The initial headlines were shocking: Five first-round picks taken away, Steve Ballmer suspended for a year, head of basketball operations Lawrence Frank suspended for six months, a $30 million fine. The loss of all those first-round picks is as close to an organizational death sentence as the NBA can hand out.
How the league got to the point Commissioner Adam Silver felt he had to bring the hammer down is detailed in the 36-page summary of the Wachtell, Lipton, Rosen & Katz report (the law firm that did the actual investigation for the league).
How we got here
That report starts with something reported here and elsewhere: That when Kawhi Leonard was a free agent in 2019, his business manager Dennis Robertson — “Uncle Dennis” as he is more commonly known (now suspended from league business for five years) — asked the Raptors, Lakers, Clippers and every other team that reached out with wild requests, such as buying him a house or car, partial team ownership, and no-show endorsement deals. The NBA investigated at the time but found nothing, and the report agrees that the Clippers did nothing at that time.
However, less than a year later in the spring of 2020 (at the height of the pandemic), Robertson was putting pressure on the Clippers to, in the words of the report, “facilitate off-court business opportunities for Mr. Leonard.” The report went on to say Ballmer told Robertson, “he and Clippers’ personnel were all ‘collective workers to try to help [Mr. Leonard] achieve his financial goals,’ and Ms. Zucker assured Mr. Robertson that Mr. Ballmer would ‘follow through on his promise.'”
The Clippers knew Leonard had a looming contract extension (which he ultimately signed in August of 2021), and so Robertson had some leverage.
How does the report know all this? Because Frank took (and retained) detailed notes from a meeting that involved him, Ballmer, Zucker and Robertson. Frank left a paper trail.
The endorsements
Within a few months of that meeting, Gillian Zucker, the president of business operations for the Clippers (now suspended for a year), set up connections for Robertson and Leonard with Daktronics, Boingo Wireless and Lockton insurance (this was in addition to a previous introduction to Aspiration).
The claim to innocence Ballmer and the Clippers make is that they introduced the sides — all three within six days in June at the height of the pandemic — but had no dealings with the endorsements beyond that. These were team sponsors, and there is no direct link showing Ballmer/Clippers paid any of the endorsers (including defunct green bank Aspiration) telling them to pass the money along to Leonard.
The report lays out how the Clippers operated in a much more old-school, mafia-style way. The Clippers were in levels of negotiations to do major business with these companies (Daktronics built the Halo Board in the Intuit Dome, for example), but first they wanted to introduce the companies to their good friend Kawhi Leonard and his business partner, and maybe there was a way you guys could connect. There were some dealings in between, but essentially these companies set up endorsement deals with Leonard (for a total of $18 million, according to the report) and not long after, those companies had more direct business with the Clippers coming their way.
In the report, Zucker said those emails were introductions made because the companies requested it. Investigators were not buying it. The report says there was no evidence that all three companies requested meetings with Leonard within days of each other at a time the NBA season was suspended due to COVID. By September, all three companies had endorsement deals with Leonard. The report says Daktronics believed that “failing to enter into a commercial relationship with Leonard could jeopardize its ability to win the bid for the Intuit Dome.”
That there were four companies tied to this matters. The max the NBA can fine a team for salary cap circumvention is $7.5 million per case, but combine the four and you get to the $30 million figure.
It’s worth noting that while Leonard released a statement (on social media and through his new agent) essentially saying he didn’t know anything about this, the report details that he was hands-on with parts of the Aspiration endorsement. However, getting Leonard and the NBPA on board meant the league could keep this from going to a neutral arbitrator, as the players’ union could have demanded (under the terms of the CBA). That would have both dragged this out and opened a door for Ballmer and the Clippers to fight the penalties and findings internally. Now, it’s likely headed to court.
Could the Clippers get some of those first-round picks back? Sure. The NBA did that the last time they came down hard on a franchise for cap circumvention, the Joe Smith case with the Minnesota Timberwolves. Eventually, they got two of their last five picks back, but they also didn’t fight the punishment and largely kept a low profile, essentially getting rewarded for good behavior. That doesn’t sound like the direction Ballmer’s heading.