like letting a player use your jet or vacation house, which is more commonplace.

If I were another owner, I'd probably get pitch forks out over this one.

1: It's clear cut cheating
2: If allowed to proliferate, it will force everyone to do under the table payments to make competitive offers which increases everyone's costs

Right, if you can do this stuff, it effectively eliminates the salary cap and advantages the richest owners and/or biggest markets. Owners generally would rather there be constraints on total payouts to keep their profits up. And non-taxpaying teams should be extra pissed because this sort of thing could be used to circumvent tax payments that would get distributed to the non-taxpaying teams.

It's also taking money out of the other owners pockets.

Salary Cap tax penalties are divided equally amongt the non-tax paying teams.

By going outside the CBA and paying players under the table they can lessen their tax bill, which in turn lessens the money other teams make.

Owners are going to be pissed about this.

[jnrjr79]

If I were another owner, I'd probably get pitch forks out over this one.

1: It's clear cut cheating
2: If allowed to proliferate, it will force everyone to do under the table payments to make competitive offers which increases everyone's costs

Right, if you can do this stuff, it effectively eliminates the salary cap and advantages the richest owners and/or biggest markets. Owners generally would rather there be constraints on total payouts to keep their profits up. And non-taxpaying teams should be extra pissed because this sort of thing could be used to circumvent tax payments that would get distributed to the non-taxpaying teams.

It's also taking money out of the other owners pockets.

Salary Cap tax penalties are divided equally amongt the non-tax paying teams.

By going outside the CBA and paying players under the table they can lessen their tax bill, which in turn lessens the money other teams make.

Owners are going to be pissed about this.

That's what my last sentence said!

[kodo]

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.

[dice]

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

[sco]

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

Good question. I wonder if Kawhi did anything wrong rule-wise by accepting the "endorsement $"? If true, the team obviously did, but I don't think they can look to claw back that $. I'm not sure the league could invalidate Kawhi's contract, can they? Although they could effectively do that by suspending him for 2 seasons.

[dougthonus]

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.