Armstrong's financial situation

[sniper]

This would be okay if Riis had paid back his prize money too. The 1997 Tour was outdated, but the 1999 not? It's getting worse and worse ...

and what about all the other fees the USPS team collected during those tours?

 

[bbohica]

CSE promotes a lot of stuff.

My suspicion about Mellow Jonnny's is that it could be an ego driven money loser. It's like ex-athletes who open a bar or restaraunt or night club. There is a lot of potential to lose money. Maybe he opened it just to stick it to Andersatan.

He might be able to sell assets, settle all the civil stuff for $20M and then rebuild. If he and his business advisors are smart then five years could erase whatever hit he takes to his current assets. Ten years from now he could be considerably more wealthy than he is today.

I heard once that most of MJ's revenue is from merchandise sales like shirts, hats, jerseys, kits, etc... Sure they sell bikes too, but I'll bet that the they make 50% less next year. He'd probably be smart to sell it off asap.

 

[benzwire]

I heard once that most of MJ's revenue is from merchandise sales like shirts, hats, jerseys, kits, etc... Sure they sell bikes too, but I'll bet that the they make 50% less next year. He'd probably be smart to sell it off asap.

Mellow Johnny's location (5th/Nueces) is on some prime real estate in downtown Austin. Does Lance own the property or does he lease the building? I would estimate that the property alone is worth several million bucks. I think it would be a shame to lose that shop, it is actually quite nice. Actions have consequences, however, and there will be a lot of collateral damage as a result.

 

[Sarcastic Wet Trout]

I wondered about this, since this is a fairly unusual situation. As I understand it, the first child was conceived 'accidentally' because LA wasn't sterile as previously thought.

Assuming it's his.

Call Maury. Time for the paternity test.

 

[Square-pedaller]

Assuming it's his.
Call Maury. Time for the paternity test.

Have to admit that had occurred to me, too.

 

[bbohica]

Mellow Johnny's location (5th/Nueces) is on some prime real estate in downtown Austin. Does Lance own the property or does he lease the building? I would estimate that the property alone is worth several million bucks. I think it would be a shame to lose that shop, it is actually quite nice. Actions have consequences, however, and there will be a lot of collateral damage as a result.

Looks like it is owned by "Mellow Johnnys LLC" and was assessed a taxable value of $1.34M in 2012. It also has a legal description of "PERSONAL PROPERTY COMMERCIAL MELLOW JOHNNY'S BIKE SHOP" which makes me think that he owns it outright.

He also seems to have another property, owned by "Mellow Johnnys Aviation LLC" legal description "PERSONAL PROPERTY COMMERCIAL ARMSTRONG PERFOMANCE LLC". This was assessed a taxable value of $4.23M Does he own his own private airport too?

Tax websites are cool.. didn't take long to dig these up also. He owns two Austin properties under a revocable trust worth $842K and $3.15M, actually they are both part of his "compound", somehow he was allowed to buy 2 lots and combine it all into one big place..

 

[DirtyWorks]

Looks like it is owned by "Mellow Johnnys LLC" and was assessed a taxable value of $1.34M in 2012. It also has a legal description of "PERSONAL PROPERTY COMMERCIAL MELLOW JOHNNY'S BIKE SHOP" which makes me think that he owns it outright.

He also seems to have another property, owned by "Mellow Johnnys Aviation LLC" legal description "PERSONAL PROPERTY COMMERCIAL ARMSTRONG PERFOMANCE LLC". This was assessed a taxable value of $4.23M Does he own his own private airport too?

In the bike shop case he can't sell because the business is entirely based on his brand. If it starts bleeding cash like it should, then he's stuck. "Mellow Johnny's" for sale at a super-premium price, but you can't have the name or the killer profit margin on yellow-branded softgoods doesn't make an attractive business to buy. Lots of fans/fools out there with money to burn though...

Who knows what the deal is on the aviation thing. Any aviation accountants care to weigh-in?

CSE is still viable for now too.

BroDeal's got a pretty good handle on it.

 

[Velodude]

Perhaps so, perhaps not. Go back through the history of the Likes of Jonathan Aitken, and Jeffrey Archer, and the action they faced and lost in similar situation was for perjury, not for fraud. So it seems their prosecution lawyers do not agree with you...

I have said repeatedly, that Armstrong faces potentially a more likely criminal liability here in UK because of the short SOL in the US on perjury rendering the 2005 hearings out of time. <snip>.........

