US Cycling is forever indebted to USPS.

--------------------
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:
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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