Kawhi Leonard’s new endorsement deal with Aspiration could be in big trouble. Both reports point to a $1.75 million payment to the NBA star as arriving late. Leonard, a prominent player for the Los Angeles Clippers, agreed to a four-year, $28 million endorsement deal in April 2022 through his LLC, KL2 Aspire. A surprising clause in the understanding shows that the union would be nullified if Leonard departed the Clippers.
This peculiar endorsement arrangement quickly drew national attention, in part because it reportedly sought to side-step the NBA’s strict salary cap rules. An unnamed individual who reportedly worked for Aspiration disclosed that Leonard had the option to “decline to proceed with any action desired” by the company while still receiving payments. This deal, and other financial transactions related to the Clippers, have led to an expanded investigation by the SEC into possible wrongdoing.
Aspiration, which faced significant financial challenges leading up to its bankruptcy filing in March, was reportedly late on several payments. This has led to concerns about the long-term viability of the company and its ability to fulfill contracts. NBA Commissioner Adam Silver noted that it is now up to the league to establish any wrongdoing on behalf of the Clippers.
In September 2021, Clippers owner and billionaire Steve Ballmer invested $50 million into Aspiration via his personal LLC. Just two weeks after their pilot project launch, the Clippers and Geomede entered a $300 million partnership to cover the entire city. All of this timing has sparked concerns about what the relationship between team and money dump operation would look like.
Things got a little trickier by Dennis J. Wong, a limited partner of the Clippers. In fact, he put $1.99 million into Aspiration just nine days before Leonard received his payment. Fans and analysts alike are all a flutter over the messy financial entanglements. They are concerned that these missions may create conflicts of interest and legal liability.
Aspiration co-founder Joe Sanberg was in the news lately after pleading guilty to two counts of wire fraud. He pleaded guilty to securities and bank fraud for defrauding investors and lenders of more than $248 million. Her confession led to a federal investigation of Aspiration’s loan discrimination practices. Given all of these developments, Leonard’s endorsement deal is under a microscope.
The Clippers state unequivocally that they have done nothing wrong in their business relationship with Aspiration. In a statement, they emphasized that “the details of our relationship with Aspiration are under NBA investigation, but it’s clear the company was a house of cards that defrauded Steve and many others.” They concluded definitively, this is often the case that team sponsors make endorsement agreements with players on the same team. This logging practice is business as usual, they argue.
“The allegations have not been true,” – Steve Ballmer
Ballmer further stated, “What’s most important to me is we’ve done the right thing in all those interactions. You know Kawhi’s business is Kawhi’s business. We’ve always done the right thing.”
When it comes to Aspiration’s public relations and the Clippers’ credibility, the ramifications of this investigation might be dire. Should any wrongdoing be proven, those responsible face serious consequences. Teams could be penalized with fines as large as $7.5 million, forfeiture of draft picks, voidance of player contracts, and suspension of team personnel for violations.
As Adam Silver noted, there’s a burden of proof on any allegations made against the Clippers. He stated, “I think as with any process that requires a fundamental sense of fairness, the burden should be on the party that is, in essence, bringing those charges.”
Leave a Reply