A Texas based company called SCA Promotions paid out a sum totaling $12 million for a policy taken out by Tailwind Sports over the course of their contract with Lance Armstrong. They paid the athlete $4.5 million for his Tour de France wins in 2001-2 and 2003, and were contracted to pay him $5 million for his victory in 2004. However, when accusations of Armstrong’s doping came to light, the company took to the courts to avoid paying the sum. They lost the case on the ground that the original contract with Armstrong did not include a clause on doping, and had to pay the original amount due plus $2.5 million in legal fees. The matter was considered closed. However, with the recent revelations regarding Armstrong’s doping, he has been stripped of his Tour de France titles and as a result is no longer considered the winner of the race, which opens the bonuses he received for winning to legal action.
SCA began proceedings against Armstrong by sending a letter requesting he return the $12 million in costs incurred by October 30th. Armstrong’s camp did not respond, and expressed an unwillingness to settle in the original request. Last week Armstrong’s camp changed their tune, and his lawyers proposed a $1 million settlement. Their new willingness to bargain represents a shift in status for Armstrong. He has undergone a very public fall from grace, and the new attitude may signify a desire to avoid testifying about his doping under oath and risking perjury for denying the practice. SCA is not the only company filing against Armstrong. The Sunday Times hopes to recoup a settlement paid in a 2010 “whistle-blower” suit filed by Floyd Landis, and the Department of Justice could join the action raising the value of the suit up to 30% of the $30 million paid to Armstrong by the U.S. Postal Service. His lawyers may be recommending that he
settle these matters quietly before more previous sponsors decide to hop on the bandwagon and go after Armstrong’s estimated $125 million net worth.