Ronde Chumpion
--------------------
U.S. Postal puts brakes on cycling deal
--------------------
By Bonnie DeSimone Tribune staff reporter
April 23, 2004
One of the most high-profile and hotly debated sports
sponsorships in recent history will end with this calendar
year because the U.S. Postal Service has decided not to
renew its contract with five-time Tour de France champion
Lance Armstrong's cycling team.
Neither side will confirm publicly that the sponsorship
contract first signed in 1996 will be terminated, but
sources said an announcement could come as early as
next week.
If Armstrong wins a record sixth Tour this July, he will do
it in a royal blue Postal jersey. The title sponsor's contract--
which is to provide about $8 million in direct financial
support to the team this year--runs through the end of 2004.
The agency's bet seemed to pay off in the intangible
categories of exposure and feel-good publicity as it became
synonymous with Armstrong's successful comeback from
testicular cancer in one of the world's most challenging
sporting events.
But the sponsorship has come under increasing fire,
especially since a March 2003 audit by the USPS Office of
the Inspector General (OIG) said the agency overestimated or
could not verify revenues attributed to sponsorships that
included cycling and several other pro and college sports.
The audit also found USPS mismanaged related costs such as
entertainment.
Armstrong, who won Stages 3 and 4 of the Tour de Georgia
Thursday, previously has said he wants to compete at least
one more year. But even his charismatic presence--and the
worldwide marketing rights to his name and image that go
with the sponsorship--were not enough to keep U.S. Postal
in the fold.
Jim Andrews, editorial director of the Chicago-based IEG
Sponsorship Report, which tracks corporate sponsorship
trends and activity, said he is not surprised that the USPS
affiliation apparently has run its course. The relationship
already was a relatively long one, he said.
"They've been under so much pressure internally and
externally for this sponsorship," Andrews said. " . . . I
don't think they want to go through another round of
articles and pundits criticizing it."
Andrews said he does not think the team will have a problem
recruiting another title sponsor even though Armstrong's
competitive days may be numbered.
"The fact that you could have him make personal appearances
on your company's behalf and use him in your advertising is
a huge factor," Andrews said. "In many cases with athletes,
we see their stars continue to get higher after retirement,
when they have more time to devote to that kind of outside
activity."
Armstrong told the Tribune in March he would retire if the
team staff could not be kept intact under Postal or another
sponsor, but he said he was optimistic that would not
happen. He acknowledged, as did his agent Bill Stapleton,
that any contract will have a lower price tag once he gets
off the bike.
"I think there'll be two different prices for the team," he
said in Girona, Spain, last month. "Obviously, if the team
is still winning the Tour, or if I continue, it'll be one
level, and when I retire, I suspect it'll drop off to
another level."
Armstrong has defended the Postal Service sponsorship
against detractors.
"Whatever U.S. Postal decides to do, I am grateful to have
worked for them for seven years," he said on his Web site
late last month.
"They gave me an opportunity when no one else would--and
without them, there would simply be ZERO Tour victories."
The Postal Service initially decided to invest in the
cycling team, which competes mainly in Europe, to help
increase brand awareness of its overseas delivery services
and better compete with rivals such as UPS, FedEx and DHL.
Agency officials also have contended over the years that
sports sponsorships are an effective means of raising
employee morale and public image.
The cycling team sponsorship is a national one, but USPS
also has been involved in regional sponsorships of the Bears
and Notre Dame, the New York Yankees and the Tampa Bay Devil
Rays, as well as the Masters and Ryder Cup in golf.
The OIG audit said the agency only recently had established
an accurate tracking system for revenues sponsorships
generate and could verify only $698,000 of an estimated $18
million it claimed was related to cycling. Similarly, the
audit could not verify $112 million the Yankees sponsorship
supposedly generated.
"The Postal Service needs to consider sponsorships in light
of its monopoly status, financial condition, investment
returns and core mission," the audit said, noting that the
agency ran more than $2 billion in the red in 2001-02.
Dollar amounts of the sponsorships were blacked out in the
report posted on the USPS Web site, as agency officials
considered them proprietary. But the Lake Worth (Fla.)
Herald, relying on original documents the newspaper
obtained, pegged the agency's total sports sponsorships
expenditures from 1996-2002 at $48 million, $40 million of
which went to cycling.
Postal's likely pullout would fit into a national trend:
Companies are much more demanding than they were even 10
years ago about getting a tangible return for their
investment, according to Paul Swangard, managing director of
the University of Oregon's Warsaw Sports Marketing center.
"It's very difficult to determine the value of a sponsorship
as a business tool," he said. "Is it better than traditional
forums of advertising and PR?
"With TV ads, you can see the numbers. A sponsorship isn't a
direct sell. The fact that your company's name appears on a
cycling jersey doesn't directly tell people about the
quality of your brand--it's done more with subtle
association."
Copyright (c) 2004, Chicago Tribune
--------------------
Improved archives!
