This morning, the International Cycling Union said it’s going to strip Armstrong of all seven of his Tour De France titles and ban him for life. He’s lost key sponsorship deals from Nike, Trek and Oakley. Throw in the loss of income from speaking engagements and Armstrong is out about $15 million a year. What else can he lose?
The companies that paid his bonuses and endorsements could after him for that money. According to Rod Smith, the director of the Center for Sports Law and Policy at Thomas Jefferson Law School in San Diego, that depends on how those contracts were worded. “Many times what they will do in a contract like that is have a liquidated damage clause,” he says.
Smith says a liquidated damage clause is sort of like a prenup. Basically the two parties agree on a specific amount to be paid in the event of any wrongdoing by the recipient of the money. He says it’s likely that Armstrong’s endorsement contracts include those clauses.
But it may not be worth it for those companies to pursue litigation. Any further lawsuits could bring unwanted attention to the brand.
“There is always that question, are you shooting yourself in the foot by drawing attention to it,” says Brian Goff, a sports economist at Western Kentucky University. He says that even among sports economists there is disagreement on how to handle scandals like this.
Goff says it could go one of two ways. Either people could see the charges from the doping scandal as proof that the cycling community is serious about cleaning up its act, which could be good for the sport’s image. Or Armstrong could ruin cycling’s reputation along with his own.
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