Official Lance Armstrong Thread: Part 3 (Post-Confession)

[blackcat]

No, it's not NPV. It's diminishing returns. The diminishing returns to a sponsorship. There is nothing to calculate an NPV for - there is only a calculation of the total value of a sponsorship, and the portion of that value assessed during each time period of it. Like everything else, that value diminishes over time. The first dollar spent on sponsorship brings a larger return than the next one, and the first year of sponsorship brings higher returns than the last one - and therefore, obviously the years beyond the sponsorship.

In this case, as someone mentioned earlier, the value of a sponsorship is for a longer period than the sponsorship itself. Therefore, if you want to calculate the full value you need to be able to assess the return at each year. Economic models help do those calculations.


Using the CPI, it's 186 vs 234 or a decline in value of around 25%. Not exactly insignificant, yes?



You wasted a lot of time refuting something I never said. I didn't bring NPV to the discussion, nor did I imply it. I brought the diminishing returns from the investment of the sponsorship.

The two are not the same.

Here is a good reference text for you:



You need to get a grasp of what I actually wrote, not the point you chose to refute- a point I never made. I'm just fine with economics, thanks.

eleven, just on that. one would think that the first dollar, or let us say, the first bloc in the contract, with usps, has the greatest return. so if was 2 million to get the team to the Tour, every cent spent after, does not offer the same return.

however, not necessarily.

lets be generous, lets say the first contract includes a bloc of 3 TdF wins. Certainly now, any recontracting at the Tour level for 6 million per, so the contract rises double, no longer has the same return.

but when did Lance cross over into public consciousness. not just a winning bike rider. That was the beauty of Bill Stapelton, Lance ceased to be the bike rider, then he became the defacto brand for cancer. not the brand to shill Treks. But to shill cars, cos he was cancer. He transcended cycling and sport, and went across to pop-culture and cancer. One could say other sportsmen have done something similar and sold Lucky Strikes or someother cigarettes like Arnold Palmer or Jesse Owens, but Armstrong was unique.

USPS was able to ride this arc, where Armstong became Armstrong, and the public knows Armstrong as Armstrong=cancer.

So, taking one point where on this bell shape, is the best return on investment, the peak that is, and when does it start to decrease. (immediately after). I dont know if there is any social science that can measure when this Armstrong type sponsorship has met a treshold level. (just offering this up in thought experiment) And even if it has met a threshold, is USPS not in a public compact now, and part blackmailed to continue the Tour run for fear of upsetting Armstrongs constituency. 6 was enough before Discovery not to cop a backlash.

 

[eleven]

eleven, just on that. one would think that the first dollar, or let us say, the first bloc in the contract, with usps, has the greatest return. so if was 2 million to get the team to the Tour, every cent spent after, does not offer the same return.

however, not necessarily.

lets be generous, lets say the first contract includes a bloc of 3 TdF wins. Certainly now, any recontracting at the Tour level for 6 million per, so the contract rises double, no longer has the same return.

but when did Lance cross over into public consciousness. not just a winning bike rider. That was the beauty of Bob Stapelton, Lance ceased to be the bike rider, then he became the defacto brand for cancer. not the brand to shill Treks. But to shill cars, cos he was cancer. He transcended cycling and sport, and went across to pop-culture and cycling. One could say other sportsmen have done something similar and sold Lucky Strikes or someother cigarettes like Arnold Palmer or Jesse Owens, but Armstrong was unique.

USPS was able to ride this arc, where Armstong became Armstrong, and the public knows Armstrong as Armstrong=cancer.

So, taking one point where on this bell shape, is the best return on investment, the peak that is, and when does it start to decrease. (immediately after). I dont know if there is any social science that can measure when this Armstrong type sponsorship has met a treshold level. (just offering this up in thought experiment) And even if it has met a threshold, is USPS not in a public compact now, and part blackmailed to continue the Tour run for fear of upsetting Armstrongs constituency. 6 was enough before Discovery not to cop a backlash.

Very interesting observations, Blackcat. Thanks. It's a complicated question re: the public compact. (Bob Stapleton would be ****ed you substituted him for Bill, however!)

It will be interesting to see how the DoJ and Armstrong attorneys play their cards here. I still think they'll end up with a settlement - but it's going to be closer to 50M than the (alleged) original DoJ offer of 12-20, if that offer is true. Armstrong will be severely financially impacted but he'll remain better off than 99% of Americans - which is probably unfair, but there it is.

