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« Season’s Greetings | Main | Fractals and Framebuilding »
Monday
Dec202010

Sponsors or Groupies?

The Wall Street Journal in an article just published makes a big issue of the fact that wealthy backers who financed Lance Armstrong’s seven Tour de France wins, failed to make money.

Financial backers of any sport are usually nothing more than wealthy groupies of that particular sport; there is nothing wrong with that.

These are usually smart businessmen who did not make their money by acting irrationally or by making stupid decisions.

They have a passion for a sport, be it cycling, sailing, auto racing, whatever. If they put money into their choice of sport, it is by way of a membership to an exclusive club, where they get to rub shoulders with the heroes of that sport.

How can anyone possibly make money from sponsoring a cycling team, unless it is a company producing and selling a product, or a service? The only benefit from sponsorship is the brand recognition that it may bring if your team is successful.

If you have no product or service to sell, it is impossible make money. Initially this group of wealthy backers had no product or service. After the team was established they were able to talk the US Postal Service into coming on board.

I could never understand the logic behind the US Postal Services involvement. Had it been UPS or FedEx I could have seen that, but the Postal Service? Whether Lance Armstrong wins or loses, has no bearing on whether or not, I mail someone a letter. And if I mail a letter, who else will I use but the Postal Service?

Now the fact that the US Postal Service was a sponsor has come back to bite the whole team and everyone involved with it.

Why? Because the US Postal Service is Uncle Sam, and you don’t fuck with Uncle Sam.

Had the sponsors been UPS or FedEx for example, I doubt there would be a Federal Investigation going on right now into allegations of doping. Unlike baseball, these alleged offences took place on foreign soil. Does the US have jurisdiction?

The people who put money into “Tailwind Sports,” the original backer of Lance Armstrong’s team, are probably wishing they were never involved.

They try to distance themselves by saying, “We are also a victim, we lost money too;” when I’m sure they knew going in they could never make a profit. As for the Wall Street Journal they just keep rehashing this old story over and over; it fills space, and sells papers.

I for one will not speculate on the outcome, I will just wait and see. Feel free to weigh in with your take on this whole mess

 

                          

Reader Comments (19)

USPS competes with UPS, FedEx and other private companies so it makes sense for them to advertise. I don't know if advertisinf the USPS name makes more sense than advertising their parcel services, though.

December 20, 2010 | Unregistered CommenterTorben Putkonen

You're right about sponsorship and the mismatch with USPS. If my mail service is any indication, Team USPS would have raced to the wrong city and a day late.

As you well know, the business of cycling has miniscule profit margins. Businessmen who have found richer paths to wealth had hoped to bring their passion of cycling into a more rewarding experience.

Shall we be asking how the combination of "wealth, power & passion" helped corrupt a sport? Wealth demands success and that probably led to some regrettable shortcuts. Just look at the mortgage industry and their robo-signers to start.

More on "Tiger" here:
https://secure.wtco.com/downloads/Business%20Week-%20Executive%20Life.pdf

December 20, 2010 | Unregistered CommenterJack

While USPS competes with UPS and Fedex in the US, I don't believe USPS has a business platform in Europe, the scene of 99% of their advertising via the team. i agree with Dave that it always seemed a strange venture for them to sponsor a continental based team. But the money they spent was a drop in the ocean when compared to their annual budget.

Regarding the doping, i hope the truth comes out but I doubt it will.

December 20, 2010 | Unregistered CommenterJohn

I hate to break this to you Dave, but there is often a sponsorship mix up with this cycling team. United States Postal Service is in fact the title sponsor, whom are not part of the goverment owned USPS despite the similiar name.

December 20, 2010 | Unregistered CommenterMike

Mike,
So you are saying despite using the name, colors, and logo of the United States Postal Service, the team had nothing to do with the government owned USPS, and they didn't put money into the team. How did that happen?
The WSJ article even mentions Gail Sonnenberg, senior vice president of sales for the Postal Service at the time, who spoke of withdrawing sponsorship. How can one withdraw sponsorship if one is not sponsoring?
Dave

December 20, 2010 | Registered CommenterDave Moulton

I have heard that part of the thinking behind the USPS team was to provide a certain distraction from the post office shooting sprees that seemed to become epidemic in the mid 90's. It was a gamble but by allying themselves with a sports hero, introducing new logos and more a corporate image the USPS was just hoping to shed some of the stigma they had in the public eye at the time. I think everything went better than expected.

December 20, 2010 | Unregistered Commentertheguth

As for John's comment about USPS not having a presence in Europe, that is wrong. They in fact ship internationally and have for years, thus it makes sense to sponsor an international bike team.
Another point I got from the article was the surprise of these investors when they couldn't keep up with Lance or the other pros when on a members-only ride. Seems someone went to da Hood where they don't belong; can't expect to just jump on a bike and keep up with even amateur cyclists.
Perhaps a case of USPS being in the wrong Hood also?
No surprise, the government meddling where it shouldn't! Oh, and da Gov doesn't have to be accountable.

