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Legal battle possible for Mitchelton-Scott as Manuela Fundación insists deal is binding

Mitchelton-Scott
(Image credit: Bettini Photo)

Confusion still surrounds the ever-evolving takeover story between Manuela Fundación and Mitchelton-Scott after Stefano Garzelli, who was responsible for conducting negotiations on behalf of the former, told the Italian news outlet Cicloweb that "the company's transfer agreement is signed, it is valid, and we go on."

Mitchelton-Scott have remained silent since declaring that they and owner Gerry Ryan had terminated talks over sponsorship, and Cyclingnews understands that an official contract was never signed. 

Sources close to the team have told Cyclingnews that the only agreement signed was a 'Heads of Terms' document that was designed to pave the way for a longer contract that would have covered all aspects of ownership and the all-important issue of the team's current WorldTour license. 

A Heads of Terms is not necessarily binding in all countries but Manuela Fundación could potentially seek damages over costs that have already been incurred, for example over logo design, kit and consultancy. Any legal challenge from Manuela Fundación could possibly centre around the wording of the Head of Terms agreement.

Mitchelton-Scott announced last week that the Manuela Fundación, and foundation president Francisco Huertas, would become the team's new main sponsor for the remainder of the 2020 season. Just days later, however, GreenEdge Cycling, the holding company that runs Mitchelton-Scott, announced that the deal had been called off.

Confusion has arisen over the terms of the agreement, with representatives from Manuela Fundación claiming that they had not just come on board as a sponsor but to also take ownership of the team. GreenEdge owner Gerry Ryan claimed that he remained the owner of the team and that the deal was not complete before representatives of the Spanish NGO fired back stating that the team licence was theirs. 

It quickly became apparent that all was not well between both sides before Ryan then announced that the team would remain Mitchelton-Scott for the remainder of 2020, and that riders and staffers would be paid full wages when racing resumes on August 1.

"I want to clarify everything as soon as possible, my image is involved as well as that of the Fundación Manuela. Gerry Ryan's words yesterday were a cold shower, and totally unjustified if we are in fact: the agreement is all right, it is concluded, signed and regular. And as far as we are concerned, we go ahead," Garzelli told Cicloweb.

Cyclingnews understands that Manuela Fundación were only made aware of Ryan’s decision to pull out of talks via a letter sent by lawyers on Thursday and that the press release confirming the news was sent within an hour of Ryan’s decision. However, Garzelli insists that the situation was clear from the gun and that Manuela Fundación had control over the team the moment documents were signed on June 5.

Garzelli said that he was contacted directly by Huertas to find a leading team for Manuela Fundación to sponsor in 2021. He said he came into contact with Alvaro Crespi and Shayne Bannan, who run Mitchelton-Scott through Bannan's management company in Switzerland. The plan was to sell the management company to Huertas so that Manuela Fundación could then take over the team, all in an agreement that was signed on June 5. 

"The idea, I repeat, was to take over the license in 2021. But they immediately re-launched, asking us if by chance we were interested in taking over as sponsor in 2020," Garzelli insisted.

"We confronted Huertas and accepted the idea of anticipating entry into top cycling by a few months. In less than a month of close meetings (electronically) with the other party, we reached an agreement. And on June 5 the contract was signed, valid in all respects, between the Huertas group and the New Global Cycling Service, Shayne Bannan's company based in Switzerland, which manages the team.

"The terms stipulate that sponsorship will start from the first races after the Covid-19 break, and that it will continue throughout 2020. In these months, all salaries for runners and staff will obviously be paid. From 1 January 2021, therefore, the company's ownership will pass directly to Francisco Huertas, and the license will become Spanish. 

"There is a clause: it is expected that until 2025 Shayne Bannan will remain on the staff as general manager, and until the same date Alvaro Crespi (financial manager), Matthew White (sports director) and Kevin Tabotta (performance director) will keep the respective roles; in addition, the entire staff of cyclists and employees will be confirmed for 2021."

Garzelli claims that even the team's management were surprised by Ryan's announcement that the deal was off and that the team would remain as Mitchelton-Scott.

"On June 12 he had also made a statement in which he thanked the Fundación Manuela. Now this reverse," Garzelli said. 

"I assure you that even the current management of the team, from Bannan to Crespi, was shocked to say the least in front of this news. We had already scheduled a series of technical meetings, already to talk about 2021 as well as the current season. We booked hotels, set dates, and then had a shirt designed and presented, [assets] 'peeled' and ready to be covered with new colours ... finally, this cold shower for everyone, us and them."

Garzelli said he cannot speculate why Ryan has pulled the plug on the deal but that he can confirm that the terms of the transaction were handled professionally by Manuela Fundación.

"The fact remains that there is a signed and valid contract, and we have all the credentials to go ahead, as we intend to do," Garzelli said. "The team is 100 per cent Bannan, Bannan decides to sell to Huertas, the agreement is valid and we will continue on the path traced.”

It’s unclear as to how this episode will conclude. Mitchelton Scott have remained tight-lipped throughout most of this process. Their initial press release on the Manuela Fundación sponsorship was both concise and blunt, and it was telling that none of the staff or riders were available for comment immediately after their press release was issued. 

Normally good news, such as the survival of a team, is followed by a wave of interviews but the lack of activity suggests that final terms between Manuela Fundación and Mitchelton were still some way off.

One source told Cyclingnews that the press release announcing Manuela Fundación as the sponsor was sent out in good faith and at the request of Manuela Fundación, and riders and staff on the team had also been informed of the team’s long-term safety just a few days after the Head of Terms was signed on June 5. Rider agents were also contacted by Mitchelton management over contract extensions for several riders – which were not possible without a sponsor for 2021 on board – but the good will quickly ran out as talks and comments in the media began to come out

According to one source close to the talks: "People showed their cards and that can spook people."

The same source added that Ryan’s U-turn came down to a number of factors, not least his thoughts over his reputation and the legacy of the team he had financially backed since it’s inception in 2012. There had been talks between both parties over the long-term vision of the team and the handover of power but, as the days passed, it became clear that any wish to progress with talks quickly dissipated within Ryan’s camp.

"He’s protective over the legacy and that was the deciding factor," the source concluded.