Trouble For Cycling’s UCI – Sponsor Seeks Damages For UCI Not Stopping Armstrong

Jaimie Fuller’s business philosophy is, according to an interview published on dynamicbusiness.co.au, as follows:-

“to bite off more than you can chew and chew like buggery.”

He is the Chairman of SKINS, the global compression sportswear manufacturer.

Yesterday the Australian entrepreneur released a statement about action taken by his company against cycling’s world ruling body, the UCI. His company’s action could have implications the world over in relation to sporting events and their sponsors. Mr Fuller seems to be living up to his motto!

What are SKINS doing?

They have demanded that the UCI pay “damages of $2 million as a consequence of alleged mis-management in the Lance Armstrong doping scandal.”

SKINS has supported cycling with financial support of the sport, teams and riders over the last five years. It boasts of having “invested heavily into research and development to build a sports-specific product range aimed at those who participate at every level.”

Mr Fuller states:-

We did all this while under the impression that cycling had been fundamentally reformed after the Festina affair in the ‘90’s and that co-ordinated management from the UCI to contain doping activity had minimised the risks and scandals with which the brand of any sponsor would be associated.

However, he makes it clear that “world cycling has not been the sport the general public and the corporate partners thought it was”.

As a result Mr Fuller says, “as Chairman of a company that has made a significant financial and emotional investment, I am acting in order to send a message to the UCI and its senior office bearers that gross mis-management and betrayal of trust is completely unacceptable.”

On what basis can a sponsor seek damages from a sport ruling body?

SKINS lay the blame firmly at the door of the two leading figures in the UCI – President Pat McQuaid and Honorary President For Life, Hein Verbruggen for “failing to eradicate cheating within the sport”.

Mr Fuller lays down his indictment of the UCI in the light of the USADA findings about Mr Armstrong’s systematic doping programme.

He says:-

“In short, we say that the UCI, Mr. McQuaid and Mr. Verbruggen have failed us, the sport and the public who love cycling. We also believe the USADA revelations of widespread doping activity have raised wider, cultural issues within the UCI relating to an apparent inability to rid the sport of doping over an extended period of time.”

Basically the sponsors are looking for money back for being tainted by association with a sport riven with cheating, and particularly where the ruling body either turned a blind eye or even actively connived in the cheating.

Mr Fuller adds that “our trust in those at the top has been crushed. Our credibility as a company that promotes true competition, fitness and overall health and wellbeing has been affected by our own promotion of its ‘virtues’.

There would be two elements to the claim if brought under Scots law (as the UCI is based in Switzerland the case is not likely to arrive on these shores, but my grasp of Swiss law is non-existent).

Firstly there would be a claim for return of sponsorship money paid to the UI on the basis that the sport being “rigged” would either breach a specific term in the contracts or more likely would be in contravention of an implied term that the UCI was running a clean sport.

Secondly there is the claim for the consequent damage to SKINS brand and reputation by its being associated, not with the active, healthy and fair sport it had assumed, but with one where cheating and deceit lead to the top prize in the sport being won against the rules for seven consecutive years.

In a Scottish court I think the first claim would be far more straightforward than the second, for two reasons.

These would be:-

  • An action seeking return of specific sums paid by way of a sponsorship deal would be easier than one for an unspecific amount of damages; and
  • It would be very difficult to attribute an amount of financial damage to the company to this issue as opposed to the myriad other factors which affect businesses.

Far be it from me to suggest that Mr Fuller has half an eye upon the publicity benefits of the announcement, although I suspect he has, but he is clearly very angry about how the sport failed over many years to deal with the issue. In addition to making the claim, he also voices a very qualified welcome to the UCI’s decision to appoint an Independent Commission to see how the sport should learn from the Armstrong mess.

It is qualified though by his scepticism that the UCI “is either capable of leading global rehabilitation or commissioning a suitably independent and unrestricted group to conduct the forensic enquiry the sport crucially requires. Those at the top have presided over the mess, so how can they possibly be given the responsibility of commissioning and overseeing its review?”

Messrs McQuaid and Verbruggen – no longer on Jaimie Fuller’s Christmas Card list

He ends with a clear statement that the UCI under its present leadership is unfit for purpose. He says:-

“… the support of partners and sponsors in any world sport cannot be abused and must be preserved by unimpeachable leadership. The unequivocal overhaul of cycling can only be achieved by a credible and capable governing body. … the UCI is not currently the organisation that cycling needs it to be. For the last 22 years, there have been two people at the head of this organisation and we allege that they are directly responsible for the culture of denial within the UCI. It’s past time for change.”

Conclusion

I think the action by SKINS and the statement by Mr Fuller mark a new danger for sporting governing bodies.

