Think about the last time you were watching the weather and the weatherman was talking about a hurricane about to pummel some coastline. Be it Louisiana, Texas, Florida, New Jersey or North Carolina, your reaction was very likely, “Those poor SOBs.”
This is the reaction I’ve been having for nearly everyone involved in what was briefly known as Divine Cycling Group. If there’s been an uglier yard sale of emotions, unpaid invoices and lawyer paper in cycling, I haven’t seen it. I’ve been digging around for all the information I can. And while I don’t typically use the term “digging” to describe the work I do, several people have used that term in asking me about what I’ve been up to, what I’ve learned. Some have used the term with excitement and curiosity. Others have used it cautiously, nervously.
What I’ve learned is that the number of people in financial hardship as a result of the failed merger of Divine Cycling Group can’t easily be totaled. What I’ve learned is that absolutely everyone I’ve talked to have something in common: they all wonder what the future holds. They are all scared that their careers or bank accounts may take a significant hit. For some, that hit has already arrived. They also share a fear of the lawyers involved in these transactions.
I’ve talked to vendors and former contractors for Serotta. Everyone I talked to has an outstanding, unpaid balance. So far as I’ve been able to find out, these amounts range from the low four figures to the high five figures. In aggregate, it appears to be an ugly, crippling sum. And no one owed this money will go on the record to say they haven’t been paid. To a person, they are afraid that any public declaration that they have an unpaid invoice could result in punitive action from the lawyers working on behalf of Bradway Capital and others.
I contacted Brian Case, CEO of Bradway Capital. He wasn’t willing to say much for the record due to “lots of legalities,” but he did say there was likely to be some news forthcoming in 10 days to two weeks. He cautioned me that only one side of the story was circulating, indirectly alluding to Ben Serotta’s open letter to the industry. He admitted he’d been frustrated to be on the sidelines unable to tell his side of the story and was eager to do so once all the paperwork was complete.
I’ve had a couple of people who have been close to these events suggest that the morass of legal wranglings is far deeper and murkier than most would suspect. For them the smoking gun is the fact that what was Serotta is now operating as Saratoga Frameworks. They each independently noted that not only was Serotta’s intellectual property split from the real estate and the labor force, but that in Case lost control of the Serotta intellectual property in his dealings with Bill Overbay, hence the need for the Saratoga Frameworks brand, complete with logo and website. Case even told Bicycle Retailer and Industry news that Divine Cycling Group owned the Serotta brand and that while there was a chance that brand would be commercialized again at some point in the future, for now it needed to “cool off.”
It’s worth noting that Bradway Capital retains the tooling and the labor force while another company Case controls owns the real estate in which the operation is based. When I asked Case about the disposition of the Serotta name and intellectual property he cited confidentiality due to the legal proceedings and was hopeful that he’d be able to say something on the record about it in a couple of weeks, the point at which he is hopeful that the paperwork will be finalized.
Case is clearly bullish on Saratoga Frameworks. He aims to have as many as 40 employees in 2014 and to be producing as many as 2500 frames over the course of the year. However, when I asked about the people who told me had gone unpaid he began saying, “A lot of promises were made by Ben and the previous management.”
I then told him that the people I had spoken with all asserted that they had signed agreements with Bradway, not verbal agreements with Ben Serotta. Worse, each of them told me that Case had used exactly that excuse for not paying them. When pressed, he said, “We have every intention of paying our legal obligations.” Moments later he added, “Once we have a sustainable business in Saratoga we can meet those obligations.”
The questions I didn’t ask were, “What if you don’t have a viable business going forward? Does that mean you won’t pay?”
My final questions to Case regarded Mad Fiber and what would happen with that company. Currently, the web site has a single page asking visitors to check back later and the phone isn’t being answered. He admitted that production had been shut down and operations had been suspended in the short term. Again, he asked me to wait a couple of weeks when he said paperwork should be finalized and he was hopeful Mad Fiber would be up and running once again.
