USAG’s Sponsor Crisis: How Bailouts and Legal Fees Prevent Engagement

With United States Olympic & Paralympic Committee (USOPC) covering millions in annual deficits, USA Gymnastics is stuck in a cycle of dependency, while real progress remains out of reach.

As we continue to shine a light on the challenges facing USA Gymnastics (USAG), it’s crucial to understand just how dire the financial situation is and why they’re stuck in a cycle that seems impossible to break. Here’s a deeper dive into the numbers and the structural problems that were, in many ways, built into their bankruptcy plan.

Nellie Kim , VP, Fédération Internationale de Gymnastique (FIG)

“The future development of gymnastics is a complex and complicated process. Part of it involves new technique for elements and creation of new skills. But human abilities are limited, and therefore, we need new, modern gymnastics apparatus, which would help gymnasts perform new skills and at the same time provide safety.”

The Sponsorship Revenue They Need—and Can’t Get

For USAG to remain financially viable, they would likely need $10-15 million in sponsorship revenue per year. Why this amount? It breaks down into five key categories:

1. Legal Fees: USAG is spending nearly a third of its revenue—around $10 million annually—on legal fees. This isn’t sustainable. They need sponsorships to cover these expenses so they can stop draining resources from athlete support.
2. Athlete Programs & Facility Upgrades: Only $1.9 million of their revenue goes toward directly supporting athletes, which is shockingly low for an organization of this size. To fund necessary upgrades to equipment, facilities, and athlete programs, they would need an additional $5 million per year at a minimum.
3. Operational Costs: Beyond legal fees and athlete support, USAG still has basic operational costs—staff, event management, overhead—that they must meet to keep the organization running. Embedded in this are ‘exclusive supplier’ agreements, where outdated equipment is provided at little or no cost and then sold to member gyms after events, all while withholding critical safety data to maintain these arrangements. (A potential breach of duty.)
4. Negative Net Worth: USAG is currently operating with a negative net worth, meaning their liabilities exceed their assets. This financial instability further discourages potential sponsors, who would rather invest in an organization with a solid financial foundation. Sponsorship revenue is critical to pull them out of this hole and rebuild credibility.
5. Risk of IRS and Federation Status Challenges: Ongoing financial losses put USAG at risk of losing its 501(c)(3) tax-exempt status, as the IRS requires nonprofits to operate primarily for public benefit. If USAG continues to prioritize legal fees over athlete support and reform, it may face scrutiny from the IRS or challenges to its status as a national governing body, further compounding its financial instability and increasing its desperation to secure sponsorship.

But here’s the catch: no sponsor wants to contribute to an organization where their fees are essentially going to cover legal expenses rather than growth, athlete safety, or positive change. Sponsors want to invest in healthy, forward-looking organizations. They don’t want their brand associated with financial mismanagement or controversy, and this is where USAG is stuck in a vicious cycle.

Scott M. Weller, Founder and Inventor, King Bars Sports, LLC

"Our Weller Spring Floor utilizes advanced tuning and materials to distribute forces more evenly, significantly reducing the harsh impacts athletes endure during high-intensity routines. Recent Olympic events highlighted the consequences of inadequate equipment, with athletes, including Simone Biles, facing unnecessary strain and injuries. While elite athletes are often praised for pushing through pain, with better equipment, we can ensure they don't have to."

Understanding Floor Synchronization and Its Impact on Gymnast Performance

Research shows that traditional cylindrical spring floors often "bottom out," creating a rebound frequency nearly twice as fast as the gymnast's takeoff. This mismatch leads to a "rattle" effect, increasing the risk of injury and disrupting the athlete's rhythm. By closely matching the floor's response to a gymnast's movements, Weller Spring Floor minimizes these issues, reducing peak impact forces and enhancing both safety and performance.

Consistency in floor performance is crucial not only for safety but also for competitive fairness. Vibrational issues can cause performance challenges such as:

• Inconsistent Landings:?Unpredictable floor responses can destabilize landings, akin to a diving board that rattles during takeoff.
• Disrupted Rhythm:?Vibrational movements interfere with timing, affecting routine fluidity.

Breaking Old Limits

We knew that the status quo wasn’t good enough. That’s why Weller Spring Floor goes beyond traditional designs to create a new standard of safety and performance. Where old floors might cause gymnasts to bottom out, leading to dangerous rebounds and inconsistent landings, our system keeps athletes in control, minimizing risk and enhancing their competitive edge.

Our advanced materials and engineering make this possible. Weller Spring Floorabsorbs and redistributes impact forces more efficiently than anything on the market, and closely matches the gymnast’s frequency (proper tuning) giving gymnasts the freedom to push their boundaries without fear of injury.

The Vicious Financial and Reputational Cycle

Here’s the reality of USAG’s situation:

• They need sponsorship revenue to survive and grow.
• But sponsors won’t engage because the organization is mired in legal battles, scandals, and a lack of meaningful reform.
• Without sponsor revenue, USAG remains reliant on membership fees and non-cash bankruptcy settlements to stay afloat.
• These revenue sources are not sustainable, especially when legal fees continue to drain a large part of their budget.

This is a quicksand scenario. Despite USAG’s results in Paris, no new sponsors have materialized. (Ending with scoring and judging controversy didn’t help.) USAG is sinking deeper financially and reputationally with each passing year. They cannot grow, attract sponsors, or improve their infrastructure because they are spending most of their money defending a fragile financial structure that was built on shaky ground.

