The Securities and Exchange Commission and the NBA have contacted Daktronics seeking information related to Kawhi Leonard and the Los Angeles Clippers, the company's acting chief financial officer said during an earnings call Wednesday, according to The Athletic.
NBA, SEC seek Daktronics information
The disclosure marks the first time Daktronics has publicly acknowledged that both the NBA and a federal government agency are examining matters involving the company and its reported endorsement arrangement with Leonard.
“Let me now briefly address a matter that has been in the media concerning the NBA’s investigation of Kawhi Leonard and the Clippers in connection with the league’s collective bargaining agreement that many of you may have heard about,” Daktronics acting CFO Howard Atkins said during the call.
“As you might expect, we have received requests for information from the NBA," he revealed.
Leonard's reported Daktronics deal
The development follows a report last month from Pablo Torre, who alleged that the 35-year-old NBA forward had a previously undisclosed endorsement agreement with Daktronics.
The reported arrangement has drawn comparisons to the alleged deal involving Leonard, the Clippers and Aspiration, the environmental startup that has since gone bankrupt.
{{/usCountry}}The reported arrangement has drawn comparisons to the alleged deal involving Leonard, the Clippers and Aspiration, the environmental startup that has since gone bankrupt.
{{/usCountry}}Both arrangements have been alleged to involve additional compensation for Leonard and potential efforts to bypass the NBA's salary-cap rules.
The NBA's investigation into the Clippers began last September, with the league examining a reported $28 million sponsorship agreement between Leonard and Aspiration under which the player allegedly received compensation despite having no work obligations.
Aspiration deal under NBA scrutiny
Aspiration served as a jersey-patch sponsor for the Clippers, while team owner Steve Ballmer invested $60 million in the company between 2021 and 2023.
The Clippers and Ballmer have consistently denied any wrongdoing or violation of NBA rules in connection with Aspiration.
The league's investigation concluded Wednesday, however, with significant penalties for both the organization and Leonard. The Clippers were fined $30 million, while Leonard received a $700,000 penalty for violating the NBA's salary-cap circumvention rules.
SEC probe details remain undisclosed
While the NBA has now completed its investigation, questions remain about the SEC's interest in Daktronics.
The company has not disclosed what specific issues the SEC is examining, and it remains unknown whether Daktronics could face financial or other penalties if federal authorities determine that securities laws or market regulations were violated.