I consider you should take some time to bone up on jurisdictions outside the US on which you are making commentary.

Jeffrey Archer was imprisoned for perjury in a defamation case where he obtained the judgment by fraud. That arose from a Crown criminal action against him.

The defendant in the defamation case, the Daily Star newspaper, separately took civil action against him to have the judgment set aside and take recovery action for the award plus costs.

Archer settled out of court for the 500,000GBP award for 1.8mGBP.

Suggest you read this article

Express Newspapers said in a statement: "Archer has repaid the newspaper the original sum, plus the majority of the substantial legal recovery costs.

"The 1987 judgment against the Daily Star, and its then editor Lloyd Turner, has been set aside by the courts as it was obtained by fraud."

You may note that Archer obtained judgment in 1987 for defamation against him. His perjury only came to light in 2001 - 14 years later.

Armstrong's perjury in the SCA case and Times case has just been proven by UCI accepting USADA's reasoned decision.

 

[86TDFWinner]

My best guess would be an out of court settlement for a few million, subject to confidentiality clause.Having seen his performance on Friday night, I'm now convinced he will never confess. In his mind, he's drawn a line. No matter what anyone does, he thinks he won the titles fair and square, and he'll continue to hob-*** with the great and the good (Robin Williams et al) and appear at Livestrong events, "dedicating his life to fighting this terrible disease" etc etc ad nauseum.

.

Why would any company agree to give him a confidentiality clause? he's been busted, they can talk about it all they want, regardless of some clause.....plus, whats left for there to have one in place for? the damage has been done. A Confidentiality clause is pointless/meaningless at this point.

 

[Racelap]

The aviation thing is probably the hangar facility for his drug smuggling plane.

 

[Merckx index]

Interesting Forbes article on the tax consequences of LA’s possible impending lawsuit payments. The author discusses two issues. First, because of the large loss in income LA is now experiencing, he may not have enough income to offset the potential deductions he could have making these payments. I.e., he normally would be allowed to deduct restitution payments from income, but if he has very little income, he can't make use of the deductions:

If the doomsday predictions surrounding Armstrong’s future income stream are to be believed, it’s possible Armstrong may pay out more in bonus restitution during 2013 than he takes in as income. As a result, he may not be able to reap the full tax benefit of the deductions related to his repayments.

The second issue the article addresses is that if LA has to pay back income received from winning races, he is entitled to a refund, in effect, of the tax he paid on this income. But there are two ways to figure this refund: at today’s tax rates, or at the rates existing when the income was received. Because of changes in the tax code, the latter would probably be more favorable to him:

And even in the event Armstrong is able to fully utilize his deductions in the current year, he may have been subject to a higher tax rate when the bonuses were originally earned — particularly during the pre-Bush tax cut years of 1999-2001 — than he is today. In either scenario, Armstrong would likely enjoy a larger tax benefit if he could travel back in time, exclude the bonus payments from income in the year they were received, and redetermine his prior years’ tax liability…

To illustrate, assume Armstrong repays $20 million in race winnings during 2013 and deducts the payment on his 2013 tax return, yielding $3 million in tax benefit. If he qualifies to use Section 1341, Armstrong opt instead to go back to the years he received the payments and perform a hypothetical computation (he does not actually amend the previous years’ returns, which are closed by statute) in which he redetermines the tax liability for each year by excluding the amount of income that has subsequently been repaid. If the result of these computations is a total decrease in previous years’ tax of $5 million, Armstrong may opt to forego the current year deduction related to the repayment, and instead reduce his 2013 tax liability by the $5 million in tax savings that would have resulted from excluding the income in the year originally received.

However, to take advantage of this possibility, certain criteria have to be fulfilled, and one of them may trip LA up:

The income must have been originally included in the taxpayer’s income because the taxpayer believed he had an unrestricted right to the income. This requirement poses a significant threat to Armstrong’s ability to use Section 1341 to obtain the most advantageous result from any bonus repayments. Because Armstrong has been accused of knowingly violating race rules and the terms of his sponsorship contracts by doping throughout his seven Tour victories, it is difficult to envision the IRS concluding that Armstrong could have believed he had an unrestricted right to his bonus money. Stated in another way, because Armstrong knew his doping was against the rules, he couldn’t have believed he had an “unrestricted right” to the bonus payments. Rather, he would have accepted the bonus money knowing that a subsequent failed drug test — or as it happened, an investigation eight years after his last race — could result in his being forced to forfeit the bonuses.

