Understanding Aspiration: The Company Behind the Kawhi Leonard Endorsement Deal

The recent endorsement deal involving NBA star Kawhi Leonard and the now-defunct financial services company Aspiration has drawn significant attention, particularly concerning allegations of salary cap circumvention. This post will delve into the background of Aspiration, its founders, business model, and the implications of its connection to the LA Clippers and their owner Steve Ballmer.

The Allegations: What Happened?

The NBA is currently investigating the LA Clippers and their owner, Steve Ballmer, following reports that Kawhi Leonard accepted a $28 million endorsement deal from Aspiration. This deal is under scrutiny for potentially being a mechanism to bypass the league’s salary cap restrictions. Ballmer, who has previously invested $50 million in Aspiration, has denied any knowledge of the endorsement arrangement or that he directed the company to pursue it.

Who Founded Aspiration?

Aspiration was co-founded in 2013 by Joe Sanberg, an entrepreneur and Harvard alumnus, and Andrei Cherny, a lawyer with experience as a speechwriter for the Clinton administration. The company aimed to offer socially responsible banking services and investment products, promoting a mission encapsulated in their slogan: “Do Well. Do Good.” Sanberg held about 30% of the company’s shares as of September 2021, while Cherny served as its CEO for nearly a decade.

Aspiration’s Business Model

Aspiration positioned itself as a digital bank with a focus on environmental sustainability. It claimed that customer deposits would never fund fossil fuel projects, such as oil rigs or coal mines. The company’s offerings included savings accounts and debit cards that provided cash back from environmentally responsible businesses. Customers could also choose to plant a tree with every purchase made. Additionally, Aspiration provided access to investment funds that were entirely fossil fuel-free.

Notable Investors and Partnerships

Aspiration attracted a range of high-profile investors, including celebrities like Robert Downey Jr., Orlando Bloom, Leonardo DiCaprio, and former NBA coach Doc Rivers. The company also partnered with major corporations, including Meta and Microsoft, and secured a $300 million deal with the LA Clippers in September 2021. This partnership made Aspiration the “first founding partner” of the Clippers’ new arena, the Intuit Dome, and included initiatives like a “Planet Protection Fund” to help fans offset their carbon footprints when purchasing tickets.

The Connection to Kawhi Leonard

Reports indicate that Ballmer introduced Aspiration to Leonard in November 2021, following the Clippers’ signing of a significant partnership deal with the company. In April 2022, Leonard reportedly agreed to a four-year, $28 million endorsement deal with Aspiration through his LLC, KL2 Aspire, just nine months after re-signing with the Clippers. An unnamed source from Aspiration suggested that this payment was intended to circumvent the NBA’s salary cap regulations.

Further complicating matters, reports surfaced indicating that Clippers minority owner Dennis Wong invested nearly $2 million in Aspiration shortly before Leonard received a payment of $1.75 million from the company. Ballmer also made an additional $10 million investment in Aspiration in March 2023, during a funding round that included other previous investors.

NBA’s Investigation

The NBA is conducting a thorough investigation to determine whether Ballmer and the Clippers violated any league rules. Commissioner Adam Silver emphasized the importance of examining the totality of the evidence rather than relying solely on appearances of impropriety. He expressed a commitment to fairness in the investigation process, stating that he would be reluctant to take action based on mere perceptions.

The league has engaged the New York-based law firm Wachtell, Lipton, Rosen & Katz to conduct the investigation, although no specific timeline for its conclusion has been established.

The Downfall of Aspiration

Andrei Cherny departed Aspiration in 2022, and he later clarified that Leonard’s contract was not a “no-show” deal, asserting that it contained extensive obligations. He mentioned that he signed the contract following numerous discussions about Aspiration’s plans with Leonard. However, he refrained from commenting further on the company’s activities post-departure.

Aspiration filed for bankruptcy in March, reporting debts of $170 million, with the Clippers owed $30 million—the largest amount among its creditors. The company also stated that it owed Leonard’s LLC $7 million. Recently, Joe Sanberg, co-founder of Aspiration, pleaded guilty to two counts of wire fraud, admitting to defrauding investors and lenders out of $248 million through various deceptive practices. Each charge carries a potential maximum sentence of 20 years in prison.

In response to the unfolding situation, Ballmer expressed regret for not identifying the financial issues within Aspiration sooner, admitting, “These were guys who committed fraud. Look, they conned me.”

Conclusion

The ongoing investigation into the Kawhi Leonard endorsement deal and its ties to Aspiration raises significant questions about the intersection of sports, finance, and ethics. As the NBA seeks to uncover the truth, the future of the Clippers and their ownership remains uncertain.

Key Facts

– **Company**: Aspiration, co-founded by Joe Sanberg and Andrei Cherny in 2013.
– **Endorsement Deal**: Kawhi Leonard’s $28 million deal with Aspiration is under investigation for potential salary cap circumvention.
– **Investments**: Steve Ballmer invested $50 million in Aspiration; Dennis Wong invested nearly $2 million shortly before Leonard’s payment.
– **Bankruptcy**: Aspiration filed for bankruptcy in March, owing $170 million, including $30 million to the Clippers and $7 million to Leonard’s LLC.
– **Legal Issues**: Joe Sanberg pleaded guilty to wire fraud, involving $248 million in fraudulent activities.

Source: www.espn.com