USA Gymnastics expects to pay between $75-150M to victims of Larry Nassar’s sex abuse who are now suing the NGB, according to audited financial statements published today. USAG and its foundation recorded $108M in total assets in ‘17. The number could grow, auditors note in the statements. The estimated range only covers the civil suits brought forward by about 220 individual plaintiffs in Michigan, California and Texas, and does not include liabilities that may emerge from the USOC-commissioned Ropes & Gray report, Congressional or criminal inquiries.
The numbers suggest bankruptcy is possible, but USAG expects to get insurance coverage for the claims and booked the expected coverage as a $75M asset, the same value it gave to its likely liability -- making it a wash on the books for now. The organization put its financial value of its liability at the low end of its estimated range because “no amount within the range is a better estimate than any other amount.”
USAG is currently in mediation with the plaintiffs in Michigan and California, talks that include its insurers. Insurers may fight its obligation to cover actions of extreme negligence, but USAG noted in its statements that “substantially all” of its legal fees so far have been covered.
Read More
“USAG is committed to working to achieve a mediated settlement of the consolidated group of claims subject to insurance proceeds to cover any such potential settlement,” the document reads.
USAG’s IRS filings, also published today, show former CEO Steve Penny was given $420,000 in ‘17 as part of a severance package when he resigned under pressure in March of that year. The Wall Street Journal has reported the total value of the settlement to be $1M. Penny earned a total of $563,000 last year before he left, including “membership dues at a social club” worth roughly $2,000 in ‘17 before he quit. He made $671,000 in total compensation in ‘16, his last full year.
Former CEO Kerry Perry, who succeeded Penny on Dec. 1, 2017, made $34,327 in the last month of ‘17, suggesting her annual salary was roughly $412,000.
The financial reports also shed new light on how the Nassar scandal has hurt the day-to-day financial condition of the organization. Revenue declined 28% last year from the Olympic year of ‘16 to $24.7M. All told, the organization posted a $301,000 loss in ‘17. Losses and revenue declines are typical in non-Olympic years, but the decline in ‘17 is larger than ‘13, the equivalent year in the prior Olympic cycle. Revenue declined 16% in the year after the London Games. The audited financial results include the National Gymnastics Foundation, USAG’s wholly owned philanthropic arm.
