The Clippers Used Fake Endorsements to Skirt the Cap, and the NBA's Law Firm Found More
Wachtell's independent investigation did not clear the Clippers — it made the scandal bigger: beyond Aspiration, there is a string of fake endorsements funded by the Clippers that ultimately flowed to Kawhi Leonard.
The video won't play here. Listen to the audio instead:
The argument · tap a timestamp to hear it
The Clippers used fake endorsements to get around the salary cap
The Clippers first paid millions of dollars to a company called Aspiration Partners, nominally for vague environmental services; Aspiration then paid that money to Kawhi Leonard in the form of endorsement fees, even though Leonard did essentially no endorsing. When Pablo Torre first reported it, the claim was contested, and the Clippers denied it throughout, but the investigation the NBA commissioned from Wachtell Lipton largely confirmed it — and found more similar arrangements.
— Matt LevineEven the scoreboard company was pulled in to move the money
Wachtell's report found more than just the Aspiration payment. The Clippers also paid "consulting fees" to companies that provided no consulting services at all, including the company that made the scoreboard for their arena. The play was: the Clippers pay a consulting fee, then call and ask for a higher price on the scoreboard purchase, with the clear expectation that the money be passed on to Kawhi Leonard. The money goes in a circle, and the ultimate purpose is still to give the star a raise.
— Matt LevineAn independent law firm investigation is not there to clear you
Max had assumed an outside law firm's independent investigation was meant to produce a clean bill of health after a scandal, but the Wachtell report made things look worse. Matt offers a more cynical explanation: the classic use of a law firm investigation, under the shadow of a DOJ or regulatory probe, is to hand over some "bad apple" as a scapegoat so the company earns cooperation credit. But this time there was no DOJ pressure to shut down the NBA, the NBA seems to have given Wachtell a lot of room, and Wachtell clearly had a great time digging.
— Matt LevineOnce the DAT premium vanished, the arbitrage flipped direction
Empery Digital was originally an electric motorcycle company, and in July 2025 it transformed into a digital asset treasury company (DAT), stockpiling about $500 million of bitcoin, with its stock at one point trading at a premium to its holdings. The logic: put $1 of bitcoin into a DAT and it becomes $2 of stock. But the premium quickly disappeared and DATs began trading at a discount, so the arbitrage reversed — use $0.90 of stock to buy $1 of bitcoin, buy the DAT, break it up, sell the bitcoin. DAT activism was born.
— Matt LevineIs a shareholder shorting bitcoin disloyal?
One of the core disputes in the Empery case: an activist buys discounted DAT shares while shorting an equal amount of bitcoin, making itself delta neutral and earning only the discount convergence. The company argues this must be disclosed, because the other shareholders are all theoretically long bitcoin while these people are bitcoin neutral, their interests are not aligned, and they should not be eligible to run for the board. Matt thinks the argument is "wrong, but only accidentally wrong": if a DAT is a vehicle for believers to hold bitcoin (like Strategy), it makes sense; but most DAT shareholders are the same hedge funds, all of whom came for the premium and are unhappy about the discount, so their interests are actually aligned.
— Matt LevineCede & Co holds most American stocks
Matt mentioned in his column a fact most people don't know: most shares of most American companies are registered in the name of Cede & Co, the nominee of DTC. A 1998 report said Cede & Co held 83% of all US stocks; DTC now custodies about $74 trillion of stocks. When you hold shares through Robinhood, what actually happens is that Robinhood has a record on DTC's ledger, and Cede & Co is on the company's shareholder register. The system grew out of the efficiency revolution of the 1960s and 70s, when paper stock certificates were centralised in one place and only name changes were recorded.
— Matt LevineRobinhood's tokenisation is not an on-chain shareholder register
Tokenised stocks can mean many things, and one ideal is this: every company maintains a public blockchain shareholder register, no longer needing intermediaries like DTC or Robinhood, and the company can build a direct relationship with its shareholders. But that is not what Robinhood did — it bought AMC stock itself, then issued derivative securities on-chain representing that stock and sold them to overseas investors, effectively "making its own share of AMC." AMC's Adam Aaron was unhappy, and Vlad Tenev asked "what's the problem?"
— Matt LevineApollo pays 100 basis points for its "aggressive" reputation
A paper measures private equity sponsors' reputations in three ways: having ChatGPT and Claude rank the most aggressive PE firms; looking at who has done liability management exercises (quasi-forced debt swaps); and putting Apollo in one bucket by itself and the other 24 firms in another. The conclusion: the most aggressive sponsors' portfolio companies borrow at noticeably higher yields, Apollo's loans are about 100 basis points more expensive than other sponsors', and the sample's average yield is 717 basis points. Matt calls it the "jerk premium" or the "aggression premium" — creditors expect to be squeezed, so they charge upfront.
— Matt LevineIn their own words · checked verbatim
the thesis was that this was a way for the Clippers to pay Kawhi Leonard, who's their star player, more than the NBA maximum contract amount.
Matt Levine3:06
the point of a law firm investigation is to make, is often to make the company look good. But often the way to do that is to make some selected person look as bad as possible.
Matt Levine7:09
you could turn $ 1 of Bitcoin into $ 2 of stock. But when it reversed and these DATs were trading at a discount, people realized that you could turn $ 0. 90 of stock into $ 1 of Bitcoin.
Matt Levine11:15
they're neutral to Bitcoin. And they're just in it to crack open the DAT and capture the discount, which I think is a really interesting claim. And I think it's wrong, but it's just contingently wrong.
Matt Levine18:21
Wikipedia quotes a report from 1998 saying that Seed & Co owns 83% of all stocks in the United States.
Matt Levine24:27
they found that Apollo loans in particular carry a premium of about 100 basis points compared to other sponsors.
Matt Levine33:35
We know that Apollo has this reputation for extracting value from creditors. We're a creditor. We don't want value extracted from us, but we expect them to extract value from us.
Matt Levine34:36
Figures
| Empery Digital's bitcoin holdings | about $500 million | 10:14 |
| Share of US stocks held by Cede & Co (1998 report) | 83% | 24:27 |
| Stocks custodied by DTC | about $74 trillion | 24:27 |
| Apollo's loan premium over other sponsors | about 100 basis points | 33:35 |
| Average yield in the paper's sample | 717 basis points | 33:35 |
| Number of PE sponsors ranked in the paper | 25 | 31:35 |
Glossary
- DAT (Digital Asset Treasury)
- A company that puts crypto assets such as bitcoin onto a public company's balance sheet and arbitrages the stock price premium.
- liability management exercise
- A quasi-forced debt swap led by a private equity sponsor that transfers value away from some creditors.
- Cede & Co
- The nominee of DTC, in whose name most US listed company shares are registered.
- DTC (Depository Trust Company)
- The central US securities custody and clearing institution; Cede & Co is its nominee.
- delta neutral
- Holding related long and short positions simultaneously so that a change in the underlying asset's price does not affect the overall position.
How to listen
Finance professionals and investors interested in sports scandals, DAT arbitrage, private equity reputation pricing and stock custody mechanics.
The opening chit-chat about Samuel Johnson and Steve Ballmer dancing is skippable.