INSIDE THE LAWSUIT Gottschee claims Cosmos has paid about $50K of $260K it is owed
By Michael Lewis
In its lawsuit against the New York Cosmos, Blau Weis Gottschee claims the soccer organization reneged on most of its August payment of $250,000 and another $10,000 to the youth soccer club, which has brought the storied youth soccer club to the brink of insolvency.
According to the lawsuit, Gottschee wants the Cosmos to honor its contract and the $210,000 it owes the youth soccer club and make the second payment of $250,000, which is due in January, immediately.
If the owed funds are not paid, Gottschee fears the lack of money will continue to hinder the club's progress and that the club could cease to exist in several months, the lawsuit said.
"As BWG is forced to renege, on virtually a daily basis, on commitments essential to its ongoing operations due to its dire financial situation, it's standing in the soccer community drops precipitously with creditors, competitors, staff and players alike," the suit stated.
The lawsuit was filed in New York Supreme Court on Nov. 3 by the law firm of Weil Gotshal and Manges. Joshua S. Amsel, Vanessa W. Chandis and Matthew D. Altemeier were the attorneys listed on the official papers of the lawsuit, which were obtained by BigAppleSoccer.com.
Gottschee, which celebrated its 60th anniversary on Oct. 22, is considered one of the most respected and storied youth soccer clubs in the United States. The Cosmopolitan Junior Soccer League club has won numerous Eastern New York Youth Soccer Association State Cup titles, a national championship and produced such future U.S. National Team players as Mike Windischmann, the captain of the 1990 U.S. World Cup team, and former Cosmos players Werner Roth and Joey Fink, among others.
The Cosmos are undergoing a change of ownership. Former CEO and chairman Paul Kemsley recently was bought out by Sela Sport of Saudi Arabia.
All of the information in this story was taken from the lawsuit.
On July 21, 2010, Gottschee and Cosmos East, a subsidiary of the New York Cosmos, entered into a sponsor agreement in which the Cosmos acqrured the "sole and exclusive right" to sponsor the club's academy teams for five years in exchange for a $500,000 annual sponsorship fee, plus other amounts that would be agreed to by the partners.
The Cosmos made their first two payments in 2010. However, only two partial payments totaling $49,056.67 were made to the club when August amount was due. Despite assurances from the Cosmos, Gottschee never received the rest of the money. According to figures calculated by BigAppleSoccer.com, the Cosmos owe the CJSL club $200,943.33. That amount includes $10,000 that the Cosmos agreed to pay Gottschee for an indoor facility in the winter of 2011. The two payments were made after the Aug. 1 deadline -- $24,056.67 on Aug. 31 and $25,000 on Sept. 26.
The papers in the suit detail the history of correspondence between the Cosmos and Gottschee, which was called "noncommittal reassurances that the money would arrive soon."
An Aug. 30 email said, "The tranche of monies we discussed are still en route. We are hoping that they do in fact pay on Sept. 1 as they told us they would."
A Sept. 8 email from the Cosmos said: "I hope to have a clearer answer tomorrow as to the arrival of the next tranche. It is to be hear [sic] early next week, the amounts you sent last week are earmarked as priority."
A Nov. 1 email stated: "The $210,000 will be paid in full. With regards to a specific date I believe it will be around the back end of next week."
Because the Cosmos failed to make its agreed to payments, the action has had several "devastating and potentially irreversible consequences" for Gottschee, the suit said. Gottschee was forced to use its "extremely limited" financial reserves" to fund its teams and operations since August. The club expected those reserves to run out by the end of the year, if not sooner, the suit said.
Gottschee told its Academy program coaches that they would not be paid beyond September. At a recent meeting, players and parents were told that the club would have to revert back to the previous pay-for-play set up for Gottschee teams that participate in the U.S. Soccer Development Academy. That would come to several thousand dollars a year per player.
"The significance of this cannot be overstates, as coaches are likely to find employment elsewhere rather than work for less (let alone for free), and parents, unable to satisfy the financial obligations now being thrust upon them, are likely remove their kids from the program, thereby forcing bwg to shut down or combine teams and forever tarnishing its reputation in the community and the goodwill it has built over the course of its more than 60 years of operation," the suit said.
Gottschee did not know how many coaches and players it would lose if it continued in its present precarious financial situation.
"BWG does not know yet how many players and coaches at the BWG Academy level and/or club level will depart in a new lesser full 'pay for play' environment, but it does know that midway through a player year [starting August 1 and continuing to July 31], it is being forced to renege on promises -- something it has never before done throughout its 60 years-plus of existence, and a bitter pill to swallow for a club based on integrity both on the field and off."
The lawsuit painted a bleak picture for Gottschee's future if the August and future payments were not met.
"Having planned its operations for the 2011-12 contract year based on its anticipated receipt of the full $500,000 annual sponsorship fee, BGW thus is faced with the real prospect of remaining in the same, precarious financial position in which it has been the past several months, assuming it still even exists as a club at that point," the official court papers stated.
The Cosmos have not responded to an email to comment on the lawsuit.