The Colorado Rapids have filed a lawsuit against jersey sponsor Ciao Telecom for allegedly missing payments, Daniel Boniface of The Denver Post reports.
According to the lawsuit, the Rapids are seeking nearly $500,000 from Global Logistics Solutions LLC after claiming Ciao Telecom's parent company has failed to make two payments. The club is also seeking attorney fees and unspecified damages.
The Rapids had agreed to a five-year sponsorship deal with the company worth $8.3 million.
From The Denver Post:
According to court documents obtained by The Denver Post, GLS agreed to pay the Rapids $80,000 to close the sponsorship deal, but only $75,000 was paid. Payments of $240,000 due on July 30 and Sept. 30 were not made. Another $240,000 payment is due Nov. 30.
The deal would have paid the Rapids $800,000 this season, increasing to $1.5 million in 2015, $1.75 million in 2016, $2 million in 2017 and $2.25 million in 2018.
A further dive into the agreement shows that the Rapids took a risk on their deal with Ciao Telecom, and so far it has not paid off. Boniface reports Ciao had $2 million in cash compared to $65 million in liabilities when they agreed to the contract.
It is not the first time Ciao has had problems with a sponsorship agreement, according to Boniface.
Ciao Telecom also had a jersey sponsorship deal with Italian Serie B club Reggina Calcio, which was supposed to run through the 2014-15 season, but Ciao's logo has since been removed from the club's website. Attempts to reach the club for comment were not returned.
Since July, the Ciao Telecom stocks have dropped to 36 cents.
- Josh Sanchez