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

The Securities and Exchange Commission has opened an investigation into scoreboard manufacturer Daktronics on Wednesday in relation to an alleged sponsorship deal the company had with Los Angeles Clippers star Kawhi Leonard .

Daktronics acting CFO Howard Atkins revealed the investigation on an earnings call Wednesday, and said they have received requests for information from the NBA. Specifics of the SEC's investigation are not yet known. It marks the first public acknowledgement that the NBA is including Daktronics in its investigation into Leonard and the Clippers.

"As you might expect, we have received requests for information from the NBA. Additionally, the Securities and Exchange Commission is seeking information from us concerning the company and Mr. Leonard," Atkins said . "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."

Atkins' statement came shortly before the NBA announced it had concluded that the Clippers and Leonard violated salary cap circumvention rules. As a result, the Clippers were stripped of five first-round picks. Clippers owner Steve Ballmer was fined $30 million and suspended, along with multiple other Clippers officials, and Leonard was fined $700,000.

Leonard and the Clippers have been under scrutiny and an NBA investigation for nearly a year after an alleged no-show sponsorship deal with the now-defunct sustainability company Aspiration . That deal reportedly paid Leonard millions for no visible work in an alleged bid to circumvent the NBA's salary cap.

A report last month from "Pablo Torre Finds Out" claimed Daktronics also hired Leonard to a multimillion dollar sponsorship deal that didn't result in any work from Leonard. Daktronics built the $100 million video board at the Clippers' Intuit Dome.

Daktronics is a business-to-business company, and doesn't sell products to the average consumer. The company is reportedly not known for doing celebrity sponsorship deals, either, and there is little impact that such a deal would have for the company if it existed. One former Daktronics employee told Torre that the company didn't have any sort of sponsorship deal like this in the 20-plus years they were with the company.

Torre, who first broke the Aspiration story with Leonard, also reported that Daktronics was in financial stress in 2023, around the time they were working on the Intuit Dome video board. The company also reportedly used the same crisis communications firm that has done work for former Clippers co-owner Shelly Sterling, and an LLC owned by Clippers owner Steve Ballmer.

The NBA concluded its investigation on Wednesday. Leonard's deal that would trade him to the Raptors has been on hold due to the investigation.

It's not clear what the SEC is investigating specifically with Daktronics, and it's not known what sort of financial penalties the company may face should the investigation determine they violated federal securities laws and market rules.

While the NBA's part in the investigation is now over, the government agency's investigation appears to be still ongoing.