Livestrong did you know ...

[Publicus]

My experience with non-profit boards makes it very hard for me to believe that the LAF board would not act in their organization's best interests at all times. I actually have more faith in them than I do in Mr. Armstrong.

Your experience, like my own, is absolutely irrelevant to the question. Just accept that you don't know and leave it at that.

 

[scribe]

It appears he IS personally profiting from the LAF. Not strong enough an appearance to bring legal action, but it is odd enough.

You can't have one without the other. This is a black and white issue. Either he is draining money stipulated for use in the fight against cancer, or he isn't. There is no in between. If you cannot ascertain that he is, then you have no footing.

 

[Ninety5rpm]

There is no need to ask them when he makes comments as in this [url="http://sports.espn.go.com/oly/tdf2009/columns/story?columnist=ford_bonnie_d&id=4304698']interview[/url]with ESPN before the Tour.

Q: There is a school of thought that you're lining your pockets by putting exclusive content on Livestrong.com as opposed to Livestrong.org. What is your answer to that?

A: I haven't made a dime off Livestrong.com. Obviously the .org is the foundation, .com is a subsidiary of Demand Media. Both the foundation and myself have equity in Demand. But I think that the promotion of the .org kinds of things, the charity side of things on .com makes it the reason we do it. To me, .com is really about prevention and .org is about treatment and care and survivorship. I think if we paid closer attention to the .com side of things, ultimately a lot of people wouldn't need the .org side.

If it was just the LAF who have equity in Demand Media then it would not be an issue.

If it was just the LAF who have equity in Demand Media then it would not be an issue?

So, for example, if it was not Lance Armstrong but someone else, say Cadel Evans, who had a personal equity in Demand Media, that would be an issue too? Or not?

I'm still waiting to hear what moral rule is violated by any of this, much less anything illegal.

 

[LugHugger]

Well you do sometimes get this reaction amongst people who think they're the in crowd. They believe the sport's greatest rider is just something for the masses, that he is too widely known and commercial. Michael Schumacher received the same treatment from the trendy people who thought they knew it all in F1.

You should shake them out of their smugness and remind them what a priviledge it is for them to still see Armstrong riding.

There's an in crowd? We're just cyclists, not loser hipsters who follow whichever trend is a la mode. We have our opinions about Armstrong but they do not define us.

 

[Dr. Maserati]

If it was just the LAF who have equity in Demand Media then it would not be an issue?

So, for example, if it was not Lance Armstrong but someone else, say Cadel Evans, who had a personal equity in Demand Media, that would be an issue too? Or not?

I'm still waiting to hear what moral rule is violated by any of this, much less anything illegal.

Correct, if it was Cadel Evans - or anyone else I would hold the same opinion.
Not everything revolves around LA.

 

[Publicus]

You can't have one without the other. This is a black and white issue. Either he is draining money stipulated for use in the fight against cancer, or he isn't. There is no in between. If you cannot ascertain that he is, then you have no footing.

As you've framed it, you are suggesting the issue is whether he is defrauding the LAF. That's the only way he could be deemed to be "draining money stipulated for use in the fight against cancer." But I think that your view is overly narrow.

Is he being personally enriched by the LAF? I think we have enough evidence to answer that question in the affirmative. One could certainly argue that there was NO REASON for Demand Media to offer Lance Armstrong stock, since, again, Lance has NO OWNERSHIP INTEREST/RIGHTS to the name/trademark "LiveStrong."

 

[Publicus]

If it was just the LAF who have equity in Demand Media then it would not be an issue?

So, for example, if it was not Lance Armstrong but someone else, say Cadel Evans, who had a personal equity in Demand Media, that would be an issue too? Or not?

I'm still waiting to hear what moral rule is violated by any of this, much less anything illegal.

Nothing immoral (beyond lying--he's definitely made money on livestrong.com and "LiveStrong") and almost 100% positive nothing illegal--that's why you hire lawyers.

 

[gjdavis60]

The odd thing, is that Lance Armstrong, also earned an ownership stake in the third party but he does not own the rights to LiveStrong which he sold to the LAF in 2005 (or earlier). It appears he IS personally profiting from the LAF. Not strong enough an appearance to bring legal action, but it is odd enough.

