The company was a sponsor for the Clippers at one point. The co founder of the company is under investigation for fraud. Think of all the celebrities that advertised for that crypto fraud, it’s not unprecedented. This wasn’t Ballmer setting up a fake company just to funnel money, he was funnelling money through what he thought was a legit company, he got screwed over by the fraud, as did other investors. As to Cubans question of why would he let it fail? Because the co founder is involved in a DOJ investigation, this was not something that Balmer could throw money at to fix.
Also, it is very obvious that Balmer funnelled money to Kawhi, they don’t need a smoking gun, it’s not the court of law, they can just use common sense. Ballmer invested $50 million in a company shortly after Kawhi signs an extension, and then a few months later Kawhi sets up an LLC and starts getting the payments from the company. The contract does not have any requirements of Kawhi except that he must remain a Clipper. They agree to pay him $7 mill a year, but he doesn’t have to do any videos, photo shoots, ads, or social media posts. Nope, as long as he is a Los Angeles Clipper he gets $7 million a year. Also, the endorsement deal is the same length, 4 years, as his contract extension. Meanwhile, while that contract is agreed to and being paid off, the company is going bankrupt.
Kawhis camp was asking for extra benefits beyond the cap in 2019, with a specific request being “a guaranteed amount of off-court endorsement money that they could expect if Leonard played for their team.”
The NBA made some changes in direct response to Kawhis camps requests.
“As Silver made clear to the owners during those New York meetings, he would be revamping some free agency rules and reinforcing the ones that were too often ignored. Tampering fines were doubled, from $5 million to $10 million. The league’s ability to perform random audits of teams was re-emphasized. The threat of suspension for executives was openly discussed, as was the potential for a loss of draft picks or even the voiding of player contracts as the most extreme of measures. The league even opened an anonymous tip line so that accusers could share information without fear of reprisal. The league’s proactive efforts didn’t end there, either.”
“As one prominent agent said at the time about the league’s renewed focus on laying down the law over the summer, “This is because of Dennis. He didn’t know the rules.”
Said one owner: “‘This (league-wide discussion) is all because of Uncle Dennis.’”
Cuban’s comment is, I think, useless. “Ballmer isn’t this dumb” is a meaningless argument to me. Plenty of “smart” people do “dumb” things. I also think that Cuban’s method of ownership suggets he definitely would have (did?) do stuff like this. He wasn’t shy about spending money. Ballmer’s specific stupidity in this matter doesn’t go a millimeter towards refuting what is written on paper in ink in these documents.
My guess is that some owners may definitely be doing the same thing, but some absolutely are not. The Bulls are absolutely not doing this. The Bucks are absolutely not doing this. The Nuggets are absolutely not doing this. The Pacers are absolutely not doing this. Those are just off the top of my head.
The allegation is not that the company is “fake”. The company was trying to actually sell carbon offsets and turn profit (personally I think carbon offesets are themselves a scam, and the company seemed to not even be doing the thing they promised (planting trees) - but they were actually trying to turn a profit, hence the celebrity endorsements (rememer all the celebrities hawking Crypto.com?).
Nate’s take (stipulates there is no “smoking gun”) but tends to believe this was circumvention because:
$28 million over 4 years is higher than what Kawhi was offered for a shoe deal (it’s a matter of record that his offered shoe deal from Nike was $22 million over 4 years). In what world is Kawhi more valuable tweeting about carbon offsets for a local sponsor worth MORE than promoting a signature shoe (something he uses, presumably he does not purchase carbon offsets).
The no-show nature (he didn’t do anything).
7 Aspiration sources saying that company executives, in meetings, said verbatim that the endorsement deal was to circumvent the cap (only one source appears in the episode as others did not want to come forward, but Torre has 7 sources)
Signing someone to a very large endorsement deal and never publicizing it would seem to run opposite the purpose of an endorsement.
Pre-existing reports that Uncle Dennis had made repeated demands to repeated teams that were, literally, cap circumvention.
My personal take:
There is no crime (in the US statutory sense) alleged here, so burdens of proof etc don’t really matter, it could easily come down simply to just what a reasonable conclusion is.
