I'm friends with some people who have worked for Dan. Here's the best article I could find that might give some insight on what happened. Short answer is each year event per-participant expenses kept increasing (Pallotta has a bit of a "spendy" reputation), until it got out of control. At his last event only 14% of the money raised actually went to the charities:
Some more backstory: to his credit Dan Pallotta did create the AIDS rides and cancer walks. They seem common now, but at the time they were innovative and very successful in dramatically increasing the donations going to these charities. Then expenses started to climb. Dan likes everything to be very nice, luxurious even, for his participants. As the money rolled in, he spared no expense on having the best facilities, logistics, design, etc. for his events. At some point he screwed up his math, the expenses ate almost all the profits, and the AIDS and cancer charities went ballistic. And they got the press involved.
In addition, Pallotta Teamworks was set up as a for-profit company. This was not what caused the controversy, but it certainly added to it. Also not helping matters from a PR perspective is that Dan was known to pay himself a very large salary and live the high-end L.A. lifestyle. He also spent a very large sum (millions) on outfitting a warehouse into a unique, custom-designed office space that was something out of a bond movie. He wasn't doing anything malicious, but these things didn't help when the wave of bad press hit.
The sponsors found it easy to find people, including some of Dan's own employees, who were glad to duplicate the events. Except this time they only used non-profits, and guaranteed a minimum percentage of donations that would go to the actual charities.
Update: pictures of the above-mentioned Pallotta Teamworks office space (gallery at bottom of page):
I recall when the SF/LA AIDS ride split from Pallotta Team Works. The major issue was about the overhead and actual percentage of dollars raised making it to the assorted charities.
Pallotta had gorgeous brochures, but you could tell all that glitz brought about overhead.
That said, the first year of the "independent" ride for the SF Aids Foundation/LA Gay and Lesbian Center overlapped with the (I believe) last Pallotta ride and had it's issues. It also took a number of years for the numbers to recover to where they were before dropping Pallotta.
Putting on multi-day events with a couple of thousand people participating takes a lot of effort. I think SFAF and LAGLC are better off now for putting on the ride themselves.
http://www.commondreams.org/headlines.shtml?/headlines02/082...
Some more backstory: to his credit Dan Pallotta did create the AIDS rides and cancer walks. They seem common now, but at the time they were innovative and very successful in dramatically increasing the donations going to these charities. Then expenses started to climb. Dan likes everything to be very nice, luxurious even, for his participants. As the money rolled in, he spared no expense on having the best facilities, logistics, design, etc. for his events. At some point he screwed up his math, the expenses ate almost all the profits, and the AIDS and cancer charities went ballistic. And they got the press involved.
In addition, Pallotta Teamworks was set up as a for-profit company. This was not what caused the controversy, but it certainly added to it. Also not helping matters from a PR perspective is that Dan was known to pay himself a very large salary and live the high-end L.A. lifestyle. He also spent a very large sum (millions) on outfitting a warehouse into a unique, custom-designed office space that was something out of a bond movie. He wasn't doing anything malicious, but these things didn't help when the wave of bad press hit.
The sponsors found it easy to find people, including some of Dan's own employees, who were glad to duplicate the events. Except this time they only used non-profits, and guaranteed a minimum percentage of donations that would go to the actual charities.
Update: pictures of the above-mentioned Pallotta Teamworks office space (gallery at bottom of page):
http://www.pallottateamworks.com/about_apostrophe.php