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.
“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?”
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.”
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