 

[86TDFWinner]

Weisel's attorney, Robert Sacks of Sullivan & Cromwell LLP, told Bloomberg that his client "is entirely out of the case."

http://www.marinij.com/marinnews/ci...-thomas-weisel-no-longer-part-case?source=rss

"Disgraced cyclist Lance Armstrong still believes he’s the victim."- Biggest LOL moment of the entire article. The guy is just CLUELESS!! I'm still laughing at that statement right there.

 

[blackcat]

Very interesting observations, Blackcat. Thanks. It's a complicated question re: the public compact. (Bob Stapleton would be ****ed you substituted him for Bill, however!)

It will be interesting to see how the DoJ and Armstrong attorneys play their cards here. I still think they'll end up with a settlement - but it's going to be closer to 50M than the (alleged) original DoJ offer of 12-20, if that offer is true. Armstrong will be severely financially impacted but he'll remain better off than 99% of Americans - which is probably unfair, but there it is.

usually i dont get them conflated. bill bill bill.

actually, i think the last posts i have been making, it has automatically been bob. i think folks know i mean the CSE owner, lawyer... I know what Gary Hall jnr told me (Bill was a swimmer at one of the major swimming colleges and was a national representative who won medals at Pan Pacs in medley i think. I dont think he ever went to Oly's tho) GHj said he was one of the most unethical persons he had had contact with.

damn, early onset dementia memory

 

[blackcat]

For cycling fans you may be correct. For the rest of the general populace, who make up the vast majority of the target audience for the sponsorship exposure, I disagree and believe the current harm is more significant partially due to ever increasing exposure to electronic information among the masses.

this is a valid pov. i was trying to come around to the position of Eleven.

But i could see how the succour moms (sic) are disgusted.

every soccer mom is not gonna see USPS and Lance in such refined light, that USPS laid out millions for that positive glow

 

[D-Queued]

It's diminishing returns. ....

You said it.

You are way over your head.

The return from each incremental effort to assist you to recognize a singular unit of glimmering light is diminishing. Definitely a case of diminishing returns now.

Moreover, it already takes a lot of effort to read the various misapplications of diminishing returns and economics.

Dave.

P.S. The value of the sponsorship isn't arbitrarily higher in the first year.

One way to calculate the value of the sponsorship would be on the number of impressions, where each impression has a known or agreed upon value. You would need to know the number of impressions in each year, which could increase, decrease, or stay the same.

... and I am not going to bother trying to explain the value of aided or unaided awareness or anything else for you... none of which has ANYTHING to do with economics.

 

[eleven]

You said it.

You are way over your head.

I love when keyboard kommando's claim victory.

The return from each incremental effort to assist you to recognize a singular unit of glimmering light is diminishing. Definitely a case of diminishing returns now.

Moreover, it already takes a lot of effort to read the various misapplications of diminishing returns and economics.

My example was diminishing returns. I can't be held accountable for your failure to read and understand my post.

 

[blackcat]

twelve

but i am supposed to have ten characters? aristotelian paradox?

 

[D-Queued]

I love when keyboard kommando's claim victory.



My example was diminishing returns. I can't be held accountable for your failure to read and understand my post.

Diminishing returns: less benefit per input - a reduced per unit benefit from a given amount of input

There will NOT be the same number of 'impressions' over time once a sponsor is no longer sponsoring a team.

Declining returns: Fewer inputs

There WILL be a lower number of impressions over time after the sponsorship ends. Among other things, there will be no USPS banners on any team at the Tour de France.

Get it?

By arguing for diminishing returns, what you are arguing is that Garmin, for example, is getting less benefit per impression than they did in their first year of sponsorship.

What you need to consider, instead, is the value per impression and the number of impressions each year. The value per impression could be marginally diminishing (i.e. diminishing returns), but that would be related to media viewership etc. On the other hand, the number of impressions in Garmin's case could be stable, declining, increasing or even accelerating.

Thus, diminishing returns per se is likely to have very, very little to do with the value of sponsorship.

Dave.

