In the Hot Seat: Exposure to Armstrong Increases Substantially in Light of Recent Admissions

Seven time Tour de France ‘winner’ Lance Armstrong likely faces increased and significant financial exposure as a result of his recent televised admissions regarding his use of performance enhancing drugs during nearly all of his cycling competitions.  Indeed, Armstrong could stand to lose a significant chunk of his estimated $125 million fortune as a result of the two part interview with Oprah Winfrey as a result of civil actions seeking financial damages based on claims for defamation, malicious prosecution, and fraud.  Moreover, he will almost certainly forfeit tens of millions of dollars in future speaking fees and endorsements as a result of his recent statements.

Prior to the interview numerous companies had already indicated that they intended to recoup the proceeds of prior settlement monies with Armstrong.  SCA Promotions, Inc., for instance, a Dallas based sports insurance company that paid him bonuses for winning the 2002-2004 races, was seeking to recover millions of dollars previously paid to Armstrong.  Armstrong and Tailwind Sports, the company that owned Armstrong’s U.S. Postal Service team, sued SCA in 2004 for failing to pay Armstrong bonuses for his wins of those years based on SCA’s suspicion of the cyclist’s doping.  As part of a settlement agreement between Armstrong and SCA in 2006, SCA ultimately paid portions of the bonuses in addition to legal fees and interest, totaling $7.5 million.

Armstrong’s concerns, however, may now extend as far as Washington, D.C.  Indeed, the federal government may decide to intervene in the pending lawsuit under the False Claims Act filed by Armstrong’s former teammate, Floyd Landis.  Landis, who sued on behalf of the Federal Government under the Act, alleged that Armstrong defrauded the United States by accepting over $30 million from a four year sponsorship with the United States Postal Service.  If the government decides to intervene in the lawsuit, it could seek treble damages in excess of $90 million.

Armstrong also faces exposure from abroad.  Indeed, in anticipation of his Oprah’s interview scheduled to air on January 17^th and 18^th, Australian Officials indicated that they would attempt to recoup millions of dollars worth of appearance fees for Armstrong’s participation in the Tour Down Under in 2009 through 2011.  As well, Britain’s Sunday Times is suing for $1.5 million, a number that includes the $500,000 settlement amount that the Times previously paid the cyclist as part of a settlement when the cyclist sued the paper for publishing a story accusing Armstrong of doping.

However, whatever the extent and ramifications of any admissions, Armstrong may have solid legal defenses against claims for damages.  Indeed, numerous potential litigants including previous corporate sponsors such as Nike and Anheuser-Busch, made money on their dealings with Armstrong and will likely be able to prove much, if any, financial loss a result of Armstrong’s confessional with Oprah.