The assets of Blue Competition Cycles are on the block. The entire workforce has been laid off. To give you some idea of how far suspended operations can inflict pain, there’s $1 million in bicycles for which the factory that produced them hasn’t been paid. There’s a team that placed deposits on bikes to race on this year that has been stiffed. No bikes.
I respect that everyone wants a bottom line; this is very much a work in progress. The challenge here is that emotions are running high and I can’t find anyone willing to take Case at his word. It would be easy to go after Case and harp on all those unpaid bills. It would be easy to look at the firing of Ben Serotta and draw parallels to Fat City and the awful turn of events that ultimately saw Chris Chance leave the bike industry. But the bright side of that chapter of the New England bike industry includes the almost necessary rise of Independent Fabrication.
While no one will say it publicly, there are plenty of people who are whispering that Case and Overbay haven’t treated people ethically or honorably. It’s easy to point to the guy at the top and label him the villain. The challenge here is that Case believes in the workforce behind Serotta/Saratoga and under the right circumstances he may have the ability to keep those craftsmen employed. Should Saratoga go under there’s a very high likelihood that not only will the bike industry lose the opportunity to revive a great brand, the industry will lose a number of talented individuals for the simple reason that most of them won’t be able to find jobs elsewhere.
There’s an additional challenge Case and Saratoga face. They need dealers. While some dealers will likely take Saratoga as a placeholder for Serotta, I’ve spoken with several dealers who want nothing more to do with Serotta, let alone Saratoga. It’s one thing to make 2500 frames in a year; it’s another to sell them.
What happens next really rides on Brian Case. If he pulls this out and revives the Serotta brand, he’ll be a hero. If Serotta goes away but he makes a going concern of Saratoga, he’ll still be a kind of hero, just smaller scale. However, if he is unable to secure the Serotta intellectual property and both it and Saratoga Frameworks go Pan Am, then Case will be served up for all and sundry to be remembered as the black-hat-wearing evil-doer; he’ll be such an obvious a target for blame that any other storyline about Serotta’s years of questionable management will be obliterated by his inability to pull the operation out of the dive.
I recently completed a feature that will run in Issue 6 of peloton magazine about New England. While I could have devoted a good 2000 words to all the great racers who cut their teeth there or on all the cycling writers who came from the region—there was a time when most bike magazine editors either hailed from or lived in Vermont or Massachusetts—I focused on the bike companies based there.
It had been a while since I’d visited the subject, more than 10 years if the truth is told, and as I dug down I realized there was more going on than I realized. It became so complicated that I decided to create a little family tree to remind me the begat, begat, begat sequence of the companies.
Some, like Pedro’s and Parlee didn’t have their genesis in other companies. Others, such as Serotta and 333Fab aren’t New England companies, but their relationship to the patriarch of the industry couldn’t be denied. This family tree isn’t particularly scientific, and certainly not to scale, but it speaks to what I most like about the region.
My time there left a mark. To the degree that I’ve got any entrepreneurial spirit, I think it was incubated while working for a number of small companies. From Richard Fries’ Ride Magazine to an upstart Apple retailer, I saw people go out on their own time and again. For me, it rubbed off from just being around them. There are those figures who cultivate that individuality; Rob Vandermark seems to be doing a lot of that at Seven Cycles, whether intentionally or not.
Part of the story this doesn’t tell, though, is the way that Richard Sachs has mentored dozens of new builders. Some of it has been indirect, as through his prolific writing about his brand and the craft of building. Some has been direct, in the form of offering concrete advice to up-and-comers.
The tragedy in this story is the demise of Fat City Cycles; it was Chris Chance who really began the scene from which all this grew.
There have been plenty of rounds of musical chairs. Parlee and Pedro’s have even picked up people who have done stints at other area bike companies. In that regard, the bike biz in New England is different from we see in California, where bigger players dominate and after a few years in the biz you stop being surprised to see an old friend in a jersey. And maybe that’s the difference, those smaller companies give employees a real window into what entrepreneurship is.