Post Office paid almost $32 million for Lance Armstrong sponsorship

posted at 11:30 am on January 15, 2011 by Ed Morrissey

When wondering how the US Postal Service could find itself in a $7 billion hole, perhaps decisions like this might explain it.  Court documents in a fraud probe involving doping allegations in Lance Armstrong’s cycling team show that the USPS paid almost $32 million for a four-year sponsorship from 2001-2004:

The U.S Postal Service spent $31.9 million to underwrite Lance Armstrong’s pro cycling team during its glory years of 2001 to 2004, approximately 60 to 65 percent of the team’s total budget, according to documents newly obtained from the agency under the federal Freedom of Information Act.

The materials provide the first clear look at how heavily the agency invested in Armstrong and reveal the exact dollar amounts at issue should Armstrong and former team officials be charged with fraudulent use of government funds at the conclusion of an ongoing federal investigation.

Until now, the USPS has gone to great lengths to keep the precise amount it spent on Armstrong a secret. In 2003, the agency’s Office of the Inspector General issued an audit report that was highly critical of the deal but blacked-out specific sponsorship amounts.

As recently as last summer, when a federal grand jury in Los Angeles began hearing testimony from ex-members of Armstrong’s team, Postal Service officials continued to be tight-lipped about their sponsorship, responding to a Freedom of Information Act request by The File with heavily redacted documents.

To give a perspective on the endorsement deal, GM paid Tiger Woods $40 million to sponsor Buick over a five-year span that ended in 2009.  Woods played almost every week all year in nationally-televised golf events, while Armstrong’s team had one event a year of interest to USPS customers — the Tour de France.  Staples pays around $6 million a year for naming rights to its arena in Los Angeles where the Lakers, Kings, Clippers, and Sparks play.  Qualcomm pays $900,000 per year for naming rights to the stadium that hosts the San Diego Padres and the Chargers, which puts their name in play year-round [see update].  The Mall of America bought the naming rights for the Metrodome in 2009, which you’d be able to see — if the roof hadn’t collapsed last month.

Now, though, USPS’ sponsorship will play a key role in determining whether Armstrong’s team, Tailwind Sports, fraudulently used government funds while running a doping scheme to win championships.  One of Armstrong’s teammates, Floyd Landis, apparently blew the whistle to the feds on doping, although everyone connected with Tailwind denies it.  Landis, who was caught doping, may end up getting a windfall if the government can prove fraud; whistleblowers are entitled to up to a third of the trebled damages that come from these types of convictions.

Even apart from the fraud allegations, the fact that USPS shelled out $32 million for this endorsement over four years seems like a good point on which to question the other decisions being made by USPS management.  If Tailwind turns out to be utterly clean, they still managed to find a sucker.

Update: One of my readers, great commenters, and friends from the CapQ days, Joe Behm, reminds me that the Padres now play in Petco Park.  Joe runs a company called Behmor, which makes coffee bean roasters; if you’re a coffee aficionado, you should check it out.

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Steroid Express?

bayview on January 16, 2011 at 9:33 AM

The USPS doesn’t do one single thing that couldn’t be done better by a whole range of private firms.
This is just colossally stupid!!!
Lew on January 15, 2011 at 12:05 PM

The one single thing that couldnt be done better is that no private firms could possibly cost effectively and WITH profit, deliver to every obsure address in the USA. The Postal Service is not required to make a profit, and it simply cant be a money making venture that any private firm would undertake. Even if the Postal monopoly was lifted, no business would scramble to get 44 cents to deliver a letter to Alaska’s boon docks. Whether we need the service is another debate, but it does keep UPS and FedEx prices down with constant price undercutting. Mail volume has dwindled plenty in the last decade, but there is still enuf volume to realize that its still very much alive. The problem is the extremely top heavy management. Carrier and clerk positions have been reduced dramatically. I know of an office who has 35 employees and at times there are 7 supervisors who bump into each other. Postal management, as noted in the Armstrong debacle is in such stark contrast with UPS and FedEx way of becoming cost effective.

