NBA Launches Major Probe into Clippers and Star Kawhi Leonard, Investigation to Drag On Until 2027

The National Basketball Association (NBA) is currently engaged in a comprehensive investigation into the LA Clippers regarding allegations of salary cap circumvention related to star player Kawhi Leonard. This complex probe, which began nearly ten months ago following podcasts from former ESPN contributor Pablo Torre, centers on whether Leonard received improper compensation through a $28 million endorsement deal he signed in 2022 with Aspiration, a green banking company that also held a significant 23-year, $300 million endorsement deal with the Clippers.

Sources familiar with the case indicate that the investigation, led by the New York law firm Wachtell Lipton, could potentially extend into 2027 if the involved parties – primarily the Clippers and the National Basketball Players Association (NBPA) – fail to reach an agreement on the findings or any proposed settlement that includes team penalties. NBA commissioner Adam Silver acknowledged on July 14 that the case is a complicated process, involving bankruptcy courts and reluctant witnesses, and has gone on “longer than I would have hoped.” He expressed a desire to wrap up the investigation before the beginning of the next season, while also emphasizing the importance of due process and a presumption of innocence.

The NBPA has taken a firm stance, with executive director David Kelly stating on July 9 that he doesn't believe there is a “there, there” regarding the allegations. He also affirmed the union's readiness to take the matter to arbitration if the NBA attempts to impose penalties without sufficient evidence to substantiate the claims. The Clippers, for their part, have vehemently denied funneling money to Leonard through Aspiration and have indicated they would “fight that to the end,” including through arbitration, if necessary.

Should the parties fail to reach a consensus, the dispute would escalate to a neutral arbitrator, jointly appointed by the NBA and the NBPA. This arbitrator would possess the authority to compel document production, witness testimony, and order discovery. Following a hearing, the arbitrator's ruling would then be subject to review by an appeals panel, also composed of three individuals jointly appointed by both the NBA and NBPA, whose decision would be binding. This elaborate process is applicable because salary cap circumvention constitutes a violation of the NBA’s collective bargaining agreement (CBA), ultimately determining if Commissioner Silver can levy punishments against the Clippers.

Under the NBA’s 2023 CBA, penalties for salary cap circumvention can be severe, including team fines of up to $7.5 million, direct forfeiture of draft picks, the voiding of any player contract, and a suspension of up to one year for any team personnel found to have engaged in such violations. If indisputable evidence were presented, a process could be followed that bypasses arbitration, with all sides agreeing on both the findings and the potential discipline.

The ongoing investigation has had a tangible impact, notably stalling a proposed trade between the Clippers and the Toronto Raptors. The deal, agreed upon on June 30, would send Leonard to his former team in exchange for Brandon Ingram, Gradey Dick, unprotected first-round draft picks in 2031 and 2033, a 2027 first-round pick swap, and two second-round picks. Nine days later, the teams announced the trade was on hold after learning from the league office that the Raptors would assume the risk for any penalties Leonard might face, such as a possible suspension or his contract being voided, due to the investigation. Both teams still intend to complete the deal, though the impact of a lengthy arbitration process remains uncertain.

Adding to the complexity, The Athletic recently reported that Wachtell Lipton has expanded the scope of its investigation. This expanded inquiry now includes a previously unreported endorsement deal Leonard had with another company, as well as expenses provided by the Clippers for Leonard for which the team was not reimbursed. Sources close to Commissioner Silver have repeatedly expressed confidence that he will not be swayed by public attention, emphasizing his commitment to “play it straight” based on the facts, ensuring neither a cover-up nor an overreach in seeking punishment without evidence.