Kawhi Leonard and the Clippers’ Alleged No-Show Job: Salary Cap Evasion and Judicial Condemnation of Hidden Pay

By Cole Collier*                                                                                 Posted: 10/14/2025

Professional sports rely on the idea of “fair competition,” that all teams have a relatively similar chance at winning it all in a given season; however, that idea falls apart when secret payment methods distort the game.[1]  The NBA’s investigation into Kawhi Leonard’s alleged $28 million “no-show job” with a company that received funding from Los Angeles Clippers’ governor Steve Ballmer shows how sham employment deals can be used to dodge the NBA’s contract and salary-cap rules.[2]  Circumventing the salary cap not only disrupts the financial structure of the NBA, but also hurts the integrity of the competition itself.[3]  This Leonard matter fits within a broader tradition of illicit side arrangements, which the NBA and courts alike have condemned as violations of collective bargaining rules and legal duties.[4]  The Leonard investigation demonstrates that hidden compensation schemes are not creative loopholes, but rather unlawful arrangements that breach collective bargaining rules and mirror the fiduciary and contractual violations courts have long rejected.[5]

The Kawhi Leonard Situation

Reports first emerging on September 3, 2025, alleged that the Clippers arranged for Kawhi Leonard to receive $28 million over four years from the financial firm Aspiration, along with about $20 million in company stock, bringing the total near $48 million, and included a clause tying payments to his Clippers contract structure, making the deal look more like hidden salary than a legitimate endorsement.[6]  Despite the large deal, Leonard never made visible promotional appearances or endorsements for Aspiration, raising questions about whether the “job” was real or just a vehicle for hidden compensation.[7]  Steve Ballmer, the billionaire governor of the Clippers and former Microsoft CEO, has denied knowing the details of the deal.[8]  Ballmer stated that he introduced Leonard to Aspiration in 2021, but that he had no role in shaping the agreement and claimed Aspiration executives misled him about its structure.[9]  While the outcome of the NBA’s investigation remains to be seen, this situation could potentially run afoul of Article XIII of the NBA’s Collective Bargaining Agreement (“CBA”), which prohibits teams from using undisclosed agreements or third-party payments to circumvent cap restrictions.[10]

Comparable Precedents: Joe Smith and Hasbro, Inc. v. Serafino[11]

The NBA faced a similar problem in 2000, when the Minnesota Timberwolves secretly arranged future payments to power forward Joe Smith that pushed his compensation beyond the salary cap.[12]  The side contracts promised Smith future payments outside the salary cap, creating the appearance of legitimate compensation but violating league rules.[13]  The scheme surfaced after the NBA uncovered the hidden agreements, which triggered a formal league investigation.[14]  Former NBA Commissioner David Stern eventually responded by canceling Smith’s side contracts, fining the Timberwolves $3.5 million, and taking away five first-round draft picks from the team.[15]  Arbitrator Kenneth Dam upheld Stern’s decision, ruling that the commissioner acted within his authority.[16]  Neither the league nor Dam cited Article XIII by name, but the framework of its anti-circumvention clause enabled Stern to impose such sweeping sanctions.[17]  The Joe Smith scandal is an enduring reminder that Article XIII gives the NBA the power to strike down hidden agreements and punish teams that try to evade salary-cap restrictions.[18]

Outside the NBA, a federal court adopted the same stance toward concealed compensation schemes.[19]  In Hasbro, Inc. v. Serafino, the U.S. District Court for the District of Massachusetts looked into a situation where employee Joseph Serafino received salary and benefits without doing any significant work.[20]  This arrangement was hidden from Hasbro's shareholders and Serafino's coworkers at the company.[21]  The court, pointing to evidence that Serafino collected pay and benefits without doing any real work, concluded that Hasbro was likely to succeed on its claim that Serafino’s “no-show job” arrangement breached his fiduciary duties as an employee to the company and its shareholders.[22]  The court granted Hasbro partial relief and authorized prejudgment attachments and injunctions against Serafino after finding that Hasbro was likely to succeed on its breach of fiduciary duty claims.[23]  This decision shows that judicial scrutiny of hidden compensation extends beyond sports and reflects a broad legal principle against secret financial arrangements.[24]

Analysis: Leonard in Light of Precedent

The Leonard investigation reflects some of the same flaws revealed in the Joe Smith scandal.[25]  Both cases involve alleged attempts to evade collectively bargained limits through concealed agreements, and each instance is governed by the standards of Article XIII of the NBA's CBA.[26]  In Joe Smith’s case, the league voided Smith’s contracts, fined the Timberwolves $3.5 million, and stripped five first-round draft picks for secret side agreements that circumvented the salary cap—discipline consistent with Article XIII’s anti-circumvention rule.[27]  If the allegations against Leonard prove true, the same provision would give the NBA authority to penalize Leonard and the Clippers similarly to how Smith and the Timberwolves were punished.[28]