malkinmania on January 16, 2011 at 9:50 AM

Typical government stupidity. Wonder what they were hoping to get in return?
For a real look at government fiscal tomfoolery, check out this link, it’s a real eye-opener for the American taxpayer!

hopefloats on January 16, 2011 at 10:09 AM

The one single thing that couldnt be done better is that no private firms could possibly cost effectively and WITH profit, deliver to every obsure address in the USA. The Postal Service is not required to make a profit, and it simply cant be a money making venture that any private firm would undertake.

malkinmania on January 16, 2011 at 9:50 AM

That’s the problem – without a profit motive, they have no concern for expenses, leading to years and years of waste and abuse.

PatMac on January 16, 2011 at 10:29 AM

I think the USPS should be privatized on a long term lease, say 30 years. Instead of a board making rules in Washington oversight should have to be initiated by a person that has to contact their congressman.

The USPS provides at least for me good services. There is a branch within walking distance from my house. A branch that is convenient for me to gop to after work and another two blocks away from my bank. When I think about it who uses FedEx or UPS? When I say that I mean who as in an individual. I realize businesses use them. I have received things from FedEx and UPS but never used them to ship. Hmm…

Theworldisnotenough on January 16, 2011 at 11:35 AM

In case any elected officials happen to read this I would also privatize with the mission to the bidders who lease the USPS to:
1. maintain the pension system for those already retired
2. Those within 5 years of retirement are given the current cash value of pensions, and accelerated access to medicare.
3. Those with over 5 years of service needed to retire are given current cash value and moved into a 403b or 457. And the company is not obligated to contribute.

This of course would have to remain secret. Also as I read my plan it is VERY expensive… If the goverment provides the cash out money it could work and still be profitable for a 30 lease if the company fronts the cash then the lease would have to be longer, 50-75 years, and thwe overall lease less expensive.

Theworldisnotenough on January 16, 2011 at 11:46 AM

The USPS did indeed gain revenue across the 4.5 years they sponsored a professional cycling team.

This goes without saying. What has not been established is that the USPS gained more revenue in those 4.5 years than they would have gained if they didn’t spend the $32 million.

Missy on January 16, 2011 at 1:03 PM

I’m an avid cycling fan and live in Murrieta where Floyd resided at the time of his drug bust. These comments here are uneducated slander. You may not like the fact that USPS sponsored Lance but you OBVIOUSLY have NO IDEA the impact it had on the sport. You are obviously no expert or even remotely knowledgeable on the matter. I suggest you interview Bob Roll and Paul Sherman and get some facts on the matter. Having said that, using Floyd as a whistle-blower is like using Sheriff Dupnik as a witness in a murder case against Sarah Palin. The man took millions of dollars in a defense fund saying he was innocent then in the end didn’t give any money back and admitted doping at the same time blamed USPS as teaching him how and forcing him to do it. Give me a break. And of course there are constant accusations against Lance. He’s done better than ANY French rider EVER did. You, again, obviously have no clue how French feel about Americans or, better yet, Americans that make them look weak and anemic. Makes them feel better to shade the wins with some color.

Anyone who went through cancer treatment or brain surgery should really THINK about Lance’s achievement and could realize how it WAS achievable without drug enhancement. Prior to his return he used to get a dose of Chemo then climb up a 9% grade mountain puking and riding all the way to the top. When you take your body to the edge and realize how far you can go WITHOUT dying it does something to you’re psyche. People who don’t understand this are just weak minded. Talk to some Spec Ops or Navy SEAL members and watch some fight science videos. Educate yourself before you write crap malign a great American!

Sultry Beauty on January 17, 2011 at 9:48 AM

As others have stated, it is not one race per year. In season, there is a least one event a week, some weeks have squads at 2 different events. Lance focused solely on the Tour de France. While he rode other races, he was riding them as training. Other team members rode to win in those other races. Bastonge-Leige, Paris-Rouboix, Vuelta au Espania, Giro de Italia.

