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Cheer Inc.

Varsity Pays $43 Million To Settle Antitrust Lawsuit

Company agrees to changes in industry “oversight” agency …

American cheerleading behemoth Varsity Spirit (Varsity) has faced years of antitrust litigation, but between a case dismissal last week and a settlement this week, the firm is one step closer to resolving all of its pending anti-trust disputes.

Originally confronted with a trio of lawsuits alleging its brand had improperly assumed monopolistic control over both the apparel and organizational sides of the multi-billon dollar youth cheerleading industry, the Memphis-baed firm is now down to just one pending action.

According to Daniel Libit of Sportico, the plaintiffs in one of the cases – a class of “direct purchasers” who’ve paid Varsity fees – have agreed to accept the company’s concessions, which consisted of a $43 million payment and promises to change the organization’s governing rules.

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Assuming chief U.S. district judge Sheryl Lipman accepts the jointly filed settlement agreement, Varsity board members would no longer be allowed to sit on the board of the U.S. All Star Federation (USASF).

Along with USA Cheer, USASF is one of the so-called “oversight” bodies purportedly protected child athletes from harm. In reality, though, it has a loophole-laden “reporting” structure which facilitates abuse through a “closed network,” according to a recent lawsuit (.pdf).

Per the terms of the agreement, Varsity won’t pay the salaries or benefits of USASF employees and executives. Also, no company would be permitted to hold more than a third of the voting seats on USASF’s board – or control more than 40 percent of the USASF’s sanctioning committee.

This settlement – along with last week’s dismissal of another antitrust case – leaves one outstanding antitrust lawsuit pending before Lipman. Sources familiar with civil litigation have told FITSNews to be on the lookout for another settlement agreement as the remaining plaintiff hopes to avoid leaving the negotiating table empty-handed.

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While Varsity’s antitrust issues appear to be clearing up, the company remains exposed on another front. As FITSNews has extensively reported in our Cheer Incorporated (AppleSpotify) podcast, the company is named in a dozen lawsuits tied to a widespread institutional sex abuse scandal in several states.

Those lawsuits began to appear nearly seven months ago following the spectacular implosion of Greenville, S.C.-based Rockstar Cheer. This gym became the epicenter of the Cheer Incorporated scandal on August 22, 2022 when its late owner and founder, Scott Foster, died by suicide. The day after Foster’s death hit the news, our news outlet reported the 49-year-old coach was staring down “a multi-jurisdictional investigation into (among other things) allegations of sexual misconduct with underage girls.”

We quickly learned it wasn’t just girls. And it wasn’t just Foster. And most importantly … it wasn’t just Rockstar.

Stay tuned to FITSNews as we continue our investigation into this industry in the hopes of not only holding those accountable who abused child athletes – but also those who profited from a system which failed to protect them.

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ABOUT THE AUTHOR …

(Via: Travis Bell)

Dylan Nolan is the director of special projects at FITSNews. He graduated from the Darla Moore school of business in 2021 with an accounting degree. Got a tip or story idea for Dylan? Email him here. You can also engage him socially @DNolan2000.

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