In the first part of our two-part sports law review from 2025, here are scouting reports on five major controversies involving pro sports.
1) Kawhi Leonard NBA probe
In September, journalist Pablo Torre broke major news on his podcast Pablo Torre Finds Out. Torre revealed that the Los Angeles Clippers might have circumvented the NBA’s salary cap through Aspiration, a company with whom Clippers owner Steve Ballmer invested $50 million and was a team sponsor. Aspiration signed Leonard (through Leonard’s KL2 Aspire LLC) to a four-year, $28 million endorsement deal. Leonard allegedly didn’t have to perform any services in his endorsement deal, which has been depicted as extra money for Leonard connected to his Clippers employment. Ballmer and the Clippers deny the allegations, and Dallas Mavericks minority owner Mark Cuban has defended Ballmer.
The NBA has launched an investigation, which is led by the law firm Wachtell, Lipton, Rosen & Katz. The NBA has significant discretion in determining whether the Clippers violated the cap. There does not need to be an actual “deal” between the Clippers and Aspiration; a mere “understanding” would suffice under the rules.
There are complicating factors surrounding the veracity of the accusers. Aspiration filed for bankruptcy earlier this year and owes the Clippers and KL2 Aspire $30.1 million and $7 million, respectively. Aspiration co-founder Joseph Sanberg earlier this year pleaded guilty to wire fraud and, according to prosecutors, used his position “to deceive investors and lenders for his own benefit, causing his victims over $248 million in losses.”
The controversy raises interesting questions about the relationship between teams and sponsors, including the circumstances in which sponsors sign players on teams to endorsement deals. Teams and sponsors necessarily collaborate in business dealings. However, they should keep clear of each other should that collaboration involve endorsement deals given the risk the deals are seen as connected to the team.
2) Brian Flores and Jon Gruden test the legal limits of NFL arbitration
It’s been a truism in professional sports law that leagues are designed to avoid lawsuits brought by teams, owners, coaches and players. The core design feature is compulsory arbitration, where everyone agrees that if there is a dispute, it is heard by a process overseen by the commissioner—and unlike litigation, it is conducted in private.
Then 2025 happened.
Although Brian Flores and Jon Gruden are an unlikely pairing—Flores accuses the NFL of racism while Gruden accuses the NFL of leaking emails with his racist comments—they have both brought lawsuits challenging the enforcement of arbitration clauses in the league constitution and referenced by their employment contracts as coaches.
In August, a three-judge panel on the U.S. Court of Appeals for the Second Circuit found NFL commissioner Roger Goodell should not be able to serve as arbitrator for Flores’ race-related discrimination claims against the league and the New York Giants, Denver Broncos and Houston Texans, which included allegations of the trio of franchises conducting sham head coaching job interviews. The panel reasoned that foundational principles of arbitration contemplate an “independent” process that is “separate from the parties to the dispute.”
That same month, justices on the Supreme Court of Nevada agreed with Gruden that even though he contractually assented to a statement saying he acknowledged having “read the NFL Constitution and By-Laws and applicable NFL rules and regulations, and understands their meaning,” an arbitration process overseen by Goodell, whom Gruden accuses of wrongdoing, is unconscionable and unenforceable.
The net effect of the lawsuits brought by Flores and Gruden lives on, but more importantly from an industry perspective, arbitration clauses in coaches’ contracts might not be enforceable. That could mean more litigation, with more pretrial discovery including emails, texts and sworn testimony about league and team affairs being made public.
3) Michael Jordan and NASCAR Legal Battle Ends in a Draw
Michael Jordan may be the GOAT of basketball, but lately he’s sought a different identity: the man who takes NASCAR’s system of competition down.
Jordan and NASCAR would probably disagree as to whether he succeeded. The two sides settled their dispute midway through their trial in December, with both sides expressing they’re pleased with the outcome.
23XI Racing, which Jordan co-owns with Denny Hamlin and Curtis Polk, and Front Row Motorsports accused NASCAR of possessing too much control in the buying of services provided by premier stock car racing teams. NASCAR was also depicted as trying to thwart potential rivals and unfairly denying permanent ownership of charters, which are multiyear contracts between teams and NASCAR.
NASCAR disputed the allegations and depicted Jordan’s group as unwisely trying to convert the NASCAR model of contracts between the association and teams into something akin to franchise ownership in the NBA. NASCAR stressed that charters allowed 23XI to come into existence five years ago and that, to the benefit of owners and their teams, charters have greatly increased in value in recent years.
The case had implications beyond NASCAR. It went to the core of the legal relationship between leagues and their teams, and the degree to which leagues and teams can contractually agree to systems of governance that limit competition without running afoul of antitrust law.
The settlement will lead to NASCAR amending existing charters with new terms. The details remain to be seen.
Had the trial gone to the jury, whichever side lost would have appealed to the U.S. Court of Appeals for the Fourth Circuit. In other words, the dispute could have remained on the docket for years. Instead, the race to win is over and both sides seem to think they won.
4) WNBA labor crisis
As 2025 ends, there appears to be some momentum that the WNBA and WNBPA will reach a deal on a new CBA—but if not, 2026 could involve a player strike and accompanying labor litigation.
WNBA players argue they should receive a greater share of money tied to dramatic increases in league franchise values, expansion fees and TV ratings. These increases have occurred while the WNBA is reportedly still losing money, with a loss of around $40 million in 2024, but seeing a rosier long-term financial picture. The sides have extended CBA discussions to Jan. 7 and could extend them again if necessary.
The WNBA and WNBPA don’t “need” a new CBA to play the 2026 season. Terms of an expired CBA continue during what is known as the “status quo period,” which continues until either a new CBA or the parties reach an impasse after good-faith bargaining. U.S. Soccer and the U.S. men’s national soccer team went four years (2018 to 2022) between the expiration of one CBA and agreement on a new one, and the team played as scheduled during that period.
While there has been talk of a WNBA lockout, that appears to be unfounded and a reflection of confusion in labor law terms. A lockout is when management locks out labor; there is no reason to believe that will happen here. It is possible the players will strike, which could cost games and lead to legal challenges before the NLRB and federal courts.
5) Phoenix Suns and Phoenix Mercury ownership battle
It might sound odd that an NBA owner who puts home games on free TV and lowers prices on concessions at games could get in legal trouble for “knowingly forgoing significant revenue opportunities,” and yet that is central to litigation brought by two Suns and Mercury minority owners against Mat Ishbia.
Kisco, led by Andrew Kohlberg, and Kent Circle, led by Scott Seldin, claim that Ishbia is liable for breach of contract, fraud and related claims. They contend Ishbia and Suns Legacy Holdings—the Delaware LLC that owns the Suns and Mercury—have threatened to dilute the interests of Kisco and Kent Circle unless they fund a capital call. Kisco and Kent Circle also depict Ishbia as spending excessively on player and coach contracts and accuse him of financial mismanagement by leaving possible money on the table.
Ishbia argues the lawsuit is frivolous, and as a Suns spokeswoman recently told Sportico, is a “shameless shakedown dressed up as legal process.” The Suns maintain that “investing in the team and its fans” is “good business” and accuse Kohlberg and Seldin of wanting to “drag the organization backward.”
The case could settle at any time, with Kohlberg and Seldin potentially selling their shares. Until a settlement, the litigation provides a window into the relationship between majority and minority owners and what happens when that relationship sours.