 

[blackcat]

hey dave, the devils advocate tho, i am not contradicting what you write. but this is from the sponsor as supplier, sponsor as seller.

but the consumer of the sponsorship, his/her impression, will have a different metric no?

hence, my position on the motorola sponsorship. i think it was Weasel's tailwind that had the former montogomery securities banner, which, was his stockbroker and i-bank, ( i might be wrong with fuzzy memory ).

but the value that motorola managed to extract, were more than the retail market for sport sponsorship or cycling sponsorship on the continent like La Vie Clare or PDM would have achieved, or the managing company, behind the racing team (that sold the title to pdb/lVC).

if, if, Eleven is coming at this perspective of value, from the buyer's, what he/she is saying, is sound.

i remember reading some material on the motorola gambit. some good pics of phil anderson and wonderboy going around.

 

[Oldman]

A lot of *** is going to hit the fan this summer..... finally

I hope part of it includes removing Lance's name from Alpe d'Huez's winners plaque at switchback 21. It was still there this afternoon and beyond my reach. On a positive note you couldn't find a single reference to him at the Trek store at the top of the Alpe village. Still had some Radioshack jerseys on the discount rack. No takers.

 

[D-Queued]

...

if, if, Eleven is coming at this perspective of value, from the buyer's, what he/she is saying, is sound.

...

We could have an intelligent conversation about the value of the sponsorship, but this isn't going in that direction.

What eleven is saying is not sound, as eleven has applied the term 'diminishing returns' to the entire future value. If what you are suggesting is the intent (and I have noted the same in my previous post), then this is only one portion of the calculation of the value.

The conversation is about the entire value to USPS. This cannot be represented by the diminishing value that the consumer's impression might assign to each 'impression'.

NB: an advertising impression is a technical reference as compared to what someone's impression might be. Perhaps we should capitalize Impression.

If you want to pursue a discussion evaluation of the consumer's impression, then consider whether USPS had reached 'saturation', or not, through its sponsorship. As the number of impressions increased, then the value of each Impression could decline.

Ultimately, the math is simple.

Value in Year X = # of Impressions * value per Impression

The term Diminishing Returns explicitly refers to a diminished gain for the same input. Thus, under Diminishing Returns the value per Impression would decline with increasing number of Impressions.

One of the reasons that the use of this term is so out of line here is that eleven is/was trying to assign a future value, post-sponsorship.

During the post-sponsorship period, there will be fewer Impressions. So the notion of Diminishing Returns doesn't hold very well as there is reduced input during that period. There could be eroding value per Impression due to the increasing scarcity of Impressions, of course, but not Diminishing Returns.

Value delivered = Value during sponsorship period + residual value post sponsorship

Or, for simplicity, V = Vs + Vps

Where Vs (Value during sponsorship) and Vps (Value post sponsorship) are calculated by Value of Impression per Media Type * Number of Impressions per Media Type

For simplicity, we should ignore Diminishing Returns as it might apply to the value per Impression. More likely than not, this will be a rounding error.

If we could have that broader, intelligent discussion on the value of the sponsorship, it might actually be quite interesting.

One area that has not been discussed vis-a-vis USPS is what possible value there was to a strictly domestic US enterprise of advertising largely in Europe within a sport that has very little domestic US following?

Your example of Motorola is one of a Global corporation.

USPS is not.

There is little to no value that can/could acrete to USPS for the many Impressions generated by its sponsorship of USPS as those Impressions would be in locations / media that could never result in realizable business benefits.

Thus, when Wonderboy provides estimates that exceed the value of the gold deposits in Fort Knox, shouldn't we also be considering the folly of USPS as a counter-argument. How could USPS possibly enjoy the same value as a Motorola? This just isn't possible and could never be delivered by Wonderboy.

But, what was USPS thinking in the first place?

Dave.

 

[eleven]

Diminishing returns: less benefit per input - a reduced per unit benefit from a given amount of input

Less marginal benefit or output from the next marginal increase in input.

There will NOT be the same number of 'impressions' over time once a sponsor is no longer sponsoring a team.

Yes indeed.

Declining returns: Fewer inputs

There WILL be a lower number of impressions over time after the sponsorship ends. Among other things, there will be no USPS banners on any team at the Tour de France.

Yes indeed. So let's recap: The value of the sponsorship declines over time. The period after the sponsorship ends sees a further decline. There are diminishing marginal returns to the investment through time.

By arguing for diminishing returns, what you are arguing is that Garmin, for example, is getting less benefit per impression than they did in their first year of sponsorship.

Indeed! Everything else being equal they would get less benefit this year than they did when Garmin took over. If everything else was equal.

