SEC Questioning Daktronics Over Alleged Kawhi Leonard Endorsement Deal (September 2)

The Securities and Exchange Commission is seeking information from Daktronics regarding a potential unreported endorsement deal with Kawhi Leonard, the company disclosed during its earnings call on Wednesday, September 2. The investigation marks the first public confirmation that federal regulators have expanded scrutiny of the Los Angeles Clippers' salary-cap circumvention scheme beyond the NBA's own probe.

Daktronics acting CFO Howard Atkins stated during the call, according to Front Office Sports: "As you might expect, we have received requests for information from the NBA. Additionally, the Securities and Exchange Commission is seeking information from us regarding the company and Mr. Leonard. We take these requests seriously and are cooperating. At this point, out of respect for the respective processes, we will not be providing further comment."

Front Office Sports reported that Leonard had a previously unknown endorsement deal with Daktronics similar to his arrangement with Aspiration, an environmental startup that has since failed. Both deals were allegedly meant to circumvent the league's salary cap and provide Leonard with additional compensation beyond his contract.

Daktronics is a manufacturer of LED scoreboards, screens, and audio equipment, including the reported $100 million halo board at the Clippers' Intuit Dome. When contacted earlier, the company referred reporters to a crisis management firm, whose spokesperson stated: "My understanding is Daktronics doesn't have a deal with Kawhi right now." The same spokesperson declined to provide definitive detail on past arrangements, citing the ongoing "Wachtell investigation" into the Aspiration deal.

The NBA concluded its investigation into the Clippers' alleged salary-cap circumvention, stripping the team of five first-round draft picks and fining owner Steve Ballmer $30 million. Ballmer was also suspended for one year. ESPN reported this summer that the NBA investigation could extend into 2027 if the parties do not reach an agreement on findings or a settlement. The Clippers traded Leonard to the Toronto Raptors on June 30, but the deal remains on hold pending resolution of the investigation.