The Postal Service has been the lead sponsor of Armstrong's team since 1996--a period in which the 32-year-old has grown to become the world's most famous and accomplished cyclist, winning five straight Tour de France championships despite a battle with cancer. The sponsorship, which costs a nearly $9 million a year, is so prominent that the cycling team is officially known as the United States Postal Service Pro Cycling Team.
Postal Service officials and sports marketing specialists have long suggested that the link to Armstrong pays unusually strong dividends to the Postal Service, particularly because the deal is relatively modest by sports sponsorship standards. Critics of the Postal Service have countered that any money spent on the bicycling sponsorship is an inappropriate use of the mail service's funds, especially in an era of rising postage prices.
A year ago, the Postal Service's inspector general concluded that while the goal of the cycling sponsorship was to "increase revenue and sales of Postal Service products on a global basis and to increase sales in key international markets," international revenues actually declined by $12.8 million between 1999 and 2003.
On March 22, the lead story in the trade journal Advertising Age said the Postal Service was "set to drop" its long-standing sponsorship deal with Armstrong.
The article quoted Armstrong's agent, Bill Stapleton of Austin, Texas-based Capital Sports & Entertainment, as saying that while the Postal Service is still the "first choice" as a sponsor, team officials "have been in a full-scale sales cycle for the title sponsorship based on the possibility that they might not renew."
The report was greeted jubilantly by PostalWatch, a Virginia Beach-based watchdog group that has repeatedly hammered the Postal Service on everything from mailbox regulations to allegations of wasteful spending. After the Advertising Age article appeared, the group called the news "a major victory for consumers."
PostalWatch executive director Rick Merritt dubbed the sponsorship "a government boondoggle." The Postal Service, he said, has "raised domestic monopoly rates three times while forcing captive ratepayers to pay more than $50 million to sponsor a European sporting event and then, adding insult to injury, they achieved a negative result."
The Postal Service, however, is still negotiating with Tailwinds Sports, the marketing agency that owns the team headed by Armstrong, said Monica Suraci, a Postal Service spokeswoman. The Postal Service sponsorship contract expires Dec. 31.P> Despite this development, Merritt said he was pleased that matters seemed to be heading in the right direction.
"They obviously have not denied that the contract may come to an end, and the indications from the team are that they're pursuing all avenues available to them," Merritt said.
The Postal Service did not indicate when the sponsorship negotiations might conclude.