The Bikeconomics (Mega)Thread

This isn't really related to the cycling industry crisis but still a noteworthy case (and we can't be the only ones wondering how the convicted party is supposed to reimburse $10M by way of a $250/month payment...that would take over 3000 years LOL):

NEWARK, N.J. (BRAIN) — Samuel J. Mancini is scheduled to report to the U. S. Bureau of Prisons in Colorado on Tuesday, April 2.

Mancini, who pled guilty to securities fraud, was sentenced to 71 months in federal prison after a day-long hearing in Federal court here on Tuesday. He was arrested in Denver in 2020 on fraud charges.

Mancini was accused of raising over $10 million from several investors to acquire legacy Italian cycling brands including De Rosa Cycles, De Marchi Apparel, Limar Helmets, and Gruppo Srl, the parent of Cinelli and Columbus. None of the acquisitions was completed and some of the investors said they never got their money back. Prosecutors said Mancini, the CEO of Outdoor Capital Partners, had engaged in a "Ponzi-like" scheme, using some funds earmarked for investments for personal use and to pay back earlier investors who were demanding their money back.

His case was filed in the New Jersey District because at least one of the fraud victims lives within the district. Others reside in Colorado and Florida. Mancini also is charged in a civil case filed in the same court by the Securities and Exchange Commission. That case has been stayed pending the resolution of the criminal case.

Judge Claire Cecchi presided over the hearing, saying she read a huge volume of paperwork on the Mancini case, including letters from victims of the fraud and letters from Mancini’s supporters. 

Mancini’s attorney, Timothy Donohue, a federal public defender, requested a reduced sentence because Mancini entered a guilty plea and had no previous criminal record. He also paid restitution of $100,000 to one of the victims.

Lead Federal Prosecutor Laura Repole asked for an enhanced sentence of 87 months because another victim, Mike Caplinger of Seasonal Tire in Denver, stepped forward in the weeks before the sentencing hearing. Caplinger, in a document included in the prosecution's pre-sentencing materials, said that while Mancini was employed at the tire business after his arrest he used a corporate credit card without permission for personal expenses, including a trip to Universal Studios.

Because Caplinger was not present at the hearing to verify his allegations, Cecchi refused to consider his claims in determining the sentence. She said 71 months is within federal sentencing guidelines.

In addition to the prison sentence, Mancini is required to pay back the 32 people he defrauded. The total is $10,615.000.  The repayment will start as soon as Mancini is incarcerated. While he is in prison, the Bureau of Prisons will deduct $25 every three months from his prison job wages. After his release, he will be expected to reimburse at a rate of $250 a month. He will send the money to the government and it will be distributed to the victims, Cecchi explained.

The defense is disputing the total amount. Mancini’s legal team claims that $3,067,000 in a bank in Italy — a deposit OCP paid to Limar before a planned acquisition that never happened — is part of the money taken from the victims that he can’t get out. Repole said the government could look into helping recover that money. Court documents indicate that Limar is willing to return the money but is waiting for an official communication to ensure the funds are returned to the correct parties. 

A Florida investor, Catherine Anne Hennessy, told her attorney she invested $5 million with OCP specifically for the purchase of DeRosa through an investment fund called Riolee LLC. Hennessy is listed as Senior Director of Best Buddies Ventures on the nonprofit's website. The organization produces Best Buddies charity bike rides and other events.

The one victim who spoke at the hearing was Aloysius McLaughlin, who has homes in Summit, N.J., and Telluride, Colorado.

McLaughlin said he informally represented seven of the victims. He said Mancini represented himself as a graduate of West Point and several West Point graduates that McLaughlin knows were interested in investing with a “classmate.”

Mancini attended the military academy but did not graduate. Some of the victims said they believed he was expelled for an ethics violation, but Donohue had an official document from West Point that said the reason was “academic deficiencies.”

The idea of being scammed by a former West Point student was particularly distressing to the grads, McLaughlin said. 

“It didn’t take us too long to discover he wasn’t doing what he said he was doing,” McLaughlin said. He also said despite Mancini’s claims of remorse, the victims don’t believe he was sincere. 

“There was no authentic remorse,” McLaughlin said. “Our biggest fear is he gets out of prison soon and does it again.” 

He also said Mancini’s LinkedIn profile still has him as a graduate of West Point. His defense team said that would be remedied promptly (as of Wednesday, Mancini's LinkedIn page does not mention West Point). 

"In addition to the prison sentence, Mancini is required to pay back the 32 people he defrauded. The total is $10,615.000.  The repayment will start as soon as Mancini is incarcerated. While he is in prison, the Bureau of Prisons will deduct $25 every three months from his prison job wages. After his release, he will be expected to reimburse at a rate of $250 a month."

Skate/bike parks are such a hard thing to sustain on a private level. There are only a few examples of private parks older than 10 years that I can think of. My local (4Seasons) hit 22 this year, and Ray's has gotta be getting close. I obviously can't speak for every park though. Only thing that makes sense to me from a sustainable business model view is you have to own the building and you have to have gotten that for cheap, likely from foreclosure &/or part of a district redev plan (i.e. big vacant city/county owned building in a less than desirable side of town). Barring those, I think parks should be developed as part of the local parks department. Locally, a suburban municipality to Milwaukee is resurrecting The Turf skatepark as a public park featuring indoor and outdoor sections so it can still be used year-round. I'm sure there'll be an entry fee, but it will likely be way less than what a private park in Calgary (or near anywhere really) would require to have a sustainable income flow.  

