Feds, NBA investigating Daktronics amid alleged Kawhi Leonard, Clippers no-show sponsor deals

The Securities and Exchange Commission (SEC) began an investigation into Daktronics on Wednesday, following allegations that the company had a sponsorship deal with Los Angeles Clippers star Kawhi Leonard. The company's acting CFO, Howard Atkins, revealed this information on an earnings call, stating that they have received requests for information from both the NBA and the SEC.

Atkins emphasized that the company is cooperating with these requests and will not provide additional comment at the moment. The investigation is the first public acknowledgment that the NBA is including Daktronics in its probe into Leonard and the Clippers. This probe stems from an alleged no-show sponsorship deal between Leonard and a defunct sustainability company called Aspiration, which reportedly paid Leonard millions of dollars for no visible work, allegedly to bypass the NBA's salary cap.

Additionally, a report suggested that Daktronics also hired Leonard for a multimillion-dollar sponsorship deal that didn't result in any work from Leonard. This company, known for not typically engaging in celebrity sponsorship deals, built the $100 million video board at the Clippers' Intuit Dome. A former employee told the investigator that such a deal never existed in the company's 20-year history with the Clippers.

The NBA is also still investigating the Aspiration deal and has expanded its probe to include Daktronics, pausing a trade involving Leonard from the Clippers to the Toronto Raptors in the process. NBA commissioner Adam Silver has stated his hope that the investigation will conclude before the 2026-27 season, but reports suggest a resolution may be delayed until next year if no settlement is reached.

The NBA has hired a New York law firm to run the investigation, but it remains unclear what specific aspects of Daktronics' dealings are under scrutiny and the potential financial penalties the company may face if found guilty of violating federal securities laws and market rules.