April 8/08 3:16 am - Trek to Immediately Sever Ties with Greg LeMond, LeMond Makes Doping Allegations

Posted by Editor on 04/8/08
 

Trek to Immediately Sever Ties with Greg LeMond

In an announcement to staff at its Waterloo, Wisconsin headquarters, followed by a teleconference with the media, Trek President John Burke announced today that Trek has gone to federal court seeking to immediately end its relationship with Greg LeMond, with whom they have a licence to produce bicycles under the LeMond name. According to Burke, the move is a response to a suit filed by LeMond on March 20th, after he informed Greg LeMond that Trek would not be renewing its licencing agreement when it concluded in 2010.

Burke announced that Trek has filed suit in Federal Court in Madison, WI, to sever the company's ongoing relationship with three-time Tour de France winner Greg LeMond.

Trek also released copies of both its filing and LeMond's (from this year and a previous suit in 2004). Links are below. In the 2008 LeMond filing, Greg LeMond makes a number of statements concerning Lance Armstrong, which are sure to create controversy.

At one point (page 11, Paragraph 53), he claims that Armstrong received a positive doping test in 1999 for a banned hormone, which was subsequently reversed with a back-dated prescription form. He states in the next paragraph that Armstrong's team made $500,000 payoff to UCI President Hein Verbruggen to get the UCI to accept the back-dated form.

LeMond 2008 Filing
LeMond 2004 Filing
Trek 2008 Filing

"Beginning in 1995 we had high hopes for the LeMond partnership," said John Burke. "And I am sorry it has come to this after so much hard work on the LeMond brand. But this troubling pattern of inconsistent business dealings forced us to do this, for the sake of the Trek family - our retailers, employees and customers."

Since 1995, Trek has licensed the LeMond brand name and has produced road bicycles under the LeMond Racing Cycles name. The move by Trek has come on the heels of LeMond serving Trek with a 41-page suit on March 20, 2008, to be filed in Minneapolis, Minnesota. LeMond's suit was characterized by Burke as containing false and irresponsible allegations which "forced us to immediately end our relationship with Greg."

The action filed by Trek Bicycle Corporation against Greg LeMond asks the court for declaratory judgment against LeMond and asks that the relationship be terminated due to multiple breaches of the contract. The breach of contract claims are based on LeMond's ongoing pattern of public statements and actions which Trek believes have continued to be detrimental to the Trek-licensed LeMond Racing Cycles name and trademark, to the Trek brand as a whole, and to the Trek reputation in the global bicycle market.

"For years, Trek has tried our best to make this relationship work. And for years, Greg LeMond has done and said things that have damaged the LeMond brand and the Trek brand as a whole," said Burke. "His actions are inconsistent with our values - values we believe in and live everyday. And after years of trying to make it work, we are done. It's time to sever this relationship and allow Trek to do what it does best - build the world's greatest bicycles and provide our customers with a great product and exceptional customer service."

In the subsequent media conference call, Burke said that repeated allegations against 7-time Tour de France winner Lance Armstrong were detrimental to both the LeMond and Trek brands, and limited the potential growth of the LeMond brand. He also stated that LeMond accounts for approximately $15 million (U.S.) out of annual revenues of $700 million (U.S.).

Trek will finish current production of "a small number" of bicycles, and will not produce any further bicycles. Burke said that the "vast majority" of LeMond production is in Asia and that they do not anticipate any job losses in the U.S. Trek will support dealers as they sell through their remaining inventory, and will continue to honour all warranties on LeMond bicycles.

Barry Near of the Trek Store in Toronto said that "the U.S. dealers are a lot more susceptible to Greg's statements than we are. It hit me [the announcement] this morning when I opened my e-mail, there was no warning."

"I can understand Trek's position, Greg is a volatile, outspoken person. I think Trek is being very open about the situation. It will have some effect on our sales, because we have put a lot into it [LeMond], and put our road team on LeMonds."

"In the overall picture it won't be too detrimental to us; LeMond is our third brand [after Trek and Gary Fisher]. Our inventory isn't huge, but with the short selling season we have in the bike business, everything counts."

"From the customer's perspective, they are still getting a great bike with a full warranty."