What’s Delaying NBA’s Kawhi Leonard Investigation? Timberwolves, Joe Smith Case May Have the Answer

Kawhi Leonard’s reunion with the Raptors remains on hold as the NBA continues its investigation into whether the Clippers circumvented the salary cap to pay their former—but also still current—star.

On Wednesday, ESPN’s Baxter Holmes reported that the league’s investigation could go into 2027 if the parties don’t agree on the findings or any proposed settlement that involves punishing the team. The investigation is already closing in on its 11th month and just two weeks ago, NBA commissioner Adam Silver said he was “hopeful” it would be wrapped up by this summer.

It’s a messy web the league is working through after the Pulitzer Prize winning investigation by Pablo Torre Finds Out into the Clippers and owner Steve Ballmer that alleges the team facilitated a no-show endorsement deal with a now-defunct tree planting company Aspiration that supposedly funneled $28 million to Leonard. Shortly after Torre’s initial reporting, Ballmer made an appearance on ESPN to unequivocally deny the allegations.

“Up front I want to say one thing very clearly: we, the Clippers, have abided by the salary cap circumvention rules because that’s the right thing to do and we have done that,” Ballmer said in September. “For what it’s worth, I happen to think it’s a very important rule in terms of promoting competitiveness and an equal playing field across the league.

“But whether I agreed with it or not, that’s the rule. And we’ve absolutely abided by that.”

Holmes’s ESPN report on Wednesday noted that the team remains adamant it did not funnel money to Leonard through Aspiration and had one source with knowledge of the case say that it would “fight that to the end,” even through arbitration, which seems like a real possibility at this point. If the NBA decides to impose penalties without sufficient evidence proving the alleged cap circumvention, the National Basketball Players Association wouldn’t hesitate to take the matter to arbitration according to ESPN.

Last month, the Clippers and the Raptors agreed to a trade that would send Leonard to Toronto for Brandon Ingram, Gradey Dick, two first-round picks, a first-round pick swap and two second-rounders. The trade remains on hold as the Raptors would have to assume the risk of any potential outcome of the investigation that impacts Leonard. With the update that the investigation could bleed into the new year, there’s a possibility that the trade isn’t finalized until well into next season, unless Toronto decides to assume the risk of potential punishments.

Investigations take time, that’s nothing new, but at this point the big question is; what’s taking so darn long? The infamous salary cap circumvention case regarding the Minnesota Timberwolves and Joe Smith is often cited as precedent for the Leonard investigation and other cap circumvention allegations around the NBA. However, the Smith case—and severe punishments that followed—included a smoking gun that we’ve yet to see with the Clippers-Leonard allegations.

What the Joe Smith cap circumvention case included that Kawhi Leonard’s doesn’t ... as far as we know

Steve Ballmer and the Clippers deny any involvement in salary cap circumvention | IMAGN IMAGES via Reuters Connect

Back in 2000, the NBA discovered an under-the-table agreement the Wolves had with Smith to sign him to a series of one-year deals at a small amount. Over that time, Minnesota would obtain Smith’s Bird rights (which allows franchises to go over the salary cap to sign their own players) and at the end of the third one-year deal, Smith would get a huge $86 million contract. The NBA brought down the hammer and voided Smith’s contract, docked Minnesota five first-round picks (later restoring one), fined the team $3.5 million and suspended owner Glen Taylor for a year while general manager Kevin McHale took a leave of absence.

An arbitrator upheld then-commissioner David Stern’s decision to void Smith’s contracts, which also took away his Bird rights. The crux of the issue in Smith’s case and what sealed the matter was a secret agreement that was signed with the Wolves, which gave the league clear evidence to punish both parties. Smith later said that the under-the-table deal was executed with his agent and the organization without him being involved.

In the current investigation into whether the Clippers circumvented the cap to pay Leonard, we’ve yet to see any under-the-table agreement that the franchise facilitated a deal to pay its star through Aspiration. It’s not public knowledge whether the investigators at Wachtell, Lipton, Rosen & Katz—the law firm the league contracted to conduct the investigation—are sitting on a secret agreement or something similar. If it were, however, you’d have to assume that the investigation would reached its conclusion by now—no matter how complex.

Pablo Torre Finds Out and WPRI of Rhode Island brought additional reporting to the table on Wednesday that revealed Leonard, his uncle Dennis Robertson and former agent Mitch Frankel have a secret investment stake in Rhode Island Football Club of the USL Championship. Leonard and Robertson opened two new entities—KL2 RIFC Real Estate LLC and KL2 RIFC LLC—that tied them to the club as Aspiration fell apart. Team founder Brett Johnson told WPRI that Leonard’s group is “particularly interested in real estate,” yet no housing has materialized thus far in Pawtucket, R.I.

Johnson and Rhode Island governor Dan McKee attended the Clippers’ home opener last season at Intuit Dome and the governor’s ticket was purchased by a Spanish sports marketing company called 380AMK. According to Torre’s reporting, 380AMK does work for Visit Rwanda, the Clippers’ current jersey patch sponsor. McKee said he reimbursed the cost of the ticket according to WPRI.

It’s a convoluted web that the NBA and its investigators at Wachtell, Lipton, Rosen & Katz have spent and will continue to spend consider time in an effort to untangle. Holmes and ESPN reported that if the NBA presents indisputable circumvention evidence once the investigation concludes, all parties could agree on the findings and potential discipline and avoid arbitration altogether. As more time passes, the question of if clear evidence of cap circumvention exists and ultimately will be presented looms larger.

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