Comparing Leonard’s case to Hasbro highlights the legal convergence between sports regulation and corporate law.[29]  The NBA uses Article XIII to guard against hidden contracts that threaten fair competition, while the court in Hasbro relied on fiduciary and contractual principles to strike down a “no-show” job scheme.[30]  Both frameworks recognize that hidden and unfair compensation violate the duties of disclosure and accountability.[31]  Where Hasbro emphasized the breach of fiduciary obligations, the NBA relies on Article XIII to police undisclosed agreements that undermine both the integrity of the league and collectively bargained limits.[32]  In both settings, hidden compensation functions not as a permissible contractual arrangement but as an unlawful device that violates binding legal frameworks.[33]

Ultimately, the Leonard investigation shows that the NBA remains subject to the broader legal condemnation of hidden-compensation schemes.[34]  Both the NBA and federal court view concealed pay as a violation that endangers the stability of the whole system.[35]  The Leonard investigation shows that whether it is on the court or in the court, transparency in financial arrangements is not optional—it is a legal requirement.[36]

*Staff Writer, Jeffrey S. Moorad Sports Law Journal, J.D. Candidate, May 2026, Villanova University Charles Widger School of Law.

[1] See Grant Mona, How Clippers’ Kawhi Leonard Scandal Could Reshape the NBA Entirely, Sports Illustrated (Sep. 11, 2025), https://www.si.com/nba/clippers/news/how-clippers-kawhi-leonard-scandal-could-reshape-the-nba-entirely-01k4x49nj4g1 (reporting on allegations around Leonard’s deal with Aspiration and its potential NBA salary cap implications).

[2] See Michael A. McCann, Kawhi Leonard Investigation: Key Legal and Business Considerations, Yahoo! Finance (Sept. 5, 2025), https://finance.yahoo.com/news/kawhi-leonard-investigation-key-legal-150000170.html (explaining how Clippers allegedly tried to circumvent NBA’s salary cap).

[3] See Mona, supra note 1 (highlighting that many “within NBA outposts” are “openly enraged” at Clippers and feel that their actions hurt NBA’s integrity).

[4] See Hasbro, Inc. v. Serafino, 958 F. Supp. 19, 24 (D. Mass. 1997) (holding that hidden financial arrangements violated fiduciary and contractual duties); see also McCann, supra note 2 (highlighting how NBA’s investigation will “center” around possible collective bargaining agreement violations).

[5] See NBA-NBPA Collective Bargaining Agreement, Nat’l Basketball Players Ass’n 340–41 (July 2023), https://imgix.cosmicjs.com/25da5eb0-15eb-11ee-b5b3-fbd321202bdf-Final-2023-NBA-Collective-Bargaining-Agreement-6-28-23.pdf (prohibiting undisclosed agreements and third-party payments designed to circumvent salary cap); see also Hasbro, Inc., 958 F. Supp. at 24 (emphasizing that courts enforce transparency by invalidating hidden compensation schemes).

[6] See Mona, supra note 1 (reporting on structure of Leonard’s alleged “no-show” contract).

[7] See Report: Clippers Paid Kawhi Leonard $28M for No-Show Job at Company, Reuters (Sep. 3, 2025, at 16:44 EDT), https://www.reuters.com/sports/report-clippers-paid-kawhi-leonard-28m-no-show-job-company-2025-09-03/ (reporting that “there is no record of Leonard doing any marketing for, mentioning or endorsing Aspiration”).

[8] See Steve Ballmer Denies Allegations of Kawhi Leonard, Clippers Circumventing Salary Cap, Reuters (Sept. 12, 2025, at 23:04 EDT), https://www.reuters.com/sports/steve-ballmer-denies-allegations-kawhi-leonard-clippers-circumventing-salary-cap--flm-2025-09-13/ (reporting that Ballmer had “no idea what the deal was” between Leonard and Aspiration).

[9] See id. (reporting that Ballmer stated Aspiration “conned” him and “committed fraud”).

[10] See NBA-NBPA Collective Bargaining Agreement, supra note 5 (establishing that NBA may void contracts and penalize teams that use undisclosed agreements to evade salary cap).

[11] 958 F. Supp. 19 (D. Mass. 1997).

[12] See Arbitrator Upholds NBA Ruling on Smith, ESPN (Nov. 12, 2000), https://www.espn.com/nba/news/2000/1102/853662.html (explaining that secret contracts aimed to secure Smith long-term without reflecting his true salary obligations on team’s salary cap).

[13] See id. (observing that Bird rights loophole became central feature of Joe Smith payment scheme, illustrating how teams could manipulate collective bargaining provisions).

[14] See id. (reporting that NBA discovered Smith and Timberwolves’ undisclosed contracts and launched investigation that led to severe sanctions).

[15] See id. (reporting on Stern’s sweeping sanctions against Timberwolves).

[16] See id. (reporting that appointed arbitrator agreed with Stern’s handling of Smith’s case); see also Collective Bargaining Agreement, Nat’l Basketball Players Ass’n at 159 (1999), https://ipmall.law.unh.edu/sites/default/files/hosted_resources/SportsEntLaw_Institute/1999NBA_NBPA_CBA.pdf (detailing NBA’s collective bargaining agreement in place in 2000 during Joe Smith’s scandal).  The CBA during the Joe Smith scandal in 2000 had the same Article XIII provision against cap circumvention as it does in the present.  See id. (underscoring how NBA has long treated hidden deals as serious threat to its salary cap).