Here is another article estimating that LA will lose $150 million in future earnings. This is based on projections from an estimated $20 million he earned in 2010.

 

[CPAvelo]

"Stated in another way, because Armstrong knew his doping was against the rules, he couldn’t have believed he had an “unrestricted right” to the bonus payments."

Since Lance never failed a drug test and still affirms his innocence, surely his arrogance would extend to believing he had an unrestricted right to the income.

 

[Ferminal]

The second issue the article addresses is that if LA has to pay back income received from winning races, he is entitled to a refund, in effect, of the tax he paid on this income. But there are two ways to figure this refund: at today’s tax rates, or at the rates existing when the income was received. Because of changes in the tax code, the latter would probably be more favorable to him:

What if say, not all his original earnings were undeclared?

Might be playing with fire trying to get everything out of the taxman.

 

[blackcat]

What if say, not all his original earnings were undeclared?

Might be playing with fire trying to get everything out of the taxman.

double negative needs to be corrected^

 

[Ferminal]

Freudian Double Negative?

 

[No_Balls]

The Guardian writes Armstrong faces "financial meltdown":

http://www.telegraph.co.uk/sport/ot...ance-Armstrong-facing-financial-meltdown.html

 

[Cloxxki]

Armstrong's perjury in the SCA case and Times case has just been proven by UCI accepting USADA's reasoned decision.

The UCI being his personally preferred entity of jurisdiction over his doping case, even.

 

[TheEnoculator]

It truly would be sweet if Armstrong goes broke. He has caused enough harm to cycling and helped scare away enough sponsors for him to just get away with having his results stripped.

Armstrong still hasn't gotten the comeuppance he deserves.

 

[DominicDecoco]

It truly would be sweet if Armstrong goes broke. He has caused enough harm to cycling and helped scare away enough sponsors for him to just get away with having his results stripped.

Armstrong still hasn't gotten the comeuppance he deserves.

Should Lance lose every civil lawsuits in the nearest future, he would still be having happy conversations with his banker for the rest of his life.

 

[jam pants]

Should Lance lose every civil lawsuits in the nearest future, he would still be having happy conversations with his banker for the rest of his life.

He probably wouldn't have a personal banker any longer.

Claims that Armstrong is awash in liquid wealth aren't accurate.

 

[mountainrman]

The Guardian writes Armstrong faces "financial meltdown":

http://www.telegraph.co.uk/sport/ot...ance-Armstrong-facing-financial-meltdown.html

Like most journalism it is hype mixed in with funny accounting.

Much of the loss they speak of are future income, not cost or outgoing.
In actual cost they have identified no more than we have here...

The big problem was always either the ex sponsors ( who probably do not have legal redress) the state, justice department or feds, and they have shown no signs (so far) of renewed interest in what they probably think is a politicial "hot potato", too many risks in holding it. So far the damage is probably contained to $10m or perhaps a bit more. It would need to triple in my view to give meltdown proportions.

 

[DominicDecoco]

He probably wouldn't have a personal banker any longer.

Claims that Armstrong is awash in liquid wealth aren't accurate.

I don't think he's suffering...

 

[reginagold]

Bigger problems coming once people start calculating losses on RSH, DMD stocks and start searching for pockets with money in them.

 

[BroDeal]

I don't think he's suffering...

He could be. It comes down to how much debt he has. People like Armstrong are often no different than the average person. People have an expectation for the amount of money that will come in, and the debt they take on is dependent on it. For many people, cutting their income to 20% of what it was means they cannot service their debt. A person who is used to making $15M+ a year could have a huge monthly nut. Where Armstrong is different than many is that he presumably has assets he can sell to pay his debts and still remain above water.

He may have issues with being forced to sell an asset quickly thus not getting the best price for it. That could cost him a lot of money.

If Armstrong has substantial debts and his income goes negative because of legal costs then he will be in a world of financial hurt. There will be a lot of financial restructuring that involves selling stuff.

Beyond what happens to his own finances, I am sure he has given his mother a ton of money plus a house. That is untouchable. He will never be looking for a job as a Walmart greeter or scoping out good spots beneath the local underpass.

 

[Benotti69]

If Armstrong as has been alluded to, began doping as a teenage tri athlete, then it would appear he never earned an honest $ in his adult life.

To lose most or all of it would hardly be an injustice.