PTI Holding of New York dumped LeMond by email saying his signature line failed to sell in the required numbers. The company switched to accessories branded with the Schwinn name instead.
LeMond and Armstrong, once friends, are now bitter enemies, with LeMond being one of the key 'witnesses' in LA Confidentiel, the controversial book by David Walsh and Pierre Ballester.
According to the Pioneer Press of Minnesota, LeMond told a St. Paul court on Monday that his signature line didn't bomb because he was no longer famous but because PTI failed to market the line with sufficient vigour.
LeMond told the jury he believed his accessory range could have had annual sales of up to $50m.
The rights to the LeMond name reside with Trek, for bicycles. LeMond's Cycling Inc. holds the rights for cycle accessories and LeMond said going downmarket was a "calculated risk."
PTI and Cycling Inc. signed a ten year licensing deal, with LeMond expecting royalties of $500 000 a year.
However, the line tanked in Target, mainly because of poor design and marketing, said LeMond.
PRT also failed to sell the line into retailers in Europe and Asia, said LeMond, where he believes a line with his name on would have been a big seller.
The Pioneer Press reports that PTI terminated its relationship with LeMond in March 2003, offering a $1.1m golden handshake. In an email, PTI said the LeMond name did not exert the pull it once did, and cited Lance Armstrong's "emergence as the dominant American cyclist."
LeMond was miffed: "LeMond bikes had had the best year yet. I knew [PTI] weren't making an effort."