Searching Chicagotribune.com archives back to 1985 is
cheaper and easier than ever. New prices for multiple
articles can bring your cost down to as low as 30 cents an
article: http://www.chicagotribune.com/archives
U.S. Postal puts brakes on cycling deal
--------------------
By Bonnie DeSimone Tribune staff reporter
April 23, 2004
One of the most high-profile and hotly debated sports
sponsorships in recent history will end with this calendar
year because the U.S. Postal Service has decided not to
renew its contract with five-time Tour de France champion
Lance Armstrong's cycling team.
Neither side will confirm publicly that the sponsorship
contract first signed in 1996 will be terminated, but
sources said an announcement could come as early as
next week.
If Armstrong wins a record sixth Tour this July, he will do
it in a royal blue Postal jersey. The title sponsor's contract--
which is to provide about $8 million in direct financial
support to the team this year--runs through the end of 2004.
The agency's bet seemed to pay off in the intangible
categories of exposure and feel-good publicity as it became
synonymous with Armstrong's successful comeback from
testicular cancer in one of the world's most challenging
sporting events.
But the sponsorship has come under increasing fire,
especially since a March 2003 audit by the USPS Office of
the Inspector General (OIG) said the agency overestimated or
could not verify revenues attributed to sponsorships that
included cycling and several other pro and college sports.
The audit also found USPS mismanaged related costs such as
entertainment.
Armstrong, who won Stages 3 and 4 of the Tour de Georgia
Thursday, previously has said he wants to compete at least
one more year. But even his charismatic presence--and the
worldwide marketing rights to his name and image that go
with the sponsorship--were not enough to keep U.S. Postal
in the fold.
Jim Andrews, editorial director of the Chicago-based IEG
Sponsorship Report, which tracks corporate sponsorship
trends and activity, said he is not surprised that the USPS
affiliation apparently has run its course. The relationship
already was a relatively long one, he said.
"They've been under so much pressure internally and
externally for this sponsorship," Andrews said. " . . . I
don't think they want to go through another round of
articles and pundits criticizing it."
Andrews said he does not think the team will have a problem
recruiting another title sponsor even though Armstrong's
competitive days may be numbered.
"The fact that you could have him make personal appearances
on your company's behalf and use him in your advertising is
a huge factor," Andrews said. "In many cases with athletes,
we see their stars continue to get higher after retirement,
when they have more time to devote to that kind of outside
activity."
Armstrong told the Tribune in March he would retire if the
team staff could not be kept intact under Postal or another
sponsor, but he said he was optimistic that would not
happen. He acknowledged, as did his agent Bill Stapleton,
that any contract will have a lower price tag once he gets
off the bike.
"I think there'll be two different prices for the team," he
said in Girona, Spain, last month. "Obviously, if the team
is still winning the Tour, or if I continue, it'll be one
level, and when I retire, I suspect it'll drop off to
another level."
Armstrong has defended the Postal Service sponsorship
against detractors.
"Whatever U.S. Postal decides to do, I am grateful to have
worked for them for seven years," he said on his Web site
late last month.
"They gave me an opportunity when no one else would--and
without them, there would simply be ZERO Tour victories."
The Postal Service initially decided to invest in the
cycling team, which competes mainly in Europe, to help
increase brand awareness of its overseas delivery services
and better compete with rivals such as UPS, FedEx and DHL.
Agency officials also have contended over the years that
sports sponsorships are an effective means of raising
employee morale and public image.
The cycling team sponsorship is a national one, but USPS
also has been involved in regional sponsorships of the Bears
and Notre Dame, the New York Yankees and the Tampa Bay Devil
Rays, as well as the Masters and Ryder Cup in golf.
The OIG audit said the agency only recently had established
an accurate tracking system for revenues sponsorships
generate and could verify only $698,000 of an estimated $18
million it claimed was related to cycling. Similarly, the
audit could not verify $112 million the Yankees sponsorship
supposedly generated.
"The Postal Service needs to consider sponsorships in light
of its monopoly status, financial condition, investment
returns and core mission," the audit said, noting that the
agency ran more than $2 billion in the red in 2001-02.
Dollar amounts of the sponsorships were blacked out in the
report posted on the USPS Web site, as agency officials
considered them proprietary. But the Lake Worth (Fla.)
Herald, relying on original documents the newspaper
obtained, pegged the agency's total sports sponsorships
expenditures from 1996-2002 at $48 million, $40 million of
which went to cycling.
Postal's likely pullout would fit into a national trend:
Companies are much more demanding than they were even 10
years ago about getting a tangible return for their
investment, according to Paul Swangard, managing director of
the University of Oregon's Warsaw Sports Marketing center.
"It's very difficult to determine the value of a sponsorship
as a business tool," he said. "Is it better than traditional
forums of advertising and PR?
"With TV ads, you can see the numbers. A sponsorship isn't a
direct sell. The fact that your company's name appears on a
cycling jersey doesn't directly tell people about the
quality of your brand--it's done more with subtle
association."
Copyright (c) 2004, Chicago Tribune
--------------------
Improved archives!
Searching Chicagotribune.com archives back to 1985 is
cheaper and easier than ever. New prices for multiple
articles can bring your cost down to as low as 30 cents an
article: http://www.chicagotribune.com/archives
