Trek, LeMond breaking up

Sun April 13 2008
Posted Apr 13, 2008
11,732

By JUDY NEWMAN jdnewman@madison.com Trek Bicycle Corp. is ending its 13-year collaboration with three-time Tour de France winner Greg LeMond, saying his accusations about doping and his "inconsistent business dealings" have hurt Trek and its LeMond bicycle brand. The Waterloo bike manufacturer has filed suit in U.S. District Court in Madison to sever the relationship, Trek president John Burke told company employees and reporters in separate conference calls Tuesday. "We had high hopes for our partnership with Greg and we are sorry it has come to this," Burke said. LeMond bikes are made primarily in Asia. No Trek employees will lose their jobs but some will be shifted to other positions, Burke said. Of 1,600 employees worldwide, 625 work at the Waterloo administrative offices and bike assembly plant and about 490 are employed in Whitewater, where bicycle frames are made. Waterloo is about 20 miles northeast of Madison. LeMond brand bicycles account for about $15 million of Trek's overall $665 million in 2007 revenues, Burke said. "It was an important part of our business," he added. But Trek and LeMond have had a rocky relationship for years. Their contract was due to expire in 2010, but Burke first tried to end it in August 2004. Trek's lawsuit follows a complaint by LeMond, served to Trek on March 20 and expected to be filed in U.S. District Court in Minneapolis. Each side accuses the other of breach of contract. LeMond contends that Trek, licensed to use his name since 1995, "has done little to develop and market LeMond brand bikes internationally, despite repeated requests." His lawsuit claims dealers told him in late 2004 that Trek planned to give up the LeMond brand. LeMond claims he was asked not to attend Trek's big annual show in Madison for bicycle dealers in 2006 and was not invited to the 2007 show. When he found out about it and went anyway, there were no signs or breakout sessions for the LeMond line, his suit says. Trek says it has paid LeMond more than $5 million in royalties and invested millions more in developing and marketing LeMond Racing Cycles. But LeMond began to "undercut" his brand when he launched his own line of accessories through mass merchants, the lawsuit says. Trek says LeMond's "publicly disparaging" comments about seven-time Tour de France champ Lance Armstrong and the use of performance-enhancing drugs by professional cyclists hurt the company. "He didn't just damage Trek, he damaged himself," Burke told reporters. Trek also says LeMond has hurt Trek dealers by buying $2.5 million worth of LeMond bicycles at discounted employee prices since 1999 and reselling them at lower-than-retail prices. "Instead of helping to grow a valuable business, Greg LeMond has for years impaired, and now destroyed, 13 years' efforts by Trek and its dealers," Trek's complaint says. LeMond's attorney did not immediately return calls on Tuesday. His suit claims Trek has "systematically tried to silence" his right to provide "an informed and honest opinion on matters of legitimate interest — the problems associated with the use of performance-enhanced substances," comments that were "ahead of the times." Lance Armstrong rode Trek bikes in his Tour de France victories. He also owns a small amount of stock in the privately owned company. Burke said that had "absolutely nothing to do" with Trek's decision to sever ties with LeMond. He said Armstrong's stake in Trek is less than 1 percent, "given to him as a gift at one point in time."