Colorado Rapids sue Ciao Telecom over missed sponsorship paymentsThe article details how Ciao only paid $75K of the initial $80K to close the sponsorship deal and since then they've missed payments of $240K both at the end of Q2 and Q3, with a third payment of the same amount due at the end of next month. The Rapids have now filed a lawsuit for the missing $725K.
The Post's reporting also details some of the risk involved for the Rapids, showing that the company hasn't made an SEC filing since March and in March the company had roughly $2 million in hand against $65 million in liabilities. The other club the company sponsors, Reggina Calcio in Serie B has removed all Ciao marketing from their website.
Chris Bianchi, still reporting on the team despite being fired by MLSSoccer.com, tweeted the following today:
andRe #Rapids96 missing shirt sponsor payments: club did not formalize shirt sponsorship with Ciao in Feb. over concerns this might happen.
Chris BianchiCiao stability was a concern stretching back to winter. Could take away arguably greatest club success of season in acquiring shirt sponsor.and
None of this is good news for the Rapids. They signed a 5 year deal worth 8.3 million in April and didn't get full payment then, followed by the first missed payment 3 months later. The best case scenario from my POV at this point is that the Rapids manage to get the $725K their owed at this point out of Ciao and then terminate the relationship. I don't see a scenario where the Ciao sponsorship actually continues into 2015, much less through 2018.Rapids had a rough deal in place in Feb for shirt sponsorship. Team - not Ciao, as I understand - then backed away to conduct more research.
So that puts us back to almost square one on a jersey sponsorship. Its also unknown what this does in terms of the planned investment this off-season we heard so much about in the last couple of weeks. We know that the Front Office got approval from KSE to spend more money on scouting, coaching staff, and authorization for a second DP but I'm guessing that was at least partially due to the additional funds the sponsorship brought in. Without that cash will the Front Office still be able to achieve their off-season plans?
The other question is how long will it take to find a new sponsor? There have been numerous rumors that Fort Collins' OtterBox made an offer that was declined, are they still interested? Tim Hinchey talked on more than one occasion that they were taking their time to find a company that shared the team's values and had a connection to Colorado, and they weren't going to just go with any national company that expressed interest to MLS. That's one thing that made the Ciao announcement surprising to me as the company had no real connection to Colorado. I've been told by multiple people today though that MLS had a hand in setting up the Ciao sponsorship. Does that mean the league didn't vet Ciao? Did the Rapids abandon their goal of a company with local connections that shared their values? Will that make it easier to find another sponsor?
The Rapids and the league have not made any official comment on this story yet. From what we know up to this point though, it appears the team felt pressured, either from the league, fans, or KSE to make a deal and get a sponsorship done and took an offer they knew they were wary of. Unfortunately it blew up and left egg on their faces, again. Sadly this is just another in a line of bad incidents this month for the Rapids.
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