The pending trade that would send Kawhi Leonard back to Toronto is on hold as the Raptors and Los Angeles Clippers await the results of the NBA's 10-month investigation into the Aspiration scandal.
Here are the big questions to ponder until a resolution is reached.
Why is the trade on hold?
Before the Raptors and Clippers could complete a trade call with the league office that would've made the transaction official, the NBA informed both teams that the Raptors would have to assume the risk of any Leonard-related punishments stemming from the Aspiration investigation's findings (the Clippers would obviously still be on the hook for any team-related penalties).
The Raptors released a statement that reads, in part, "In light of this, we will wait until the league's investigation is complete. The Raptors remain eager to bring Kawhi back to Toronto and look forward to a swift resolution for our players, our organization, and our fans."
The most logical conclusion is that the league (and Toronto) prefers that all findings and potential penalties are clearly understood before the Raptors and Clippers consummate a trade involving a player at the heart of the scandal. However, the wording of both teams' statements suggests that it was a surprise to learn the Raptors would have to take on such risk.
The NBA wanting to hold off on approving a trade until the investigation is wrapped up and potential punishments have been doled out makes sense. The Raptors being caught off guard about having to deal with any Leonard-specific penalties does not.
What is the Aspiration scandal?
In short, it is alleged that when extending Leonard in 2021, the Clippers circumvented the NBA's salary cap by funneling additional funds to him - cap-hit free - through an endorsement deal with a now-bankrupt eco-friendly bank and tree-planting company called Aspiration. Leonard's $28-million deal with Aspiration, which counted Clippers owner Steve Ballmer among its investors, was reportedly equivalent to a "no-show" job in which Leonard received the funds without doing any promotional work for the company.
After pleading guilty to defrauding investors out of more than $248 million, Aspiration co-founder Joseph Sanberg was sentenced in June to 14 years in prison. Ballmer and the Clippers have maintained their innocence, with the team's owner stating he was merely a victim of fraud, like many other Aspiration investors.
After investigative journalism podcast "Pablo Torre Finds Out" originally went public with its findings exposing the scandal, the NBA announced it was hiring law firm Wachtell, Lipton, Rosen & Katz to investigate the allegations. Ten months later, that investigation remains ongoing, though commissioner Adam Silver said in June, "At some point, we have to wrap it up."
When will this be resolved?
The hope is that all of this will be resolved by the time the NBA's board of governors meets Tuesday (July 14), according to Sportsnet's Michael Grange. In a statement to ESPN's Shams Charania, an NBA spokesperson said they expect the law firm to finalize its work "in the coming weeks."
Is there any precedent for this?
Yes. The Minnesota Timberwolves were severely punished for circumventing the cap to sign Joe Smith back in 1999.
The illegal pact would see Smith sign three consecutive one-year contracts with Minnesota so that the capped-out Wolves could get his bird rights, at which point the team could go over the cap to re-sign him. All of this was orchestrated to eventually pave the way for a seven-year, $86-million deal in 2001. In short, when Minnesota signed Smith to an initial one-year, $1.75-million contract, it was just a cover for an under-the-table deal worth roughly $93 million over 10 years.
Then-Timberwolves owner Glen Taylor received a nine-month suspension as a result, while team vice president Kevin McHale agreed to take a leave of absence. In addition, Minnesota was fined $3.5 million, and then-commissioner David Stern stripped the Wolves of their next five first-round draft picks (though one was eventually returned). Meanwhile, Smith wasn't suspended, but his contract was voided.
You can argue what the Clippers and Leonard's camp allegedly did is worse. The Wolves never funneled cap-free money to Smith off of the NBA's books. Minnesota signed him when it didn't appear to be in position to do so by promising him more money later, but that money was always going to count against the cap.
What happens if Leonard's contract is voided?
This is the question that could throw a wrench into the proposed blockbuster between the Raptors and Clippers. In the event that the NBA's investigation finds misconduct worthy of the same punishment Smith faced, how does the framework of Toronto's acquisition change?
Would the trade remain in place, with one year and $50.3 million remaining on Leonard's current contract voided only after the deal goes through? In that extremely unlikely scenario, Brandon Ingram, Gradey Dick, and draft picks would still head to L.A. Such an outcome is probably what the Raptors are hoping to avoid by holding off.
If Leonard's contract is voided, the more probable scenario would see the trade fall apart and Leonard immediately become an unrestricted free agent without bird rights (which is what happened to Smith). At that point, teams would not be able to exceed the cap to sign Leonard without using an exception, and few teams, if any, have practical cap space remaining this offseason. The Raptors would be limited to using part of their $15-million non-taxpayer mid-level exception to sign the two-time Finals MVP. If they move some money around, they might be able to offer him the full $15 million.
In any event, if his contract is voided, Leonard would have to wait at least a year to sign for max-level money. Without his bird rights, the Raptors couldn't offer such a contract in 2027 unless they found a way to clear max cap space.
If Leonard's current contract remains in place and the trade goes through as planned, him and the Raptors could move quickly to secure a two-year, $123.7-million extension that runs through 2029. For what it's worth, Charania reported earlier this week Leonard has new representation that no longer includes former agent Mitch Frankel or uncle Dennis Robertson.
Finally, if Leonard maintains his contract and bird-rights status but faces a lengthy suspension, it will be fascinating to watch whether the Raptors accept the terms of the original trade or renegotiate in hopes of perhaps surrendering less draft capital. Again, given that Toronto should've assumed Leonard could face punishment, it would be stunning if the Raptors let the deal fall apart once that punishment is announced.
What's the smart prediction?
Between reports that a voided contract is unlikely and Toronto's stated confidence in reuniting with Leonard, it feels like the trade will ultimately go through. Leonard's reported desire to retire as a Raptor also increases the likelihood he'll end up north of the border.
However, until the league's investigation concludes and the trade is official, Raptors fans will be sleeping on pins and needles. Understandably so.
Joseph Casciaro is theScore's lead NBA reporter.
