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Armstrong Comes Clean; The Legal and Economic Fallout of an Athlete's Mea Culpa

By Jason Rindenau
New York Law School, Class of 2013

While it is difficult to know exactly what motivates a star as singularly driven as Lance Armstrong, it is not hard to predict the fallout from his decision to come clean to doping in a "no holds barred" interview with Oprah this week. As any fan of entertainment and sports can tell you, the mea culpa has become increasingly popular. What drives such ubiquitous celebrities as Michael Vick, Tiger Woods, and Arnold Schwarzenegger to commit gross iniquities and then come crawling back to their constituents (some with more convincing apologies than others) is a subject worth exploring in its own right; however, the fervor with which Lance Armstrong denied using performance-enhancing drugs in the midst of collecting seven Tour de France titles and establishing a hugely important cancer-fighting organization places him in a league of his own.

Armstrong's stellar track record in defending his poster boy-for-perfection reputation has come crashing down on top of him. With an estimated net worth of $125 million, legal experts say immediately filing for bankruptcy could be the price of coming clean, and the vultures are already circling. Sponsors and media outlets as diverse as The Times of London, who long accused the seemingly superhuman Armstrong of doping, and the U.S. Postal Service, want Armstrong to pay for his digressions. Rupert Murdoch, who paid Armstrong fortunes over the years in settlement payouts, is particularly interested. According to Eriq Gardner, reporting for The Hollywood Reporter, even cycling event organizers could sue for fraud in the collection of prize money.

According to the media, one of the reasons why Armstrong's confession is so significant is because of his iconic status. This is not a Barry Bonds or Mark McGwire-type scenario, where perhaps fans expect this type of behavior from their athletes. This is, indeed, a no holds barred retaliation against Armstrong where supporters, journalists, and fans invested in him as an individual and not merely as a member of a sport. Armstrong's admission goes beyond a simple violation of the morals clauses he undoubtedly signed with his sponsors. It represents a violation of trust by all of the supporters who stuck by him during one cancer diagnosis after another, and they want their money back.

Individual cyclists are getting in on the action, as well, as those Armstrong publicly criticized over the years in response to doping allegations could sue for defamation. Perhaps the most sensitive questions involve the future of Livestrong, the charity Armstrong founded in his home state of Texas in 1997. What is important to keep in mind is that the 501(c)(3) non-profit now operates entirely independent of Armstrong. As a result of the doping scandal, he is no longer chairman of the group, formerly known as the Lance Armstrong Foundation, nor does he maintain a seat on the board of directors.

Despite Livestrong's obvious willingness to keep Armstrong at arm's length, sponsors are still balking. Major League Soccer's Sporting Kansas City announced on Thursday, the day Part 2 of Oprah's interview aired, that it would cut ties with Livestrong and drop the organization's name from its masthead, a move that is likely to send both companies to court. Robb Heineman, CEO of Sporting Kansas City, denies that the scandal had anything to do with breaching its contract with the mega-non-profit. It was, he insists, economic.

In a deal which guaranteed Livestrong a percentage of ticket sales, concessions, and other revenue, Heineman says that Sporting Kansas City had no choice but to modify key terms of its contract, which became necessary when Livestrong could not uphold its end of the bargain. Heineman argues it was, in fact, the doping scandal which distracted Livestrong from fulfilling its obligations, a sentiment which is likely to be echoed in the coming months by nearly all of Armstrong's former business partners.

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This page contains a single entry from the blog posted on January 21, 2013 10:20 PM.

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