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.