Nope. You were closer before ...

Everyone is trying to fill in the missing information based on their subjective eelings about Lance Armstrong. The reality is that we can't know much beyond LAF has entered into an exclusive licensing agreement with Demand Media, Inc. for the use of the name LiveStrong.com. As part of that transaction, Lance Armstrong was significantly enriched PERSONALLY, even though he has no ownership interest in the name LiveStrong (sold to LAF in 2005 I believe).

We don't know anything other than Armstrong acquired a stake in Demand Media. Don't know how he got it, whether money changed hands, and if so in which direction. He might have paid for it out of pocket. Or he could have blackmailed Demand Media for it, or perhaps he colluded with them, throwing the Tour de France and allowing them to collect on a wager.

We just don't know.

 

[Ninety5rpm]

Nothing immoral (beyond lying--he's definitely made money on livestrong.com and "LiveStrong") and almost 100% positive nothing illegal--that's why you hire lawyers.

Sigh. All of you who have an issue with livestrong.org/livestrong.com thing can't even seem to agree on what the issue is. Do any two of you even agree with each other?

 

[Publicus]

Nope. You were closer before ...



We don't know anything other than Armstrong acquired a stake in Demand Media. Don't know how he got it, whether money changed hands, and if so in which direction. He might have paid for it out of pocket. Or he could have blackmailed Demand Media for it, or perhaps he colluded with them, throwing the Tour de France and allowing them to collect on a wager.

We just don't know.

We do know.

http://www.allbusiness.com/legal/contracts-law-licensing-agreements/6609429-1.html

 

[Publicus]

Sigh. All of you who have an issue with livestrong.org/livestrong.com thing can't even seem to agree on what the issue is. Do any two of you even agree with each other?

I'm only speaking for myself. Didn't know I was supposed to be part of some collective groupthink effort.

 

[gjdavis60]

We do know.

http://www.allbusiness.com/legal/contracts-law-licensing-agreements/6609429-1.html

What conclusions can you draw from this press release? There could be myriad terms in the actual agreement that we are not aware of.

 

[Ninety5rpm]

I'm only speaking for myself. Didn't know I was supposed to be part of some collective groupthink effort.

You're not supposed to be, it just makes it hard to figure out what the real objection is. Once I find a logical inconsistency in one person's reasoning, they drop out and someone else jumps in and points out that, because their objection has a different basis, the whole logical argument I just constructed does not apply to their objection, and I have to start all over.

Bottom line, nobody can explain and defend their objection to the whole livestrong.com/livestrong.org thing.

Some (not you) object because it's "immoral", though they can't explain why ("you choose to not see it"), much less identify the moral rule that they feel is being violated.

I don't understand your objection.

 

[Publicus]

What conclusions can you draw from this press release? There could be myriad terms in the actual agreement that we are not aware of.

Other than the equity stake was in connection with the licensing of the name LiveStrong.com? Nothing I guess except that we know that Lance did not pay cash consideration for it. This part right here gives you that answer (just in case you were wondering):

Per the agreement, LAF and Lance Armstrong will become shareholders in Demand Media.

If he paid cash consideration, then Demand Media would have to make certain disclosures under the Securities Act or look for an exemption. Moreover, the sale would not be part of a license agreement; it would be a subscription agreement.

I take it you are still smarting about my comment dismissing your conclusions regarding the LAF's board of directors motives.

 

[Eva Maria]

Once I find a logical inconsistency in one person's reasoning,

Let us know when you actually do this.

 

[Publicus]

You're not supposed to be, it just makes it hard to figure out what the real objection is. Once I find a logical inconsistency in one person's reasoning, they drop out and someone else jumps in and points out that, because their objection has a different basis, the whole logical argument I just constructed does not apply to their objection, and I have to start all over.

Bottom line, nobody can explain and defend their objection to the whole livestrong.com/livestrong.org thing.

Some (not you) object because it's "immoral", though they can't explain why ("you choose to not see it"), much less identify the moral rule that they feel is being violated.

I don't understand your objection.

