Lance Armstrong could lose millions
After confessing to doping, the disgraced cyclist may find his net worth is at risk.
After admitting to doping during an interview with Oprah Winfrey, disgraced cyclist Lance Armstrong might find the toughest part to come: legal challenges and negotiations with prior supporters that could drain millions from his bank account.
Friday night, Armstrong will address some of the issues around his sponsorships and his decision to step down from the Livestrong Foundation, according to a preview that aired on Thursday night for the second part of Winfrey's interview.
When Nike (NKE) called to tell him they were dropping him, Armstrong said in the preview, it was a "$75 million day -- gone."
With a tangled web of endorsements and business interests -- as seen in this amazingly convoluted flowchart -- it's tough to estimate exactly how much Armstrong earns each year, although his net worth has been estimated between $100 million to $125 million.
The U.S. Anti-Doping Agency slapped a lifetime ban on Armstrong in October, adding fuel to some lawsuits against the cyclist. Now that Armstrong has admitted to Winfrey that he engaged in doping, those lawsuits could receive a bigger impetus and possibly reduce his net worth significantly, according to NPR.org.
U.S. Attorney General Eric Holder is reportedly considering whether to join in a whistleblower lawsuit from cyclist Floyd Landis, reports the New York Daily News, which reviewed the sealed lawsuit. Filed under the False Claims Act, the lawsuit alleges that Armstrong and his associates defrauded millions from taxpayers, given that he was in allegedly in violation of the sponsorship agreement between himself and the U.S. Postal Service.
Armstrong is said to be in talks with the U.S. Postal Service to return some sponsorship money, although it's not known how much is at stake. During the team's peak years of 2001 to 2004, the postal service likely spent at least $30 million to underwrite Armstrong's team.
Many sponsorship contracts are created to last only short periods, and some of Armstrong's deals might have already expired, Marc Edelman, a law professor at Barry University's Dwayne O. Andreas School of Law, tells MSN Money.
It's unlikely that a sponsor would seek compensation through the courts, he says. "A much more drastic remedy might involve a brand going after Lance Armstrong for past payments, or for indirect damage done to brand," Edelman says. "Those are much more difficult to win."
Aside from legal problems, Armstrong is facing a loss of future income from severed sponsorships and reduced speaking fees. It's possible for Armstrong to revive his image -- but it's going to take a while, notes Karl Heiselman, chief executive of brand consultancy Wolff Olins.
Coming clean is the first step, he tells MSN Money.
"There are always opportunities to redeem yourself, but it comes back to honest, sincere action," Heiselman says. "He used to stand for is perseverance, so this is obviously a major blow to that."
Armstrong should "take on a new cause, such as anti-doping, and it'll take a long road to rebuilding" his reputation, he adds.
In the meantime, there is one clear winner in Armstrong's confession: Winfrey.
Her struggling cable network received a sizable premium for advertising spots during her two-part interview with Armstrong, reports Advertising Age.
OWN is fetching about $100,00 for a two-unit package, giving advertisers access to spots in both nights of the interview, marking a 40% to 50% bump from any other night on the cable network, according to the story.
And even better for Winfrey, inventory has sold out.
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I still admire his athelic accomplishments and his desire to win. Like he said in the interview he did what he did to level the playing field and win. I do not think he has very much remorse, confessing may just be a calculated move so he can move onto another chapter in his life.
As people get older attitudes change and wisdom can begin to set in, or their own conscience finally gets the better of them. All of us have lied, cheated, stolen, exaggerated, or done things when we were younger. We now look back and wonder "What the hell was I thinking". At least he is trying to make amends, and take responsibility for his actions, but wow he pulled a big one. He must pay the consequences for his actions.. He needs to get a job with the Anti-doping officials since he seems to know how to totally beat the system.
Armstrong should have kept his mouth closed.
Are the other "dopers" who confessed or busted also going to be under scrutiny and required to pay money back and be banned from competition? I sure hope so. After all, it's justice we're after? Right?
He should lose millions. He never would have made them in the first place. Unfortunately he'll still live better than most of us.
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