The Memo that Speaks Volumes

A recently surfaced memo from American Athletic, Inc Western Regional Office acknowledges Dr. Sands’ research on the safety risks associated with outdated gymnastics equipment. Although it claims to respect Sands’ findings, the memo details a decision to ignore his research, opting instead to continue using legacy equipment based on “enumerable hours of successful use.” This circular reasoning reveals a troubling acceptance of known risks, reinforcing why USAG remains mired in practices that put athletes at risk and deter sponsors seeking genuine progress.

How Does USAG Compare to Other Olympic Sports?

Revenue:

In 2022, USA Swimming reported $74.5 million in revenue—almost double USA Gymnastics’ $38 million. This substantial difference highlights stronger sponsor engagement and financial support in swimming compared to gymnastics.

Athlete Support:

USA Swimming allocated $2.5 million in direct grants to athletes for medal money, stipends, and bonuses. In contrast, USA Gymnastics managed just $1.9 million for athlete support, reflecting a much lower investment in athlete welfare.

Net Worth:

USA Swimming ended the year with $39.25 million in net assets, showcasing their financial stability. Meanwhile, USA Gymnastics is operating with a negative net worth, further limiting their ability to secure sponsorships and invest in growth.

Sponsorship Capacity:

USA Swimming ’s stable financial position allows it to attract sponsors, reinvest in athlete programs, and maintain a positive public image. USAG, stuck in a cycle of legal fees and declining trust, struggles to grow or attract meaningful sponsor support.

USA Swimming Partners:

The Bankruptcy Plan’s Role in All This

It’s not an accident that USAG finds itself in this position. The bankruptcy plan allowed them to temporarily survive, but it did nothing to ensure long-term stability. The plan was designed to protect the organization’s immediate future and pay off legal liabilities, but it never addressed the core problems—such as athlete safety, equipment upgrades, or the need for sponsorships to replace lost revenue streams.

The bankruptcy plan, designed by the legal teams—including James Stang, who now collects fees from USAG—was focused on short-term survival, not long-term solutions. While the plan helped USAG avoid immediate financial collapse, it didn’t address the need for sustainable growth or reform—instead, it led to more legal fees.

United States Olympic & Paralympic Committee (USOPC) has been stepping in to cover about $3 million in annual financial gaps, essentially bailing out USAG. But this support can’t go on forever. Those funds need to be replaced by new sources, like sponsorships, which USAG is struggling to secure.

Even more concerning, USOPC has bailed out USAG before, but the financial and structural issues tied to those bailouts remain unresolved. As long as legal battles and maintaining the status quo take priority, USAG is stuck in a cycle of dependency and stagnation.

The Path Forward

Unfortunately, as long as this structure remains in place, it’s hard to see a way out for USAG. They need fundamental changes, starting with transparency about where their money is going and a real commitment to athlete safety. Until then, they will remain stuck in this vicious cycle, with no sponsors willing to touch an organization that spends five times more on legal fees than it does on the athletes it claims to support.

Now is the time for action. Share this post, spread the word, and demand transparency from USAG. The future of gymnastics depends on real reform and accountability. Let’s keep the conversation going—together, as stakeholders, we can push for the changes that athletes deserve.

Read the full analysis in our recent posts: Safer Equipment: An Existential Threat to USAG and USOPC and The Real Cost of Legal Fees: How USAG’s Future is Tied to Law Firms

Scan the QR Code or visit bit.ly/WellerBlog2024 to learn more and join the conversation.

Play Safe!

King Bars Sports, LLC

Additional Resources:

For further insights and ongoing updates on gymnastics safety and equipment innovations, check out these posts:

• Reimagine USA Gymnastics: Prioritizing Safety and Innovation
• The Real Cost of Legal Fees: How USAG’s Future is Tied to Law Firms
• Safer Equipment: An Existential Threat to USAG and USOPC
• They Can’t Afford Safer Equipment, But You Can: Why Gymnasts Deserve Better
• Who is Responsible for Gymnast Safety, Anyway?
• From Growth Plates to Achilles Tears: Why Gymnastics Needs Safer Equipment
• We Invented Another Way: Unlocking Gymnastics Performance with Weller Floor
• Beyond the Status Quo: The Urgent Need for Innovation in Gymnastics Equipment
• Open Letter: Time to Hold USAG and FIG Accountable for Athlete Safety
• Beyond the Medals: Addressing the Real Issues in Gymnastics Floors
• The Hidden Challenges of Vibrational Movements in Gymnastics Floors
• Ensuring Gymnastics Safety: The Need for Modern Equipment
• Breaking the Silence: Challenging the Gymnastics Cartel
• Uncovering the Truth: Enhancing Safety in Gymnastics
• Welcome to Our Mission: Enhancing Gymnastics Safety with Innovation
• Unlocking Gymnastics Performance: The Power of Weller’s Innovative Design
• The Genesis of Spring Floor Tuning: Innovations in Sport and Entertainment
• Addressing the Injury Epidemic: Advocating for Safer Gymnastics Equipment
• Disrupting the Gymnastics Cartel: Weller Floor Offers Enhanced Safety and Performance
• Understanding the Impact of Podium Setup and Selective Editing at the Trials
• Post-Trials Reflections: Prioritizing Gymnast Safety

Check back on the website version of this post for updates and additional content.

US Patent No.: US 7,993,244 B2 and US Patent No.: US 8,337,368 B2

Approved Supplier for The Walt Disney Company, Disney Live Entertainment, Walt Disney World, Shanghai Disneyland Entertainment, and Disneyland Paris.

Copyright ? 2024 King Bars Sports LLC, All rights reserved