Joining VeloClub not only supports the work we do, there are some fantastic benefits:
by Neal Rogers
February 13, 2016
Photography by Cor Vos/Brian Hodes
NEWS AND RACING BROUGHT TO YOU BY CHAPTER2 BIKES
The relationship between the USA Pro Challenge and its founders, the Schaden family, was always a complicated one.
That was never more evident than on Friday, when the event’s CEO, Shawn Hunter, said in a press release that it would not be held in 2016 — the first year without the Schadens underwriting it. Hunter said that he hopes the event will return in 2017.
The event, which was first called the Quiznos Pro Challenge, then USA Pro Cycling Challenge, and finally the USA Pro Challenge, was announced in August 2010 after years of development by former Colorado governor Bill Ritter, Colorado resident Lance Armstrong, and Rick and Richard Schaden — founders of the Quiznos, Smashburger, and Live Basil food chains.
By the time the first edition was held, in August 2011, Ritter was out of office, having opted to not run for a second term.
By the time the second edition had wrapped up, Armstrong had been handed a lifetime ban from the U.S. Anti-Doping Agency.
Of the original founders, only the Schadens continued on with the original vision, with Hunter, the former head of the Amgen Tour of California at AEG Sports, leading the charge.
The Pro Challenge was lauded for both its scenery and the professionalism of its organization, attracting Tour de France winners Cadel Evans and Chris Froome just weeks after their victories, as well as top Americans from both the WorldTour and domestic circuits.
But behind the scenes, the event was hemorrhaging money. The Denver Post reported that the event had lost US$10 million in its first year, and incrementally less each subsequent year. By the end of the 2015 edition, the Schadens had reportedly invested US$20 million of their own money into the Pro Challenge, to float the race through its first five years.
Denver Post writer Jason Blevins, who has covered the Schadens and the Pro Challenge extensively, reported after the 2015 edition that the family was laden with lawsuits in its other business dealings that made it difficult for the event to secure outside funding.
“After five years, the Pro Challenge doesn’t have a title sponsor, and its litigation-plagued owners might be part of the problem,” Blevins wrote.
Two large hedge funds, Avenue Capital and Fortress Holdings, were the largest lenders to Quiznos during several years of financial distress, the Post reported. The funds claim that the Schadens, along with several other executives, orchestrated a conspiracy to defraud global investors in a 2012 restructuring of Quiznos. In August 2014, Avenue and Fortress filed a contentious federal lawsuit against the Schadens.
Because Fortress and Avenue Capital are active in the sports industry — they own the Milwaukee Bucks NBA franchise — potential sponsors of the Pro Challenge were hesitant to end up on the wrong side of the international investment firms, which together control US$85 billion of assets, the Post reported.
It was far from the Schadens’ only litigation.
The former chief executive of Smashburger sued them in 2014.
Hundreds of Quiznos franchisees also sued the family, accusing them of squeezing store owners to bolster corporate profits, the Post reported, adding that between 2006 and 2009, the Schadens and Quiznos faced four class-action lawsuits representing nearly 7,000 angry franchisees in Colorado, Wisconsin and Illinois.
In 2009, the Schadens settled the lawsuits for US$95 million.
Still, those lawsuits, and the US$20 million invested in the race, weren’t what ultimately pushed the Schadens away from their event. Rather, it was the reputation they had built for themselves, in other businesses, that led Hunter and Denver businessman Ken Gart to ask them to step aside.
Gart told the Denver Post in August that he hoped Rick Schaden would step aside from the event he’d founded.
“[Rick Schaden] has had incredible vision and courage. He’s invested a huge amount of money,” Gart said. “But every business goes through cycles and matures over time. … I hope he does the right thing for both him and the state of Colorado.”
In September 2015, the Schadens relinquished ownership, under pressure, from the event they had developed with Armstrong and Ritter in 2010.
Since then, Hunter and Gart have sought out investors. On Friday, Hunter announced that the event would not happen in 2016, but that it hopes to return next year.
“As we finish the transition of the USA Pro Challenge to a new ownership group, the focus has been on the continuing legacy of the race,” Hunter said in a statement. “The timing and work involved in this endeavor does not allow us to produce the event in 2016 and achieve all the goals of our important stakeholders. Instead, we have targeted 2017 to restart this iconic race.”
Hunter told the Denver Post Friday that he has new “strategic and long-term investors”, which he will announce soon. Hunter added that feedback from investors was that they wished the race were longer than one week, and that there was interest in a series of events, rather than just one.
“One of the important pieces is to allow for continued growth of the Pro Challenge but also expansion and the introduction of new races over the next three to five years,” Hunter told the Post. “Here is an opportunity to create a platform that has a handful of events in key locations that are attractive to both national sponsors and broadcasters. A one-off cycling event is exciting, but if it’s part of a bigger organization or a bigger vision, that’s what we think is key to long-term success.”
Colorado will anchor the new series of Pro Challenge races, Hunter said, adding that the East Coast is “the next logical step” for expansion of the Pro Challenge race brand.
In his statement, Hunter said, “While forming a new ownership group for the event, we have been focused on ensuring the longevity of the race, expanding its coverage, and aligning it with other United States cycling events and activities. Building a solid platform of this type takes time and the efforts of many diverse stakeholders, and while we will not be conducting America’s Race this year, we are diligently working to complete the necessary pieces for 2017. We have made great strides over the past months and look to re-launch when we finish this phase of the process.”
The final sentence of Hunter’s statement was reserved for the Schadens.
“A special thank you goes to Rick and Richard Schaden who originally launched the race in 2011,” Hunter wrote. “Without their vision and support we would not be here.”
Whether or not the event will continue at all without the Schadens remains to be seen.