[17] See Michael McCann, NBA Free Agency: How the CBA Stops Salary Cap Circumvention, Sports Illustrated (July 25, 2019), https://www.si.com/nba/2019/07/25/nba-trade-demands-tampering-clippers-lakers-thunder-kawhi-leonard (showing that “Article XIII had been used with force by the NBA . . . the arrangement violated both the spirit and letter of Article XIII” in Joe Smith’s case).

[18] See id. (detailing that Article XIII strictly “forbids teams from compensating players outside of their contract and thus in circumvention of the team’s obligations under the salary cap”)

[19] See Hasbro, Inc., 958 F. Supp. at 20 (noting how case arose when Hasbro sued former employee Joseph Serafino over concealed financial arrangements).

[20] See id. at 22 (explaining that Serafino continued to receive salary and benefits despite providing no meaningful services or work to Hasbro).

[21] See id. at 23 (observing that Hasbro and Serafino’s arrangement was hidden from both Hasbro’s shareholders and Serafino’s fellow employees at Hasbro).

[22] See id. at 24 (holding “Hasbro has a likelihood of success . . . with respect to its claim of breach of fiduciary duty”).

[23] See id. at 26 (concluding that “Hasbro has succeeded in demonstrating a probability of success on the merits of its claims against Serafino”).

[24] See id. (finding that Hasbro was likely to prevail on its claim that its employee’s “no-show job” arrangement, which concealed salary and benefits from shareholders, breached his fiduciary duty of loyalty).

[25] See McCann, supra note 17 (discussing Article XIII and how NBA uses it); see also Report: Clippers Paid Kawhi Leonard $28M for No-Show Job at Company, supra note 7 (detailing allegations against Leonard).

[26] See NBA-NBPA Collective Bargaining Agreement, supra note 5, at 340 (defining circumvention broadly to prohibit “any undisclosed agreement, understanding, or contract . . . to evade the intent of the Salary Cap”).

[27] See McCann, supra note 17 (stating that “Article XIII had been used with force by the NBA” in Joe Smith matter).

[28] See id. (explaining that Article XIII authorizes NBA to void contracts, impose multi-million-dollar fines, and strip draft picks when teams use hidden deals to circumvent salary cap); see also NBA-NBPA Collective Bargaining Agreement, supra note 5, at 341 (explaining that, under new CBA in Section 13.3(a), NBA commissioner is only authorized for first offense to “impose a fine up to $4,500,000[,]” “direct the forfeiture of one First Round Draft Pick[,]” and void any transactions that circumvent cap rules).  Under the new CBA, a first-time offender like the Clippers in the Leonard matter could face limited penalties, far lighter than the sweeping sanctions imposed on the Timberwolves in the Joe Smith scandal under the older CBA.  See id. (showing how older CBA let NBA hit teams with sweeping sanctions, while new CBA caps first-time penalties at lighter fines and draft-pick losses).

[29] See Hasbro, Inc., 958 F. Supp. at 24–25 (recognizing Hasbro’s likelihood of success on breach of fiduciary duty claims arising from alleged “no-show job” scheme).

[30] See NBA-NBPA Collective Bargaining Agreement, supra note 5, at 340 (prohibiting any undisclosed agreement or understanding designed to circumvent salary cap); see also Hasbro, Inc., 958 F. Supp. at 24 (finding Hasbro likely to succeed on fiduciary duty claims).

[31] See McCann, supra note 17 (explaining that Article XIII prohibits hidden agreements that evade salary-cap obligations); see also Hasbro, Inc., 958 F. Supp. at 24 (recognizing likely breach of fiduciary duty due to “no-show” job).

[32] See Hasbro, Inc., 958 F. Supp. at 24 (finding likelihood of success on Hasbro’s fiduciary duty claim based on concealed arrangements); see also Collective Bargaining Agreement, supra note 16, at 341 (authorizing voiding of contracts, fines, and loss of draft picks for salary-cap circumvention).

[33] See Hasbro, Inc., 958 F. Supp. at 24 (explaining that hidden agreement is likely breach of fiduciary duty); see also McCann, supra note 17 (detailing how NBA CBA bars undisclosed understandings or transactions that are designed to evade salary cap).

[34] See id. (emphasizing that concealed pay arrangements, such as “no-show” jobs, breach fiduciary duties and undermine transparency).

[35] See NBA-NBPA Collective Bargaining Agreement, supra note 5, at 340 (explaining that “[a]t no time shall there be any agreements or transactions of any kind” that are hidden agreements that circumvent salary cap); see also Hasbro, Inc., 958 F. Supp. at 24 (holding that concealed “no-show job” arrangement breached employee’s fiduciary duties to company).

[36] See id. (showing that courts step in when hidden pay schemes break fiduciary duties, reinforcing that financial transparency is legal requirement).