There would be no doubt that, where a sporting team or individual athlete had cheated significantly, or over a significant period, the sponsors of the miscreant would be entitled to seek recovery of money paid to them. What Mr Fuller is looking to do is to attack the governing body, s the guardian of the sport’s sanctity. If the UCI, as it is in this case, cannot keep the sport played within the rules, then should it not also pay a financial penalty for its failures?

Should this case proceed successfully, or should another sponsor, whether in cycling or another sport, take similar action, I can see this placing ruling bodies in a Catch-22.

They could do one of the following:-

  • draw up sponsorship contracts with a specific exclusion of any right of action in such circumstances, which would be seen as an admission that the ruling body could not properly govern its sport; or
  • accept the risk that, if undetected cheating went on (or at least cheating undetected at the time) the sport could find itself liable to pay substantial sums in damages, when discovered.

The third option of course would be to prevent any cheating, but that is unlikely whilst there are rewards for winning and ways in which people can break the rules.

It also creates issues where there are ruling bodies whose responsibilities overlap. In Scotland, as a hypothetical example, should a football team be found to have engaged in long-running cheating in some way, and at such a level where as punishment the record books have to be changed, this would clearly be serious enough to justify such a case. But where does the responsibility lie? Do the SFA, SPL and SFL have a share in responsibility, and to what extent?

Maybe SKINS will prove to be the only sponsor in the world to take this action, and the UCI the only governing body to face it. However one can imagine a CEO of a major company who feels his or her business’ interests are adversely affected by its connection with a sport where there has been cheating following in Mr Fuller’s path.

Posted by Paul McConville

 

Footnote

The full statement released by SKINS can be found here.

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10 Comments

Filed under Cycling, Damages Claims, Doping, Lance Armstrong

10 responses to “Trouble For Cycling’s UCI – Sponsor Seeks Damages For UCI Not Stopping Armstrong

  1. Rich753

    “Half an eye on the publicity” – are you kidding? Both eyes firmly fixed, nay glued, to the publicity. Classic example of a number of phrases which in themselves are accurate but where the sum amounts to a lot less than the parts.

    Bunch of chancers – both lots actually, UCI and Skins – and you do sport in general no favours by giving them the oxygen of publicity.

    What may be more significant is that the letter to the UCI originates, so I understand, from the offices of the lawyers representing Kimmage vs UCI. One for teh conspiracy theorists.

    • Ernesider

      I sincerely hope Paul Kimmage has not got himself tied up with legal sharks who are more concerned with a high profile money earning case than restoring his standing and integrity.

  2. JohnBhoy

    Jabba: “A-L-L-Y. W-A-I-T. F-O-R. M-O-R-E. P-O-S-T-S. T-H-E-N. W-E. M-U-S-T. G-I-V-E. T-Us. W-E. M-U-S-T. G-I-V-E. T-Us. O-B-E-Y C-H-A-R-L-I-E. M-U-S-T. O-B-E-Y.

    Ally: “A-G-R-E-E-D. J-A-B-B-A. W-A-I-T. T-H-E-N. W-E. M-U-S-T. G-I-V-E. T-Us. W-E. M-U-S-T. G-I-V-E. T-Us. O-B-E-Y C-H-A-R-L-I-E. M-U-S-T. O-B-E-Y.”

  3. Ernesider

    I have been keeping a fairly close eye on this affair for some time now and I feel strongly, not about the doping, but about the intimidatory tactics used by both Armstrong and McQuaid against anyone who threatened their respective positions in the sport. So the more people that get stuck into them the better. They are both what McQuaid called Floyd Land and Tyler Hamilton, scumbags.

    Paul

    Here is another firm looking for money back, and serves to show how strong were suspicions when Armstrong was still winning, his brazen arrogance and how little the UCI did then and since to bring him to book.

    ” SCA Promotions paid out on an insurance policy taken out by Tailwind Sports, owner of the US Postal Service team, against bonuses due to Armstrong if he won a sixth Tour de France.

    Armstrong achieved his target with ‘victory’ in the 2004 Tour de France, but SCA refused to pay in the belief that he had cheated to win. Armstrong took the case to court in 2005 and won, claiming $5m plus interest.”

    SCA have announced that they are going to court to look for their money back.

  4. Paul,

    Very good article and an interesting if perhaps opportunistic development with this case.

    For those who have not read it I produced along examination of the Armstrong/Usada position prior to the UCL decision being made which can be found here http://wp.me/p1G95H-6.

    The parallels with what has happened here are clear and are becoming more and more relevant.

    As Erenesider has pointed out, Armstrong’s breathtaking arrogance and bullying have effectively left him in a position where he does not have a cycling friend left, and those who now appear to protect and defend his interests do not do so out of loyalty but out of sheer self preservation and interest.

