- The Washington Times - Sunday, June 29, 2003

Lance Armstrong can add marketing phenom to his resume. The world-class cyclist is one of the top product endorsers in the country. And he shows no sign of slowing down as more businesses align them

selves with him, from cycling companies to automakers.

The 31-year-old cancer survivor is preparing for what could be his fifth straight win in the 23-day Tour de France —the sport’s biggest and most rigorous event, covering more than 2,100 miles through the French countryside. Armstrong, the favorite, would be tied with one other cyclist with five straight wins. He also would be one race closer to setting a new record for most consecutive Tour de France victories.

The race, celebrating its centennial, begins Saturday with 22 nine-member teams from all over the world. It will begin in Paris, loop around France in 20 stages and end with the traditional ride down the Champs-Elysees in Paris.

As Armstrong’s popularity soars, so has the number of companies affiliated with him —from team sponsors such as the U.S. Postal Service and Berry Floor, a European laminate-flooring company, to individual deals with Subaru of America Inc. and PowerBars.

Last year Armstrong was the fifth-biggest product pitchman among athletes, behind Tiger Woods, Michael Jordan, Kobe Bryant and Anna Kournikova, according to a survey by Burns Sports & Celebrities Inc. of Evanston, Ill.

“America loves anyone who can overcome adversity like Lance has,” says Burns’ chief executive, Bob Williams. “It’s an all-American story. As a company, you are the indirect beneficiary of his positive image.”

Going postal

In the first leg of the 100th Tour de France, Armstrong and eight teammates will be decked out in red, white and blue uniforms saturated with the Postal Service logo, among others. The team’s nearly two dozen sponsors include Visa, Nike, Coca-Cola, Trek Bicycles, Thomas Weisel Partners and All Sport Body Quencher.

Sponsors provide everything from cash to products and services in return for logo placement, advertising and appearances by riders, to name a few benefits.

But only one organization can be the title sponsor.

The Postal Service, a quasi-government agency, is in its eighth year as top sponsor for the pro cycling team. It signed on in late 1995, three years before Armstrong joined.

The Postal Service spends an estimated $6 million a year for the sponsorship. The money buys the team name, and the agency’s logo covers team jerseys, vehicles, signage and advertising.

“There is a very strong synergy and powerful image of Lance Armstrong as a kind of turbo-charged delivery man finding the fastest route between two points with unique determination,” says Lucian James, founder of LucJam Inc., a research and brand-strategy firm in San Francisco.

Postal officials won’t discuss specific financial information but say the sponsorship dollars reach much further than the cost. In the weeks surrounding the Tour de France in 2001 and 2002, the monetary value of all the times the Postal Service was mentioned in domestic media —without having to pay for it —reached about $19 million each year, according to research by the service’s advertising agency.

“It’s truly amazing how much exposure there is,” says Joyce Carrier, manager of public affairs for the Postal Service. “There’s a certain brand awareness.”

Brand awareness is a prime reason the Postal Service sponsors the Armstrong-led team. The relationship gives the agency opportunities to reach customers and be top-of-mind for services both internationally and domestically.

“We want to remind people that they have choices,” Ms. Carrier says. “People take us for granted and forget we have all these competitive services.”

Individual deals

Armstrong has signed deals with some companies separately from his team, among them Coke, Bristol-Myers Squibb Co. and Nike Inc.

Most recently he inked a deal with Subaru reportedly worth $12 million. Subaru previously used Australian actor-outbacker Paul Hogan of the “Crocodile Dundee” movie franchise for years.

The automaker’s Armstrong campaign, using the tagline “Subaru. Driven by What’s Inside,” launched in April. Armstrong appears in TV and print ads pitching four Subaru vehicles —Outback, Forester, Baja and WRX.

“Lance Armstrong is a perfect fit for Subaru,” Fred Adcock, executive vice president of Subaru of America, says in a prepared statement. “He’s a rugged individualist. He’s authentic and passionate about what he believes. He’s engineered like no other to perform like no other.”

Some of Armstrong’s individual sponsorship deals appear to conflict with his cycling team’s dozens of sponsors.

For instance, the team is affiliated with Clif Bar but Armstrong has a deal through 2004 with PowerBars. Team riders are sponsored by All Sport Body Quencher, but Armstrong quenches his thirst with Coca-Cola’s Powerade.

Mr. Williams, of Burns Sports & Celebrities, says athletes and celebrities must be careful not to amass too many endorsement deals. Michael Jordan “walked that fine line” and Tiger Woods is doing so now, he says.

“There’s certainly a saturation point for athletes and celebrities,” Mr. Williams says. “But for Lance, he hasn’t reached that point yet.”

Stamp of disapproval

Critics say the federally regulated Postal Service, financially troubled for years, should not be spending money marketing a cycling team.

“What is the purpose of developing the U.S. Postal Service as a brand? They don’t need a brand,” says Rick Merritt, executive director of PostalWatch, a Virginia Beach watchdog group. “It’s not a benefit for the American people, who are paying the bill.”

The Postal Service raised the price of a first-class stamp to 37 cents in June 2002, the fifth increase since 1991, when the rate increased from 25 cents to 29 cents.

The struggling agency reported a net loss of $676 million for the fiscal year ended Sept. 30 and a net loss of nearly $1.7 billion for the prior year.