No real objection. I'm a corporate lawyer by day and I was trying to help folks understand the connection between Demand Media and the LAF (it wasn't clear because the references to Livestrong.com being a for-profit company). I think Lance does himself a disservice, however, by portraying his motives as being purely altruistic (I've not made a dime on LiveStrong.com). He is significantly enriched by this, and I assume other licensing arrangements the LAF has made over the years (and the sale of the LiveStrong name to the LAF). Nothing wrong with him making money, but he should (as we say in my neighborhood) stop fronting like this is pure altruism. It isn't.

For some folks that's just one more piece of evidence that he's a self-serving, duplicitous ar$e. For others, it is proof of his business savvy. I see the argument for both. Oh, and just for the record, lying is immoral.

 

[Ninety5rpm]

No real objection. I'm a corporate lawyer by day and I was trying to help folks understand the connection between Demand Media and the LAF (it wasn't clear because the references to Livestrong.com being a for-profit company). I think Lance does himself a disservice, however, by portraying his motives as being purely altruistic (I've not made a dime on LiveStrong.com). He is significantly enriched by this, and I assume other licensing arrangements the LAF has made over the years (and the sale of the LiveStrong name to the LAF). Nothing wrong with him making money, but he should (as we say in my neighborhood) stop fronting like this is pure altruism. It isn't.

For some folks that's just one more piece of evidence that he's a self-serving, duplicitous ar$e. For others, it is proof of his business savvy. I see the argument for both. Oh, and just for the record, lying is immoral.

Isn't it true that unless and until he sells his interest in Demand Media, he will not have made a dime on LiveStrong.com? Where's the lie?

 

[Ninety5rpm]

Let us know when you actually do this.

Oh, please. Your "it's morally wrong you just choose not to see it and that's all I'm saying" "argument" (using the term loosely) is logically bankrupt out of the gate.

 

[Dr. Maserati]

Isn't it true that unless and until he sells his interest in Demand Media, he will not have made a dime on LiveStrong.com? Where's the lie?

Do you believe people - the general public that view Livestrong.com - would be as willing to part with their cash if they knew that LA will personally profit from them doing so?

 

[Ninety5rpm]

Do you believe people - the general public that view Livestrong.com - would be as willing to part with their cash if they knew that LA will personally profit from them doing so?

Which cash?

The cash used to pay for the fee for an "enhanced" membership at livestrong.com? Yes.
The cash they use to buy a product advertised on livestrong.com? Yes.
The cash they use to pay for a donation made by clicking on Donate at livestrong.org? No.

 

[Publicus]

Isn't it true that unless and until he sells his interest in Demand Media, he will not have made a dime on LiveStrong.com? Where's the lie?

Fair point. But I think you are now venturing into technicalities/timing issues. If it was purely altruistic, which it seems is the implication he is trying to make, then he wouldn't need compensation in the form of equity. He could have his expenses related to the venture reimbursed, etc. Or simply donated the stock to the LAFE . . . if it was purely altruistic.

Moreover, there is no ready market for Demand Media's stock, it is a privately held corporation and therefore Lance would have to comply with SEC regulations before selling. That problem will be alleviated when (and if) Demand Media goes public as expected (conservative valuation is between $1B and $3B enterprise value).

So, Lance is technically being honest that he hasn't yet recorded a gain on the sale of his interest in Demand Media.

 

[Eva Maria]

Oh, please. Your "it's morally wrong you just choose not to see it and that's all I'm saying" "argument" (using the term loosely) is logically bankrupt out of the gate.

You have provided nothing to explain why it is ok to exploit the assets of a non profit for personal gain. Your McDonald's analogy only succeed in confirming your inability to grasp the issue and did nothing to prove your point.

 

[gjdavis60]

Other than the equity stake was in connection with the licensing of the name LiveStrong.com? Nothing I guess except that we know that Lance did not pay cash consideration for it. This part right here gives you that answer (just in case you were wondering):



If he paid cash consideration, then Demand Media would have to make certain disclosures under the Securities Act or look for an exemption. Moreover, the sale would not be part of a license agreement; it would be a subscription agreement.