    I have no knowledge of the letter concerning Kimmage and will need to look into that but in light of subsequent events, McQuaid, Verbruggen and the UCI would be well advised to abandon that litigation altogether and go study their Oscar Wilde on the folly of commencing court cases without thinking through the consequences.

    Armstrong faces financial ruin and potentially worse. He can never admit what he was about– unless it forms part of a sensational book with film rights which would net him Millions to help pay those who feel cheated out of sponsorship and advertising monies.

    I here that there is a book etc being discussed but again have no knowledge of its content — whether it spills the beans or robustly and steadfastly defends his innocence in spite of the USADA report.

    Whatever it says– it is all about money for Lance– nothing else counts.

    Greg Le Mond was once asked if he thought that Lance would ever fess up to doping. His reply was short, to the point and illuminating:

    ” No chance! That man has no conscience!”

    • Carl 31

      BRTH,
      I missed the piece when you first put it up, but very interesting. Are UCI still pursuing Kimmage?

      I heard a short interview on the radio a few weeks back, with a guy that either was from the Telegraph or had been, from memory. He recounted that the turning point in the whole affair was when USADA obtained stronger powers from a US federal court that allowed them to compel other US Postal team guys to make statements under oath. Up til then, there had been no such powers and the cyclists were under no compulsion to tell the truth about Armstrong. Put simply, when a court tells you you have to do something, and you dont do it, you get the jail. USADA thus was able to obtain far more widespread and reliable info on Armstrong and various avenues for the evidence trail.

      This raises a question about the Rangers Saga. Where will the evidence trail lead when the FTT returns, and the SPL Commission reports?

  5. Interesting stuff Paul. It could be viewed that a global brand, some marketing people and international litigation specialists have all got together to set up and explore a new, potentially very lucrative area of business that is a win-win for them all.

    However, could it not be argued that sponsors such as Skins (why the caps?) did indeed benefit very well, over the course of time that the said cheating took place, directly from the results of the alleged cheating? No one was any wiser that the cheating was taking place over the course of time in question, so surely the companies involved received ample return for their investment?

    Indeed, it would be very interesting to see how well such businesses’ profits and standing in the sports market – particularly among the fans of the particular sports – benefited during the years in question. They might not even be in the position to launch such a massive publicity dri- sorry, legal action to recover sponsorship and claim damages, or to develop such a potentially excellent line of work for sports lawyers.

    Truly, my heart bleeds for the poor souls.

    Seriously, if anyone has recourse to claim in such circumstances, surely it would be the people who have invested money that gave NO financial return – ie, the fans, not only the winners, but of all the ‘losers’ too.

    So just maybe, the Skins action could have an effect on our own little problems in Scottish football – it could galvanise all the supporters associations to get together and have a go at the SFA… Well, if a chancer like Jaimie (really?) Fuller thinks he can do it, why not the poor saps who followed all the teams in Scotland while one club were systematically cheating their way to titles galore? And btw, that includes the fans of the cheating club…

    (PS. Of course, it follows that the players could get involved too – but obviously that wouldn’t include those of the cheating club.)

    • Ernesider

      Kenny you wrote:

      ” it could galvanise all the supporters associations to get together and have a go at the SFA”

      I have started the ball rolling and texted the secretary of our village cycling club, asking for a vote of no confidence in Pat McQuaid. (No reply yet)

      The Skibbereen Eagle comes to mind, but who was the Chinese geezer that said a journey of a thousand miles starts with a single step.

  6. Carl 31

    Mr Fuller says, “as Chairman of a company that has made a significant financial and emotional investment, I am acting in order to send a message to the UCI and its senior office bearers that gross mis-management and betrayal of trust is completely unacceptable.”

    This ‘trust’ that he speaks of… how does that sit – where Sport is considered a sector of the economy that does not depend on trust and probity? I recently did a piece on here (Guest Posts, October 17th) that noted and commented on a FTT ruling HMRC v McLaren. The ruling contained a judge’s opinion that sport does not have trust and probity at its heart.

    It is obvious and clear to me that participants and administrators of all sports are trusted by all stakeholders, including fans, spectators, sponsors, investors etc, to be following the rules and acting with honesty and integrity. I suspect there will be many more cases like this brought related to the governing body’s failure to ‘police’ Lance Armstrong. There may well be similarly motivated cases brought against the Scottish footballing authorities for a lack of action against Rangers, should they be found in breach of player registration rules, but that remains to be seen.

  7. Marching on Together

    Anybody remotely involved in cycling and with modicum of understanding of the sport, had a fairly good inkling as to what was going on. Far from the UCI’s actions being in breach of an implied term to Skins, Skins can be deemed to have tacitly accepted the state of the sport, and personally barred themselves from raising any litigation over it.

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