US Cycling is forever indebted to USPS.

Discussion in 'Road Cycling' started by Ronde Chumpion, Apr 23, 2004.

  1. --------------------
    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

    --------------------
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  2. Gary

    Gary Guest

    Now the price of a stamp will be going DOWN, right? LOL Gary

    ronde chumpion wrote:
    > --------------------
    > 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
     
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