Daktronics Says SEC, NBA Seek Information on Kawhi Leonard

Dow Jones
Sep 03

Daktronics has found itself in the middle of an NBA controversy. Now federal regulators are asking questions, too.

The maker of scoreboards and large video displays said Wednesday that both the Securities and Exchange Commission and the NBA have requested information from the company in connection with Los Angeles Clippers star Kawhi Leonard.

"We have received requests for information from the NBA," acting Chief Financial Officer Howard Atkins said on Daktronics' fiscal first-quarter earnings call on Wednesday. "Additionally, the Securities and Exchange Commission is seeking information from us concerning the company and Mr. Leonard."

Atkins said on Wednesday's earnings call that Daktronics is cooperating with both requests and declined to comment further.

The disclosure follows a report from journalist Pablo Torre last month that Leonard had a previously undisclosed, multimillion-dollar endorsement agreement with Daktronics. The arrangement drew scrutiny because Daktronics has substantial business ties to the Clippers: The South Dakota company supplied the massive Halo Board and other displays at the team's Intuit Dome arena.

Daktronics hasn't publicly confirmed the reported agreement.

The reported endorsement became part of a broader NBA inquiry into whether outside business arrangements involving Leonard were used to circumvent the league's salary-cap rules.

Daktronics' acknowledgment on Wednesday confirms that regulators are now seeking information from the company, though it doesn't indicate the SEC has accused Daktronics of wrongdoing.

Daktronics shares fell 1.2% Wednesday, leaving the stock down nearly 13% since the Leonard-Daktronics relationship was first reported in early August.

The company has reported a solid fiscal first quarter. Revenue rose 7.1% from a year earlier to $234.6 million, while earnings increased 21% to 40 cents a share.

 

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