Steve Ballmer has been suspended by the NBA for a year and the Los Angeles Clippers must forfeit five future draft picks and pay a $30 million (£22.3 million) fine after an investigation into alleged improper payments linked to star player Kawhi Leonard.
The league-commissioned report found that statements made by the former Microsoft chief executive about a disputed $28 million endorsement arrangement were “inaccurate (at best) with respect to Mr Ballmer”. It described claims made by Clippers president of business operations Gillian Zucker as “clearly false”.
Zucker has also been suspended for 12 months. Leonard has been fined $700,000 and his business manager has been barred from working in the NBA.
The penalties follow a 35-page investigation by the law firm Wachtell, Lipton, Rosen & Katz into arrangements involving Leonard and companies connected to the Clippers. The NBA said the agreements appeared to have been structured to provide the player with money beyond the limits imposed by the league’s salary cap.
NBA investigation into Kawhi Leonard payments
The case came to wider attention after the podcast Pablo Torre Finds Out reported questions surrounding Leonard’s alleged endorsement deal with Aspiration, a financial technology company in which Ballmer had invested.
Ballmer had previously denied that the Clippers were involved in the arrangement. The report, however, said investigators could not find a credible alternative explanation for an agreement under which the Forum, the Clippers’ former home, was due to pay Aspiration $7 million a year for four years.
Ballmer and Zucker had said the figure was based on an assessment of the Forum’s carbon emissions by a team consultant. Investigators said the consultant told them that the Clippers had instead supplied him with a $28 million budget to address the emissions.
Joe Sanberg, Aspiration’s co-founder, allegedly gave different explanations to colleagues. In one exchange cited in the report, he said the Clippers had asked the company to make the arrangement involving Leonard and had promised to increase their business with Aspiration to offset the payments.
Aspiration later collapsed into bankruptcy. Sanberg was sentenced to 14 years in prison after being convicted in a fraud scheme that prosecutors said cost investors $248 million. The NBA’s sanctions against Ballmer and the Clippers do not centre on that fraud case or on Ballmer’s reported $50 million investment in Aspiration.
The investigation also examined agreements involving Daktronics, Lockton Insurance and Boingo Wireless. Daktronics was selected to provide the digital scoreboard and signage technology for the Clippers’ new Intuit Dome after a competitive process.
According to the report, a Clippers executive proposed that Daktronics provide business back to the team through an endorsement agreement with Leonard. The company was allegedly told to pay Leonard $3 million over two years, with the amount later increased when the team expanded its spending on the arena’s scoreboard.
The Intuit Dome’s centrepiece is the Halo Board, a double-sided, wraparound 4K screen covering about 44,000 square feet. The scoreboard was reportedly valued at more than $100 million as part of an arena project whose overall cost rose above $2 billion.
Investigators said Daktronics and people connected with Aspiration co-operated with the inquiry. Lockton declined to co-operate, while Boingo initially provided information but later supplied material investigators considered inconsistent or not credible before refusing further assistance.
Clippers challenge NBA findings
The Clippers have written to the NBA objecting to the investigation, arguing that it was prompted by what they called “a podcaster’s baseless claims”. The team said the process had cost Ballmer about $50 million in legal fees and damaged his reputation, while also upsetting commercial partners including Daktronics.
Ballmer’s lawyers said they were “exploring every legal remedy to address this gross injustice”. The NBA report said the inquiry was continuing into a separate allegation that a consulting agreement involving the Clippers may have been used as a vehicle to pass money to Leonard.
The sanctions represent a significant sporting and financial punishment for one of the NBA’s wealthiest owners, while the findings have placed renewed scrutiny on the way sponsorship, arena and player agreements were handled by the Clippers.