“I’m opposed to the Postal Service wasting money to sponsor the team,” Mr. Merritt says. “Why should we be paying so [the Postal Service] can have a better image? They’re too busy trying to be the next Wal-Mart and building a brand.”

The Postal Service gets about 82 percent of its $66.7 million in annual revenue domestically from first-class, periodical and standard mail.

International mail and services make up slightly more than 2 percent of revenue, while other domestic mail and services such as Priority Mail and Express Mail make up about 15 percent.

The Postal Service won’t disclose how much the team sponsorship helps business, or how much specific segments have grown as a result.

“No matter what we spend, to some people it’s too much,” Ms. Carrier says.

Allure of sponsorships

The owner of Armstrong’s team says the Postal Service gets a bad rap.

“Their image is always questioned and often criticized,” says Dan Osipow, director of operations at Tailwind Sports Corp., which owns and operates the cycling team. “But when you have an athlete like Lance in tow — it’s done wonders for their image.”

More companies are catching on to the benefits of sports sponsorships. The majority of money spent by North American businesses on sponsorships goes to sports, according to the IEG Sponsorship Report, which tracks corporate sponsorships.

A projected $7.21 billion will be spent this year on sponsoring sports and athletes —up 11 percent from $6.48 billion in 2002, according to IEG. In total, North American companies are expected to spend $10.52 billion on all sponsorships, up from $9.65 billion.

“Sponsorship is more of a two-way relationship with the consumer compared to advertising, which is essentially a memorably persuasive plea to a consumer to buy a product,” Mr. James of LucJam says.

Sponsorships can keep teams or individuals training and armed with top equipment. In some cases sponsorships allow athletes to concentrate on training rather than having to work at other jobs for pay, Mr. James says.

“The deal with the consumer is that the sponsor enhances the sport to a higher level and in return hopes that the customer will be interested in the brand and return some attention to it,” he says. “The ongoing association in the consumer’s mind between the brand and the athlete is the goal.”

Riding into history

The Postal Service team has not always had Armstrong as its lead rider.

Armstrong raced on the team when it was created in 1990 under a different name —long before the Postal Service signed on and long before Tour de France victories. But he moved on, and Tailwind’s Subaru-Montgomery Team continued to evolve as a pro cycling team, adding new sponsors and new riders.

Armstrong signed with Team Motorola in 1992, winning routinely on the pro cycling circuit and helping to pull his team into the world’s top five.

In 1996 he cut a reported $2.5 million deal with Cofidis, a French credit company, to ride with its cycling team. Shortly afterward, the Plano, Texas, native was diagnosed with testicular cancer. The French team severed ties with him in 1997.

With odds of surviving put at 50-50 at best, Armstrong underwent two operations and aggressive chemotherapy, then came back stronger than ever.

Many teams and past supporters had been skeptical. When no other team was interested in signing the cancer-free Armstrong, Tailwind’s Postal Service team stepped up in 1998.

“Prior to his illness he was one of the best riders in the world,” Mr. Osipow says. “We asked [the Postal Service] to trust us. They agreed and saw it as a benefit.”

Armstrong claimed his first Tour de France victory in 1999.

Tailwind pushed to find the best riders to complement each other and help drive the team leader to victory. During the race, each rider works — including blocking the wind for Armstrong at different stages — to ensure he wins in the end.

“The key is to find the right talent and personalities — to find the right athletes that work,” Mr. Osipow says.

‘Lofty expectations’

The 21-rider team’s operating budget is $10 million, which comes from the sponsors and includes riders’ salaries.

Tailwind determined that is the amount needed to “continue to compete at the highest level of the sport,” Mr. Osipow says. “We know what it takes to win the Tour de France.”

The team has come a long way. Italian saddle supplier Selle San Marco is the only sponsor along for the ride since its inception as the Subaru-Montgomery Team. Many sponsors, including the Postal Service and Visa, signed on prior to Armstrong’s winning streak.

“[The team] has overperformed for the sponsors over the years,” Mr. Osipow says. “There are pretty lofty expectations of the team.”

In November, the Berry Group signed a two-year agreement as the team’s presenting sponsor, the level below title sponsor. The Belgian flooring company, which showcases the Berry Floor name on team uniforms, expects the sponsorship to increase brand awareness and sales in Europe and the United States.

Bissell Homecare Inc., a manufacturer of vacuums and other floor cleaners, is the newest sponsor to sign on through the end of the 2004 season. Bissell’s deal includes logos on the team uniform, team vehicles and casual wear, hospitality events and the opportunity to host team members at its Grand Rapids, Mich., headquarters for a day of cycling with employees.

If too many brand names are associated with it, Tailwind runs the risk of “diluting” the impact of sponsors, Mr. Osipow says. The company has a certain amount of “real estate” to sell, including space on jerseys, bikes, collateral material and advertising.

Tailwind usually signs long-term deals. Many of the multiyear agreements —including the title sponsorship — expire at the end of 2004. Ms. Carrier won’t say if the Postal Service will renew.

However, Armstrong’s decision to continue after 2006 — if he reaches his goal of six consecutive Tour de France wins — probably will determine whether sponsors will stay on with the team.

“The team was around before him, and we think it will be around after him,” Mr. Osipow says.

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