Anyone believing the drama surrounding Kawhi Leonard had concluded should reconsider. Merely a week following the heavy sanctions imposed on the Clippers—marking one of the most severe penalties ever handed down by the NBA for breaking rules against bypassing the salary cap—a report from The New York Times reveals that federal authorities have launched a criminal inquiry into the very same situation.
According to the Times coverage:
The probe is currently in its initial phase under the direction of the Brooklyn-based U.S. attorney’s office, a department with an extensive track record of looking into professional sports leagues like the NBA, as stated by two sources.
While the precise objectives, targets, and potential criminal violations remain undefined, investigators have already delivered at least one subpoena related to the case, the sources added.
A primary focus of the inquiry is expected to be several undisclosed sponsorship agreements signed by Leonard, with investigators assessing whether team owner Steve Ballmer and other front-office personnel set up these deals to circumvent the NBA’s salary ceiling and deliver extra compensation.
During an earnings call with investors last Wednesday, Daktronics Chief Financial Officer Howard Atkins disclosed that the firm had been contacted by both the NBA and the Securities and Exchange Commission concerning their sponsorship contract with Leonard, confirming that they are cooperating completely with the federal investigators, as reported by Matt Sullivan on the Pablo Torre Finds Out podcast.
“Allow me to quickly touch upon the media reports regarding the NBA’s probe into Kawhi Leonard and the Clippers regarding the league’s collective bargaining rules, which several of you might be aware of. Naturally, the NBA has approached us for details,” Atkins explained. “Furthermore, the Securities and Exchange Commission has requested records from us regarding our business and Mr. Leonard. We are taking these inquiries with the utmost seriousness and are fully compliant. To honor the ongoing investigations, we are refraining from making any additional remarks at this time.”
As of Thursday evening, Leonard continues to be a member of the Clippers. Although Toronto previously reached a trade agreement to re-acquire Leonard earlier in the offseason—a transaction expected to finalize following the conclusion of the league’s investigation—the deal has remained frozen since the end of June. The NBA has neither suspended Leonard nor invalidated his active contract.
While federal intervention in a sports-related matter may seem unusual, the Times notes that the Brooklyn-based federal prosecutors’ office has spent almost twenty years pursuing legal actions centered on the fair play and integrity of professional athletics.
Back in 2007, the agency worked alongside the FBI to prosecute an NBA official who confessed to betting on contests he refereed. Within the last two years, prosecutors representing the Eastern District of New York have indicted eight active and retired pro athletes on charges related to illicit wagering. This group of defendants includes legendary NBA guard Chauncey Billups and standout MLB relief pitcher Emmanuel Clase, both of whom maintain their innocence.
Additionally, in 2015, the federal office in Brooklyn indicted numerous individuals in a massive campaign against systemic corruption within FIFA, soccer’s international governing authority. That prosecution revealed an illicit arrangement where sports marketing representatives handed over $150 million in payoffs to soccer administrators to secure valuable broadcasting rights for major events.
Crucially, the existence of this investigation does not guarantee that Ballmer or the Clippers franchise will face criminal indictments; it simply indicates that law enforcement is looking into the situation.
Concurrently, independent of the federal investigation, Ballmer and the franchise are strongly disputing the conclusions of the NBA’s private inquiry, which was managed by the legal firm Wachtell, Lipton, Rosen & Katz. That league-led probe concluded the Clippers breached salary regulations by actively setting up external business deals between Leonard and four external corporations.
“The private conversations we had with the league do not align with their public declarations today, and they have failed to adhere to the standards of fairness and precision promised by Commissioner Adam Silver when this inquiry began,” the Clippers stated in a release last week. “We spent the last twelve months cooperating completely and honestly, and we are prepared to defend ourselves just as aggressively. We plan to contest these conclusions and punishments using all accessible legal channels and anticipate a fair and unbiased arbitration hearing.”