While $7 mil per year within the context of what Kawhi makes is penny-ante stuff, it’s on record that Uncle Dennis was pursuing penny-ante stuff relentlessly.
Who would hire the least charistmatic star in world history as a pitch-man to sell carbon offsets to an LA county audience for more money than Nike would to sell shoes internationally?
Plus Kawhi was paid more than all the other celebrity endorsements combined, and he didn’t have to actually endorse. Also apparently in addition to the $28 mill, Kawhi was supposed to receive an additional $20 mill in stock.
Frankly this would be a shut and closed case even in a court of a law. You do not need to have a text or email with the parties outlining their plan of cap circumvention, the circumstantial evidence is more than enough. The burden of proof is now on the Clippers to prove a reasonable alternative, but I certainly can’t see any.
The $28 million deal was to be paid in quarterly installments over four years, but it was not the only compensation Leonard received. According to a high-level source, Leonard also cut a side deal with Aspiration to receive an additional $20 million in company stock. The stock was to be paid out from Sanberg’s personal holdings in the company over four years.
So now we’ve basically accounted for the $50 mil Ballmer gave. Note: Leonard never got this because the stock never went liquid, the business went belly up.
Torre was also on the radio today and implied that he was looking into “a Knicks player” (psssssttt it’s Jalen Brunson)
If you care, Cuban has an hour long conversation with Pablo Torre, posted. Haven’t listened yet, no takes.
ok -Cubans take is Aspiration acted alone because retaining Kawhi improves the value of their sponsorship (tickets they get are more attractive, Clippers get more games on TV with company logo on their jersey, etc)
To add to this (I just listened to the podcast), Torre was arguing he had 6 or 7 sources within the company that said this was an open secret for cap circumvention. Cuban’s counter was that the scammers at the top could be pitching “cap circumvention” as a way to get the employees not to talk about the deal etc.
On the valuation being more valuable with Kawhi etc, I get Cuban’s point, but $28 M seems exorbitant for a no-show deal. Kawhi wouldn’t have done it for $5 M? Why $28M…or $48 M if you include the equity grant from the Aspiration founder, as it’s coming out now.
Doesn’t seem like there’s a direct smoking gun here, but if you look at the evidence and timing in totality, it’s hard not to believe that Ballmer’s investment was routed to Kawhi or there was some sort of quid pro quo going on. Cuban’s whole argument came off as possible…Torre’s came off as probable.
We don’t need to treat Cuban’s specious arguments protecting his buddy and another super rich guy with any kind of credulity. I’m not conspiratorially minded at all but 1+1 does in fact = 2 here.
This is the gap that we are left with with some of the PTFO stuff IMO. He presents an incredibly convincing case over a long podcast, and you are pretty certain what happens, the interviews are compelling, etc. but there also maybe isn’t quite enough for like the NBA to actually act on.
Probable … possible… but no smoking gun = hard to punish, right?
Very true crime podcast-esque where it can be convincing as to what happened but does it always hold up in court?
Regardless, the NBA still needs to investigate it and vet the company and Klaw’s contract. The accusation is significant enough to warrant an investigation or you might as well throw the cap away for the NBA.
This doesn’t need to pass muster in a court of law though. Maybe Ballmer is just so rich even among NBA owners that it doesn’t matter (I have my doubts about that honestly, the NBA and other owners have a lot more at stake, different power, and incentives than like, a toothless NCAA, for example). But I don’t think we need walk around and treat this like some mystery when it’s pretty obvious what happened.
I’m not a lawyer and don’t follow the NBA that closely but from everything we know about how sports and professional sports work there is almost certainly some legal threshold or standard that has to be met in order to punish the Clippers.
Maybe this podcast meets this standard! It seems possible or likely that they would need more though.
Maybe! There’s assuredly a process. I’m just saying the standards are different from a court of law (I also am not a lawyer). We’ll see what the NBA says and does in time.
In the meantime, I just refuse to pretend like there’s some mystery here. And I roll my eyes at Cuban’s (and others) various “defenses” of this.
This makes no sense! Marketing sponsorships are not hidden from view bc ofc they’re not.
And as Nate pointed out, the value of the deal exceeded his deal with Nike. Adjust for whatever you want that’s just insane money to just light on fire.
