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It's Official: The Ciao Deal is Dead.

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The Rapids are now in the hunt for a new jersey sponsor, however the legal proceeding continue.

US District Court Building Colorado
US District Court Building Colorado
Richard Bamber

On Monday January 26th 'Ciao' (well in actual fact the named defendant ‘Global Logistics Solutions’), submitted a response to the court to the lawsuit filed by the Rapids back in October.  To summarize, Global are bunkering down in a legal sense & their response is to only accept 4 things: who they are as an entity, that the US District court has jurisdiction over the case, that the sponsorship agreement was signed & that they paid the first $75,000.

The rest of the items in Global's response are a denial, either due to them claiming that they have 'insufficient information' to comment or due to the complaint presenting its desired legal conclusions as fact (such as 'in breach of contract').  It will no doubt be a source of amusement to fans that Global even denies that the Colorado Rapids are a professional soccer club playing in MLS, although it has to be pointed out that the 'insufficient information' response was cited in that instance.  As well as this, there are alternative defenses such as a claim that the Rapids could have helped mitigated Global's liabilities, although exactly how this could have reasonably been done is unclear.  The response is devoid of any large item that says the Rapids have done anything really wrong & it should be concluded that all Global are trying to do is minimize the amount that the court orders that they pay. Plus the longer any court case is dragged out, the chance of some technicality coming up which means that the case is thrown out (just what Global wants) is kept alive.

Anyway, where it gets interesting is the previously unknown relationship between Ciao Telecom & Global is explained. Global signed a partnership with Ciao Telecom to become their North American distributor & marketer in return for 50% of all profits from the sale of Ciao products in the region. The partnership agreement has a clause which Global are claiming means that Ciao should have indemnified them against any legal claims brought due to breaches of the sponsorship agreement, which Global signed. Global also claim that Ciao hasn't paid them a cent in profits since the agreement was signed in April last year. Therefore, Global have filed a 3rd party complaint against Ciao for all costs & damages incurred in defending themselves against the Rapids plus the profits they are owed.  Because of this, it should be no surprise that, according to Ciao Telecom President Victor Santos, the Denver Post has reported this week that his company has severed ties with Global.

As Global requested & was subsequently granted extra time to reply, it is believed that the court hearing, originally set for Wednesday February 4th was postponed. A two month delay in Global’s response logically points to a new hearing being scheduled for early April, although this is pure speculation at this stage.

A part of the sponsorship agreement (with Global) was that the Rapids promote the Las Vegas friendly on Sun Feb 15th in conjunction with Ciao. While the Vegas game was played last Sunday, Ciao logos did not feature at all & the team was even forced to wear the 2013 home jerseys, presumably due to a lack of availability of ‘blank’ versions of the current 2014/5 ones. As the Ciao logo has been removed from the website & signage at DSG Park, it appears that the club is no longer worried about being seen as in breach of the agreement themselves, also given that non-payment was a just cause for the club being able to terminate the agreement from their side.

Rapids president Tim Hinchey has confirmed that the club is now on the hunt for a new jersey sponsor in his comments to the Denver Post, although the same article reveals that Ciao and Global were both involved in other legal cases when Major League Soccer and the Rapids approved the sponsorship deal in April last year. Questions remain about whether appropriate due diligence was performed at the time & any new sponsor, particularly a small or relatively unknown one, would expect to be asked more searching questions by the Rapids in advance of any new sponsorship agreement being signed.