The entire 8 million a year did not go into Lance’s pocket. And at the beginning of the sponsorship, Lance was not the proven superstar he became. He was a promising young rider.

Lots of expenses with a pro cycling team: salaries for 20+ riders, trainers, managers, mechanics. USPostal was one of the first with a team bus on the pro tour. Multiple team cars. Most of the stage races have 2 or 3 team cars following the peloton. Hotels, meals, jerseys, etc.

Now was the expenditure a wise one? Different question, and one all sorts of entities have to evaluate each year. Lots of companies sponsor sports teams. Not all of them get the return they expected. Some get more. Whether USPS did or not, we don’t have enough information. Was it an appropriate choice for USPS? A question that can be analyzed without impugning a sponsored team, individual or sport.

MTinMN on January 17, 2011 at 10:43 AM

@Sultry Beauty,

I was tee’ing up a response almost exactly like yours, but then I get to the last post and there you are…

Anyway, the comparison of Tiger Woods to Lance Armstrong is a good one, except for one thing, Lance is a FAR better athlete and physically unique individual. As much impact as Tiger Woods has had on golf, I would argue that Lance has done much more for cycling, let alone for cancer victims.

When a few of my family members have contracted cancer, I’ve usually gifted them with Lance’s book about his fight with cancer and the return to cycling. To a person, they ALL told me it was so motivational and that it inspired them when the pain from chemo was just too much to bear, they had someone to look up to…everyone should read about his trials with dealing with an aggressive cancer that had spread to his lungs, abdomen, and brain resulting the removal of something like 23 pounds of tumors from his body.

The way cyclists train now has been effected by Lance Armstrong’s training techniques. The way all pro teams are formed and ran, have been effected by Johan Bruyneel and Lance’s formula. Cycling fans all over the world (more people watch cycling live than any other sporting event in the world, long races can have over 2 million spectators over a course), flock to see Lance race and he effects entire local economies by his presence at events. And, while the Tour de France is his trademark event, he does race nearly year round, competing in the most of the big name events in the European circuit (Tour de Suisse, Tour of Italy, World Championships (1993 winner), the Dauphine Libere, etc.).

This guy is the preeminent endurance athlete of the 20th century. NO ONE has had a bigger impact on endurance athletics, and I’d argue he has as big of name impact as Tiger Woods outside of the US. Toss on top of that his ongoing work with cancer…how many of you have ever seen one of his yellow “Livestrong” wrist bands on someone’s wrist? I’d bet every reader here, because his impact transcends cycling.

BTW, Lance Armstrong is the most drug tested athlete on the planet. No one gets tested more than Lance, and believe me, French/European cycling authorities would love nothing more than to prove that Lance/USA was cheating because he was so dominant throughout the 2000s. When Lance won his first TdF in 1999, no one thought it was possible that he did so fairly, so he MUST HAVE been cheating…when Lance never tested positive, he was derided because the other top riders of the world (Marco Pantani (confirmed drug cheat), and Jan Ullrich (confirmed drug cheat)) weren’t in attendance that year…the next year, he destroyed them. In fact, Lance rode during a time when a whole cavalcade of world class riders were there every year for the sole purpose of defeating Lance; Ullrich, Beloki, Pantani, Zulle, Basso, Moreau, Kloden, Virenque, Sastre, Mayo, et al. Every year, Bruyneel and Armstrong put together a better team and focused on the TdF and came away with the biggest prize in cycling.

In the end, I wouldn’t argue whether it was a *smart* decision to fund the US Postal racing team for four years, but it certainly positively promoted the USA around the world and sponsorship of a cancer survivor that then demolished the record for Tour de France wins is a huge publicity win.

Geministorm on January 17, 2011 at 10:46 AM