I take it you are still smarting about my comment dismissing your conclusions regarding the LAF's board of directors motives.

Not at all. Technically you were right. I can read a 990 and talk about how a non-profit is supposed to behave, but I cannot say for certain what goes on in their board room. If we are trying to separate facts from fiction around all this we need to be cognizant of the limits of our inferences. You obviously have some knowledge of how these deals are structured, and the legal requirements surrounding them. So, you can say with certainty that neither Armstrong nor LAF paid cash for their stake in Demand? Is Demand a public company? Are they subject to the Securities Act?

Anyway, after re-reading the press release, at face value one could conclude that Armstrong is getting equity in return for ...

As a strategic advisor and ongoing content contributor, Lance will work exclusively with Demand Media to build and promote LIVESTRONG.com for the next four years.

Is this how you see it? He's going to provide content and advice to the for-profit entity?

LAF, in return for their licensing of the brand gets some equity, too. In addition ...

Demand Media will have an exclusive and perpetual license to the LiveStrong.com domain and work with the foundation to develop LIVESTRONG.com into the leading health, wellness, and fitness destination. Demand Media will provide a perpetual license of its proprietary social media tools to support the LAF army of volunteers on LIVESTRONG.org. Donors, supporters and survivors will be able to interact on the non-profit site via profiles, messaging, photos, and blogs.

So Armstrong promotes the commercial lifestyle site livestrong.com and is compensated for this. In addition to generating profit for its shareholders, the commercial venture also supports and promotes the foundation. Is this your read?

 

[Ninety5rpm]

Fair point. But I think you are now venturing into technicalities/timing issues. If it was purely altruistic, which it seems is the implication he is trying to make, then he wouldn't need compensation in the form of equity. He could have his expenses related to the venture reimbursed, etc. Or simply donated the stock to the LAFE . . . if it was purely altruistic.

Ah, the inherently self-destructive moral philosophy of altruism rears its ugly head. There is no winning with altruism, by definition. That would be selfish, and wrong. Altruism is contrary to human nature, and life in general.

Of course his actions are not purely altruistic. So what? No behavior is. Show me human behavior that you think is purely altruistic, and I'll show you a situation you haven't analyzed very well (or maybe a suicide, but even suicide is rarely purely altruistic).

Moreover, there is no ready market for Demand Media's stock, it is a privately held corporation and therefore Lance would have to comply with SEC regulations before selling. That problem will be alleviated when (and if) Demand Media goes public as expected (conservative valuation is between $1B and $3B enterprise value).

So, Lance is technically being honest that he hasn't yet recorded a gain on the sale of his interest in Demand Media.

Right. So where is the lie? Where is the immorality?

 

[Publicus]

Not at all. Technically you were right. I can read a 990 and talk about how a non-profit is supposed to behave, but I cannot say for certain what goes on in their board room. If we are trying to separate facts from fiction around all this we need to be cognizant of the limits of our inferences. You obviously have some knowledge of how these deals are structured, and the legal requirements surrounding them. So, you can say with certainty that neither Armstrong nor LAF paid cash for their stake in Demand? Is Demand a public company? Are they subject to the Securities Act?

Anyway, after re-reading the press release, at face value one could conclude that Armstrong is getting equity in return for ...



Is this how you see it? He's going to provide content and advice to the for-profit entity?

LAF, in return for their licensing of the brand gets some equity, too. In addition ...



So Armstrong promotes the commercial lifestyle site livestrong.com and is compensated for this. In addition to generating profit for its shareholders, the commercial venture also supports and promotes the foundation. Is this your read?

The sale of securities, even of a private company, are governed by the Securities Act, as well as applicable state securities laws (Blue Sky).

As for my read of the transaction, yes I pretty much agree with your assessment. I think what troubles people is the confusingly similar names (.com vs .org), the fact that you aren't aware it is Demand Media that you are engaging instead of the LAF. And arguably that is by design to maximize the return of all of the parties involved. Lance's claims/posturing that he is not making money though is what I find disconcerting. He's not doing anything illegal, but I get the sense that he is uncomfortable publicly acknowledging that he's getting a cut from these ventures as well.