NBA Approved Clippers’ Deal with Aspiration: Salary Cap Violation?

NBA Investigates Clippers’ Sponsorship Deal with Aspiration

The NBA is conducting an investigation into a sponsorship deal between the Los Angeles Clippers and the company Aspiration, which could involve a possible circumvention of the salary cap to compensate star Kawhi Leonard. In 2021, the league approved a $300 million sponsorship agreement between the Clippers and Aspiration, a green banking company. This agreement was reviewed and approved by the NBA before its official announcement in September of that same year, because it included a patch on the team’s jersey. The agreement also included advertising in the Clippers’ future Inglewood stadium. Subsequently, in April 2022, Aspiration signed a separate sponsorship deal for $28 million with Kawhi Leonard, which did not require NBA review. The league is investigating whether the Clippers and their owner, Steve Ballmer, violated the rules by attempting to compensate Leonard through this deal. NBA Commissioner Adam Silver initially stated he was unfamiliar with the company Aspiration, but later corrected his comments, admitting his knowledge of the brand. According to NBA rules, certain sponsorship agreements, such as those involving jersey patches and visible advertising on television broadcasts, require league approval. Companies related to cannabis, gambling, and energy drinks are also subject to review.

“Teams evaluate their own sponsorship partners and negotiate their own sponsorship deals,” said an NBA spokesperson.

Mike Bass, NBA spokesperson

A Clippers spokesperson referred questions about the league’s process to the NBA. The league’s official documents indicate that NBA approval is necessary for sponsorship agreements that include patches on jerseys. The league’s operations manual for the 2021-22 season specifies that teams must notify and obtain NBA approval before announcing any such agreement. Regulations are even established regarding the size and location of the patch on the uniform. The manual also includes provisions that should be in the contract between the team and the sponsor, such as the possibility of terminating the agreement if the sponsor is involved in any controversy that could negatively affect the reputation of the team or the NBA. In September 2021, when the agreement between the Clippers and Aspiration was announced, Ballmer invested $50 million in the company. In April 2022, Aspiration signed a sponsorship deal with Leonard for $28 million. Ballmer denied having knowledge of the sponsorship contract that Aspiration signed with Leonard. NBA rules do not prohibit teams from introducing their sponsors to players, but they cannot participate in subsequent negotiations. The league does not review sponsorship agreements with players. The Aspiration logo was supposed to appear on the Clippers’ jerseys at the start of the 2023-24 season, but this did not happen. In January 2024, it was reported that Aspiration was being investigated by the Department of Justice and the Commodity Futures Trading Commission for allegedly deceiving its customers. The Clippers reported that they had terminated their sponsorship agreement with Aspiration. Aspiration declared bankruptcy in March, with a reported debt of $170 million. The company stated it owed $30 million to the Clippers, the largest amount owed to its creditors. In August, Aspiration co-founder Joe Sanberg pleaded guilty to two counts of wire fraud. Federal prosecutors accused Sanberg of defrauding investors and lenders of $248 million by fraudulently obtaining loans, falsifying bank and brokerage statements, and concealing that he was the source of some income recorded by the company. Ballmer stated that he was reviewing his interaction with Aspiration as part of the team’s cooperation with the Department of Justice investigation.

“These guys committed fraud. They scammed me. I invested in them thinking everything was legal, and they scammed me,” Ballmer said.

Steve Ballmer

Sources close to the league’s sponsorship review process indicated that the evaluation focuses on the company’s credibility and its ability to meet its financial commitments. The NBA has hired the law firm Wachtell Lipton, Rosen & Katz to investigate whether the Clippers evaded salary cap rules. The investigation could last for months and may not conclude until after the 2026 NBA playoffs. According to the NBA’s collective bargaining agreement, Silver is not solely responsible for deciding whether the Clippers will be sanctioned, depending on the findings. Wachtell Lipton will present its findings to the league office, and Silver must decide, based on those findings, whether to present any evidence to a neutral arbitrator appointed by the NBA and the Basketball Players Association. The arbitrator will examine the evidence presented by Silver and decide on the next steps. The arbitrator could grant Silver the authority to sanction the Clippers or decide that there is not enough evidence to justify any sanction.

“The burden falls on the league if we are going to sanction a team, an owner, a player, or any member of the league,” Silver declared.

Adam Silver