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Volume 25 No. 134

Olympics

About 220 individual plaintiffs have filed civil suits against USA Gymnastics for Nassar's crimes
Photo: GETTY IMAGES

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. 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. “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.

PAYMENT FOR PENNY, PERRY: USAG’s IRS filings 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.

Biles this week called the decertification move by the USOC a start in the right direction

USOC Chief External Affairs Officer Patrick Sandusky indicated that the organization for months had "considered severing" USA Gymnastics' ties to Olympic sports and "ending its authority over the sport," according to Juliet Macur of the N.Y. TIMES. The USOC on Monday moved to revoke USAG's status as a member governing body after the organization had grown "increasingly frustrated" as USAG "stumbled in its attempts to move forward after the Nassar scandal and gain the trust of the gymnastics community and its leading athletes." USOC CEO Sarah Hirshland had been considering stripping USAG of its "powers as a national governing body, known as decertification, since moving into her job in August." She decided last weekend to "make the move after the national team returned" from the world championships. The process of "moving toward decertification could take months." In the meantime, the USOC will "manage the elite national teams." It is still "trying to figure out how it will manage the federation’s other responsibilities, like overseeing local gyms, certifying coaches and managing its legal liabilities in litigation stemming from the sexual abuse scandal" (N.Y. TIMES, 11/9).

RAISMAN ADVOCATES FOR OVERHAUL: In West Palm Beach, Lulu Ramadan notes gymnast Aly Raisman continued to "call for an overhaul of management" of USAG following the USOC's move. Raisman during an appearance at a Boca Raton synagogue said, "I can’t even understand why they’re putting up such a fight. I think it shows how corrupt they are and how much they’re trying to cover up. Those people need to be gone." She added that she has been "trying to work with the organization on fixing its flaws and protecting athletes in the future." Raisman: "I hope one day USA Gymnastics is the leader in sexual abuse prevention. Right now, we look at them as an example of what not to do" (PALM BEACH POST, 11/9). Raisman on Tuesday responded to the decertification process, writing on her Twitter account, "I believe this is a significant step forward that is necessary for the overall health and well-being of the sport and its athletes. Change is not easy, and the unknown can be scary, but we need to do whatever it takes to ensure nothing like this ever happens again" (TWITTER.com, 11/6). Other current and former Olympic gymnasts also have weighed in on the USOC's move. Simone Biles said, "It's a start in the right direction. But then again, we still need a strong leader for the head of our company and I think it goes from there. But all we can do is sit down and watch and hope for the best” (“Today,” NBC, 11/9). Dominique Moceanu said, "It is a tough and confusing time for our sport, its athletes and the fans. But it’s also a time of great hope. I look forward to the gymnastics community emerging from all of this better and stronger -- with a new leadership that has its priorities in order" (HOUSTON CHRONICLE, 11/7).

HELP FROM CAPITOL HILL: In DC, Sally Jenkins wrote Congress "deserves the congratulations for dragging the USOC, heels digging-in-the-dirt," to start the process of disbanding USAG. Jenkins: "Forget 'decertification.' Not until we have a thorough and transparent examination of the entire USOC can it be trusted to rebuild anything in a trustworthy way." But the "success of members of Congress in forcing accountability up to this point provides hope, and a relief from weary cynicism" (WASHINGTON POST, 11/8).

A growing sex-abuse problem in Olympic sports has "led to a steady stream of Congressional hearings and a three-year grant" worth $2.2M, yet "not a penny of those federal funds can be used to fight the actual problem: investigating or resolving more than 800 open cases, many brought by victims themselves," according to Eddie Pells of the AP. That leaves an "ever-growing backlog for the U.S. Center for SafeSport." SafeSport CEO Shellie Pfohl said, "We didn't realize until the (bid instructions for the grant) came out that we would not be able to use it for performing investigations. Clearly, that is a need, and we are continuing to look for more robust funding, both from government sources, as well as from outside of government." Pells noted the $2.2M represents a "significant infusion" for an office operating on $6.4M in '18. But according to the rules of the Justice Department grant awarded last month, it "must all be directed toward prevention and education programs, and for auditing national governing bodies' work in sex-abuse prevention." A spokesperson for U.S. Sen. Jerry Moran (R-Kan.), who chairs the Senate subcommittee hearings investigating the handling of the Larry Nassar scandal by USA Gymnastics and the USOC, said that the panel is "reviewing whether the center needs additional resources." But the spokesperson "could not explain the reason the grant was written the way it was." The USOC provides $3.1M a year for SafeSport (AP, 11/8).