LeMond Litigation, an Update
Greg LeMond and Trek Bicycle Corporation have reached an out-of-court settlement. The agreement spells out an end to all legal proceedings between LeMond and Trek, bringing a 15-year relationship to a close. While most of the terms of the settlement were confidential, both parties agreed to disclose that Trek will pay $200,000 to 1in6.org, a charity with which LeMond is affiliated.
Trek will make two $100,000 payments to the California-based charity. Its purpose is to educate people about childhood male sexual abuse and takes its name from the rate of incidence of that abuse. LeMond is a member of the organization’s board of directors.
While the impasse between LeMond and Trek seemed to hinge as much on LeMond’s belief that Lance Armstrong was attempting to intimidate him as it did on LeMond’s believe that Trek really wasn’t supporting the LeMond brand to the degree spelled out in their licensing agreement.
In preparing for a possible trial, LeMond had begun deposing witnesses, including Kristin Armstrong, Lance Armstrong’s ex-wife. The possibility that LeMond might try to depose Armstrong himself loomed over the proceedings and threatened to turn a fairly straightforward business dispute—nonperformance—into a three-ring doping circus.
Due to the fact that most of the terms of the settlement are sealed, we’ll never know just what brought the case to resolution. However, by any estimation, the single least desirable result would have involved Armstrong on the stand. In this regard, LeMond had Trek over a barrel; they had two reasons to avoid testimony by Armstrong. While it is safe to assume Armstrong would have said nothing to incriminate him or Trek, his mere presence would have turned the proceedings into front page news. And then there’s the aftermath to consider. Armstrong’s ire has a history of its own and Trek really can’t afford to take any action that would alienate the seven-time Tour winner.
Litigation for LeMond isn’t at an end with the resolution of the Trek suit. As one of the creditors of the bankrupt Yellowstone Club, LeMond, joined by his in-laws, David and Sacia Morris, is contesting the sale of a parcel of the millionaire-only Yellowstone Club in Montana. Membership in the club is ultra-exclusive and includes Microsoft founder Bill Gates and L.A. Dodgers owner Frank McCourt. LeMond and the Morrises wish to make their own bid for the property.
The parcel in question was the “family compound” for Yellowstone Club co-founder Edra Blixseth and her family. It is being sold as part of a liquidation of Blixseth’s assets due to bankruptcy.
LeMond and the Morrises are taking issue with the price offered by CIP Yellowstone Lending, LLC, another Yellowstone Club creditor. Less than two years ago CrossHarbor Capital Partners offered Blixseth $56 million for the 160-acre parcel. Recently, CrossHarbor offered Blixseth a mere $8.5 million, with only $500,000 coming in actual cash; $8 million would be “paid” in debt relief to Blixseth in the form of debt forgiveness. Court papers filed by LeMond and the Morrises argue that the bid has no relation to its actual value.
When the real estate market crashed, sales at Yellowstone Club stalled. Blixseth and her then husband Tim Blixseth took out a $375 million loan with Credit Suisse. Rather than using that to help the faltering Yellowstone Club, the Blixseths put the money into other ventures. When the pair’s marriage hit the skids in 2008, bankruptcy followed, both individually and for the club.
While Blixseth’s parcel is only 160 acres within a 13,600-acre resort, the location of the land make it particularly attractive and its sale is seen by some as key to reviving sales of new parcels in the Yellowstone Club.
As original investors in Yellowstone Club, LeMond and the Morrises should have shared in the proceeds of the $375 million Credit Suisse loan. That suit was settled for $39.5 million, and while a settlement was reached, a fair chunk of that settlement remains outstanding. As a result, LeMond and the Morrises hold a $13.5 million lien on the Blixseth family compound—more than the value of the CrossHarbor bid.
John Shaffer, one of the attorneys representing LeMond and the Morrises asked the judge overseeing the bankruptcy to reject the CrossHarbor bid and to give them 120 days to put together a bid of their own. A ruling on that request is still to come.
The full text of the Trek/LeMond joint press release:
Joint Press Release of Greg LeMond and Trek Bicycle Corporation
Cycling legend Greg LeMond and Trek Bicycle Corporation announced an agreement to close out all remaining issues for the business venture they began in 1995, and to provide funding for a charity near Greg’s heart.
“Greg has a hard-won place in the Pantheon of bicycle racing, and we are proud of what we were able to accomplish together,” said Trek’s President John Burke. “Trek respects Greg’s efforts and commitment to the charitable foundation, 1in6.org, and Trek is pleased to lend its support to that very worthwhile endeavor.”
Three-time Tour de France winner LeMond said: “I am pleased to resolve the issues between Trek and myself and am happy to be able to move forward with the things important in my life. I appreciate Trek’s support for the work of 1in6.org. I take deep satisfaction in this resolution and believe it will have a positive impact on those that can benefit most from the purpose of 1in6.org.”
Image: John Pierce, Photosport International
