The NBA investigation into whether the LA Clippers circumvented the salary cap to pay Kawhi Leonard could drag into 2027 if the parties don't agree on the findings or any proposed settlement that involves punishing the team, sources with knowledge of the case told ESPN on Wednesday.
Sources close to the National Basketball Players Association with knowledge of the investigation said the union wouldn't hesitate to take the matter to arbitration if the NBA sought penalties without sufficient evidence proving the claim that the Clippers have denied since the league's probe began nearly 10 months ago.
On July 9, NBPA executive director David Kelly told reporters in Las Vegas that he didn't believe there was a "there, there" regarding whether the Clippers compensated Leonard through a $28 million endorsement deal that he signed in 2022 with the now-bankrupt green banking company Aspiration, which also had a 23-year, $300 million endorsement deal with the Clippers.
When asked if he believed there was anything that the New York law firm Wachtell Lipton -- which is directing the NBA's investigation -- had uncovered that was worthy of punishment, Kelly replied, "Not from anything I've seen."
One source with knowledge of the investigative process cautioned against the idea of any outside parties having inside knowledge of Wachtell Lipton's findings to date -- or of anyone trying to speculate as to whether the length of the investigation signals what the law firm has or hasn't found.
NBA commissioner Adam Silver said July 14 that this case was a complicated process that involved bankruptcy courts and reluctant witnesses.
If the parties -- which include the Clippers and the National Basketball Players Association -- can't agree, the matter could head to a neutral arbitrator who is jointly appointed by the NBA and the NBPA. The arbitrator could compel document production, witness testimony and order discovery. After a hearing, the arbitrator's ruling would be subject to an appeals panel made up of three people jointly appointed by the NBA and the NBPA. The appeal panel decision is binding.
Such a process, which applies in this instance because cap circumvention is a violation of the NBA's collective bargaining agreement, would ultimately determine whether Silver could punish the Clippers for allegations that money was funneled to Leonard through Aspiration.
On July 14, Silver told reporters that the investigation "needs to be wrapped up before the beginning of next season" and that it had gone on "longer than I would have hoped, there's no question about that."
The NBA did not immediately respond Wednesday to a request for comment.
If the NBA presented indisputable circumvention evidence after an investigation that began in September 2025 following a series of podcasts from former ESPN contributor Pablo Torre, then those sources suggested a process could follow that avoids arbitration with all sides agreeing on both the finding and the potential discipline.
Under the NBA's 2023 collective bargaining agreement, penalties for salary cap circumvention can include team fines up to $7.5 million, direct forfeiture of draft picks, the voiding of any player contract and a suspension of up to a year for any team personnel found to have engaged in such a violation.
The Clippers remain adamant that they did not funnel money to Leonard through Aspiration, and one source close to the team with knowledge of the investigation said that it would "fight that to the end," including through arbitration.
One factor that has placed a heightened sense of urgency in the matter is the proposed trade between the Clippers and the Toronto Raptors that would send Leonard to his former team in exchange for Brandon Ingram, Gradey Dick, unprotected first-round draft picks in 2031 and 2033, a 2027 first-round pick swap and two second-round picks.
The Clippers and the Raptors agreed to the trade on June 30. Nine days later, the teams separately announced that the trade was on hold.
In separate statements, the teams said they learned from the league office that the Raptors would be taking on the risk for any penalties that Leonard might face -- such as a possible suspension or his contract being voided -- as a result of the investigation.
Both the Clippers and the Raptors have stated that they still intend to complete the deal, though it's unclear how an arbitration process might impact their ability to do so.
Outside of punishment for salary cap circumvention, it's unclear what penalties, if any, the Clippers and/or Leonard could face. The Athletic recently reported that Wachtell Lipton has expanded the scope of its investigation and was looking into a previously unreported endorsement deal that Leonard had with another company as well as expenses that the Clippers provided for Leonard but for which the team was not reimbursed.
Sources who have known and worked with Silver for years have repeatedly told ESPN that they do not expect him to be swayed by public attention in this case, one way or another.
As one source explained, if the league ignored evidence that implicated the Clippers, then the cover-up would become a story; and if the league sought punishment without evidence, then the overreach would become a story. The source said they had full confidence that Silver would "play it straight," based on the facts, as Silver has said he would do throughout the inquiry.
On July 14, Silver said he understood why some are frustrated that the investigation has lasted this long.
"On one hand, we want to respect everyone's rights here," Silver said. "Certainly, if any of us were being investigated, we would want a certain standard to be met, a standard of due process with presumption of innocence, etc. And at the same time, we want to be able to answer to our teams and our fans and to all of you that this is comprehensive and that to the best of our ability, we've discerned what actually happened in this situation."
