Feds Questioning Daktronics Over Reported Kawhi Leonard Ties
The company revealed on its earnings call it’s “cooperating” with the SEC.
The Securities and Exchange Commission is probing Daktronics for potential connections to the Los Angeles Clippers and basketball star Kawhi Leonard. In a recent report, Pablo Torre uncovered that Leonard had an undisclosed sponsorship agreement with Daktronics, akin to the clandestine arrangement he purportedly had with the defunct environmental firm Aspiration.
Both partnerships allegedly aimed to bypass the NBA's salary cap and provide Leonard with extra pay. During its earnings call, Daktronics disclosed the regulatory scrutiny on Wednesday. Acting CFO Howard Atkins stated, "As you might expect, we have been asked for information by the NBA. Moreover, the Securities and Exchange Commission is requesting data from us concerning the firm and Mr. Leonard.
We consider these inquiries seriously and are complying. For now, out of deference to the relevant processes, we will refrain from issuing additional statements." Daktronics specializes in LED scoreboards, screens, and audio gear installations for professional and college sports venues, such as the $100 million display board at the Clippers' arena.
A Daktronics spokesperson declined to comment on the matter. Meanwhile, the SEC spokesperson also hesitated to provide further information. When questioned previously by Torre and Hunterbrook Media's Sam Koppelman, Daktronics redirected them to a crisis management firm, which later clarified that "to the best of my knowledge, Daktronics does not currently possess a deal with Kawhi."
The SEC spokesperson added that "I am unsure what the company wishes to disclose, or can disclose, given the NBA's investigation into the Aspiration deal, which has been ongoing for nearly a year." ESPN has previously reported that the probe might persist until 2027 if the involved entities fail to reach an agreement or arrive at a settlement.
The Clippers traded Leonard to the Toronto Raptors on June 30, but the transaction remains suspended until the investigation concludes.
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