December 20, 2010 | Unregistered CommenterSteve

Sports sponsorships have always been about businessmen being fans, not about making money. Buick sponsored Tiger Woods and four PGA tournaments. Cadillac sponsored the Masters television broadcasts. How did that work out for GM?

December 20, 2010 | Unregistered CommenterTexasYankee

The US governent is always on the lookout for new ways to waste money. So in this clever plot they have sponsored Lance's TDF team so they could justify spending even more money on a Federal inestigation of doping. Maybe Eric Holder will even get involved.

December 20, 2010 | Unregistered CommenterGary

The WSJ article says the fraud allegation is based on language in the sponsorship contract providing that negative publicity from failed dope tests constitutes "default."

As a matter of law, I can't see how publicity coming 6 years after the contracting parties have shaken hands and walked away could amount to "default." I'd argue that the team performed--and then some--under the contract: USPS enjoyed overwhelmingly positive publicity for years.

Hard to say more without looking at the contract.

December 20, 2010 | Unregistered CommenterJohn Pillette

Hi Dave, To me the investigation by the US Gov. is just a big waste of taxpayer money at a time when our country broke. Yes I am against doping and cheaters, but I believe it's a little late to chase the accussed. Floyd Landis is an admitted liar who has lost his integrity as a pro cyclist. Why should anyone believe him? I believe he is out for revenge against former teamates who for the most part are either still racing in the pro peloton or have retired sucessfully. The biggest problem I have is like others have basically said, " if the Feds get involved it will become a long, expensive mess probably without any positive results that will benefit cycling." There are so many arguments floating about and disagreements between the test labs, the UCI etc... that it's really not worth chasing at this point. I'm more in favor of lifetime bans for riders who are caught now. If you are caught, you are done, period ! Sometimes harsh punishment is the only way to "straighten out" a crooked system.

December 20, 2010 | Unregistered CommenterBrian

@ Steve
Of course USPS ships internationally from the US.
My point is that they do not have a business based in Spain, or France or Italy which benefits from advertising in those countries. Is USPS competing for postal delivery service business within those countries? Do they compete with La Post in France? If you live in Paris and want to send a package to the US is there USPS office you can pop along to?

December 21, 2010 | Unregistered CommenterJohn

The reason USPS got into sponsorship is to win. Their team won the biggest race on the calendar.
It wasn’t about competing with other country’s postal services; we can’t use that argument against USPS. The point I brought up is what has also happened with companies: a group of investors take over, know nothing about the product much less how to make it (read race a bike or machine a bone screw) and expect big payoffs in five years.
They fire the highest paid with 30 years’ experience and are so stupid they don’t miss what’s now gone. Call it brain drain or whatever. Same with sports: athletes on drugs. Narrow window of opportunity to reap rewards. Then get out. Invest in next big thing.
Free enterprise. Only there’s no free lunch. Someone pays.

December 21, 2010 | Unregistered CommenterSteve

I like the don't fuck with uncle sam poster.

December 21, 2010 | Unregistered CommenterJohn

Regarding the merits of the investigation. It is default of the contract because that clause was included in the contract. Probably for a reason. Both parties signed it. There are dollars involved and the spenders want what they paid for...not bad publicity...I say go get em officer.

December 22, 2010 | Unregistered CommenterHale

Back then I did think it was a bit odd that the Government was sponsoring a team, but I will agree with the poster who talked about them wanting to change their image of service. I remember the saying "going postal" meant shooting all your co-workers back then...

The Tour itself is owned by an old-monied french company. But the UCI is government sponsored. A very strange relationship. I read that last year Lance was thinking of buying the Tour. Could you imagine how the testing would then be regulated?

I still think Landis was actually inncocent, the fact that he wrote a book about it, then spent millions trying to defend himself only to go broke carries weight in my mind. I think the french government blackmailed him into confession.

"Ok, Floyd, we'll flip you a couple million so you can break even and even retire, all you have to do is go public and confess. If you don't ,we'll throw your ass in a french jail because we have solid evidence that you hacked into the testing lab". Notice the timing of that, a few months before the TDF started. Now they bust Contador with a ridiculously small test result??? ..the witch hunt continues.

Under all this is the French/American rivalry, that's obvious.

Consider then we had Discovery Channel a company that gets huge government
grants and now supports Sarah Palin. And the various telecomm companies, which all get huge grants as well, and contribute to election campaigns in return.

If Credo Mobile started a team that would be fun to watch LOL.

December 23, 2010 | Unregistered CommenterRobert Graves

Mike,
So you are saying despite using the name

December 24, 2010 | Unregistered Commenterimoveis alegrete

Fuck the Government and Fuck Business (and Sports is a business). You will never recover and will never know what hit you.
Learn Mea Culpa.
Steve

December 26, 2010 | Unregistered CommenterSteve

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