NBA has suspended Los Angeles Clippers owner Steve Ballmer for one year. The league also ruled that the Clippers must forfeit their next five draft picks and pay a $30 million fine. The team’s president of business operations, Gillian Zucker, was also suspended for one year, while Kawhi Leonard was fined $700,000; the business executive was also suspended.
The decisions are based on a 35-page report by Wachtell, Lipton, Rosen & Katz commissioned by the NBA following a suspicious $28 million sponsorship deal brought to light by the Pablo Torre Finds Out podcast. The report described Ballmer’s statements as “inaccurate at best” and Zucker’s statements as “clearly false.” While the Clippers’ management argued that the investigation was biased and had been launched because of “the baseless claims of a podcaster,” it said that Ballmer had spent $50 million on lawyers and that his reputation had been damaged.
The investigation also uncovered a link between the giant-screen project at Intuit Dome and payments made to Leonard. In 2020, Daktronics was selected as the preferred company in the bidding process to provide the venue’s digital scoreboard and signage technologies. Zucker then proposed to a company executive an arrangement known as “spend back,” under which Daktronics would make payments to the Clippers based on the volume of business. The arrangement was designed as a sponsorship deal with Leonard. Daktronics was told to pay Leonard $3 million over two years; that payment was increased after the scoreboard budget was raised. The project was said to have cost more than $100 million for the 44,000-square-meter, double-sided 4K “Halo Board.”
It was alleged that two Clippers-connected companies, Lockton Insurance and Boingo Wireless, also played a role in transferring an additional $18 million to Leonard. Lockton refused to cooperate; Boingo initially provided information, then withdrew from the investigation after the information it submitted was deemed unreliable.
In another arrangement with Aspiration, annual payments of $7 million matched the amount of the payments made to Leonard. The company’s co-founder, Joe Sanberg, was sentenced to 14 years in prison for a fraudulent revenue scheme that caused investors to lose $248 million. The investigation is continuing to examine whether a consulting agreement was used as a front to funnel payments to Leonard. Ballmer’s lawyers, meanwhile, said they were considering legal action.
Why it matters
The penalties have brought renewed attention to how the NBA oversees the relationship between sponsorship payments and commercial agreements in team ownership and club management. The investigation report’s alleged link between the Intuit Dome project and payments to Kawhi Leonard makes the matter contentious not only in terms of the player contract, but also with regard to the club’s business partners and bidding processes. The loss of five draft picks represents the decision’s impact on sporting plans, while the bans imposed on Ballmer and Gillian Zucker highlight management responsibility. The Clippers’ characterization of the investigation as biased and Ballmer’s consideration of legal action leave open the question of how challenges to the NBA’s report will proceed. The ongoing review linked to Aspiration indicates that the scope of the case has not yet been fully closed.