If you don't own the building, you're eventually going to get boned by a landlord. It might be 5 years or 50, but it will happen. It's like a law of nature or something. 

BLine owner has been very transparent with his operating costs during last several months in his pitches to the community for sponsorship and membership. Non-profit model is probably the best way to do it locally here (or just a smaller facility), but he doesn't have the time or money to keep floating it while the city figures out it's end of the bargain in taking it over. BLine website and Instagram account have been very interesting lately to follow regarding his costs and realities of operating a facility like this.

5 more weeks to go, trying to show up 2x weekly before the end

The City also built a ton of beginner/low intermediate level pump tracks during the last several years (one could argue in direct competition to the under 7 child/birthday party revenue BLine generates in their struggle season - aka the summer)

 The City is also very allergic and liability adverse to anything that could be seen as a jump or even tabletop. There is still work to be done. The best recognized and sanctioned bike parks and spots around here are typically outside of the big city.

They faced some severe headwinds from day one, that's for damn sure. COVID was one of those Force Majeure things that your average small business owner just doesn't see coming and can't realistically prepare for. A location closer to their clientele [SW and/or NW] would have helped attendance a fair bit, but op costs would have been even higher. Fatbiking in the area ramped up sharply from 2015 onwards, and while not a direct competitor for B-Line's client base, it could not have helped. Chestermere opening in 2017 would have been a swift kick in the nuts. The other skills parks* would have further drained customers in the summer.

*I have a long comment about this, sending by PM.

We have a county in our area that redeveloped the MTB trails in one of their parks (Heritage Trails) with a bunch of actual well made drops and jumps, all created and maintained by members of the local advocacy group. The county I live in is risk adverse and NIMBY packed, but there's another neighboring county that opened a couple of their parks to MTB development and are watching what happens at Heritage, liability/legal wise, to gauge future development as what trails they let the local mofos create have been great for revenue. Turns out that whole "If you build it they will come" saying has some truth. At least as long as it ain't gonna run $20/session.

Just seen something that I think sums up the industry right now… take a look at the spelling of brakes on Chain reaction’s relaunched website 😂

https://www.chainreactioncycles.com/bike-parts

Nice.

At least they fixed it

Looks like the chickens from the loan Scott got are coming home to roost:
 

Scott Sports replaces CEO 'to refresh' brand

"Juwon Kim, a Scott Sports Board of Directors member since 2022, succeeds Zaugg. Kim has 17 years of experience in investment banking with various international banks. He was the co-founder of a start-up venture in Korea before joining Scott Sports majority shareholder Youngone Corp. as head of growth strategy and mergers and acquisitions."

Sounds like a CEO who loves bikes and will prioritize company culture, innovation, and supporting creative freedom no matter the cost NOT

I honestly don't see Juwon Kim running Scott long-term. He was probably tapped as an interim CEO to get the financials in order and then take a step back once they get to green.

His LinkedIn profile doesn't show any tenure in the manufacturing, retail, or FMCG industries so I don't see how his experience will be relevant to the growth of Scott Sports as a brand and company. 

He's not there to grow the company. He's a bean counter there to cut overheads.

Potential plot twist in the Scott Sports story spotted on the other site. Former (?) CEO Beat Zaugg denied the news and says "I'm still the CEO." Source: www.ride-mtb.com/de/news/beat-zaugg-ich-bin-ceo / radmarkt.de/paukenschlag-bei-scott-sports-group-verwaltungsrat-ernennt-neuen-ceo

According to Google Translate: "Beat Zaugg himself told RadMarkt that he is still president and CEO of the Scott Corporation and the Scott Sports Group. He is also surprised that his employees only found out about the Youngone or Scott board of directors decision through the press: 'Not exactly conducive to Scott's values ​​or our European ideas about management...' Industry insiders fear that a power struggle between the long-standing Scott team and the Scott majority shareholder."

People thought Zaugg had left the company, but what actually happened was designers at Scott hid him by integrating him with his desk in the hopes it would provide his office with a cleaner look.

i'm curious is to which parts of the scotts sports business are in the red.  cycling? winter sports? running? motorsports? all of the above? 

From a quick scan of this article the bike division had a lot of capital tied up in inventory and needed cash to carry them over until they were able to sell a lot of it.

good find, thanks.

SRAM sold! Fox? Oops. 

Pole Bicycle insolvent. Screenshot from here: Insolvency register (om.fi)

that's something 

Bummer if true.

I like a lot of the things that they do with their bike design.

Leo from Pole has sent an update to Rob from EMTBForums which he has shared:

Man, thats a kick in the nuts. As abrasive as Leo can be, I consider him to be the primary force behind the geometry revolution of the last 10 years. As recent as 2018, the Specialized Enduro still had XC geometry. 

I was always curious how Pole supported all they do with boutique sales and hype. In Robs video he blames it on the post-COVID bike industry crash, but that can't be the only reason why.

Did he seek a loan or line of credit to keep the doors open? Is that even possible in his jurisdiction and company size?

bummer i just saw my first pole emtb on the local trails and was kinda starstruck. I've always wanted to try one.

Kona troubles at sea otter. 👎 

https://www.bicycleretailer.com/industry-news/2024/04/17/wheres-kona-br…

Today is the day I learned that it’s not pronounced like a North American would expect.