What you need to consider, instead, is the value per impression and the number of impressions each year. The value per impression could be marginally diminishing (i.e. diminishing returns), but that would be related to media viewership etc. On the other hand, the number of impressions in Garmin's case could be stable, declining, increasing or even accelerating.

Thus, diminishing returns per se is likely to have very, very little to do with the value of sponsorship.

I disagree with the idea that diminishing returns would have very little to do with the value. As an example, I probably account for a couple hundred Garmin impressions (nevermind my running watch...) over some period during the cycling season. The value of the first time I ever received that impression was far higher than the one garnered today - And this is true for everyone, holding other factors constant.

Therefore, because the number of people viewing cycling is not expanding at some very rapid rate and therefore the rate of new impressions declines from the first day of sponsorship, the marginal benefit of the next period of sponsorship is lower than the benefit of the last.

This presumes, of course, that exposure remains constant - something doesn't happen such as Ryder Hesjedal winning a Grand Tour.

 

[D-Queued]

...



Yes indeed. So let's recap: The value of the sponsorship declines over time. The period after the sponsorship ends sees a further decline. There are diminishing marginal returns to the investment through time.


...

Aargh. We are so close.

Once the sponsorship ends, there is a residual benefit. There will be some Impressions (e.g. magazine references, new imprints of old photos, re-runs, etc.) that continue.

That is NOT a diminishing marginal return to the investment. It is a residual value post-sponsorship.

I hope that you and I are actually close on this concept, but it is not fully clear as you continue to apply a term that has a very different application.

The reason that diminishing returns are important is if, and only if, we have a discussion about the value per Impression (e.g. as the number of Impressions reaches market saturation). That value could change over time. For simplicity sake, it is probably easiest to assume that the value per Impression is constant as it is extremely unlikely that USPS sponsorship of a cycling team will result in saturation.

I am not being pedantic, but sincerely with all due respect, you are.

Can we move on?

Dave.

 

[eleven]

Aargh. We are so close.

Once the sponsorship ends, there is a residual benefit. There will be some Impressions (e.g. magazine references, new imprints of old photos, re-runs, etc.) that continue.

That is NOT a diminishing marginal return to the investment. It is a residual value post-sponsorship.

But a residual value is part of any diminishing return. The diminishing benefit I receive from, for instance, the purchase of a car continues after my final payment.

I hope that you and I are actually close on this concept, but it is not fully clear as you continue to apply a term that has a very different application.

The reason that diminishing returns are important is if, and only if, we have a discussion about the value per Impression (e.g. as the number of Impressions reaches market saturation). That value could change over time. For simplicity sake, it is probably easiest to assume that the value per Impression is constant as it is extremely unlikely that USPS sponsorship of a cycling team will result in saturation.

I am not being pedantic, but sincerely with all due respect, you are.

Can we move on?

Dave.[/QUOTE]

 

[eleven]

Aargh. We are so close.

Once the sponsorship ends, there is a residual benefit. There will be some Impressions (e.g. magazine references, new imprints of old photos, re-runs, etc.) that continue.

That is NOT a diminishing marginal return to the investment. It is a residual value post-sponsorship.

But a residual value is part of any diminishing return. The diminishing benefit I receive from, for instance, the purchase of a car continues after my final payment.

I hope that you and I are actually close on this concept, but it is not fully clear as you continue to apply a term that has a very different application.

The reason that diminishing returns are important is if, and only if, we have a discussion about the value per Impression (e.g. as the number of Impressions reaches market saturation). That value could change over time. For simplicity sake, it is probably easiest to assume that the value per Impression is constant as it is extremely unlikely that USPS sponsorship of a cycling team will result in saturation.

I am not being pedantic, but sincerely with all due respect, you are.

Well it's convenient but I'm not being pedantic at all. The diminishing value of the investment after 2003 is an important part of the discussion - or at least this twig of this branch of this tree in this forest of the "Lance Armstrong" discussion thread.

There's obviously a natural decline in the benefit. That decline has been strengthened by the allegations -> investigation -> admissions and charges of Sir DopesaLot that have followed since the sponsorship ended. If you want to assess how much value was lost you need to assess the current value (which may be negative) at each year vs. what the value would have been sans the allegations, charges etc...

Can we move on?

Sure.

 

[D-Queued]

But a residual value is part of any diminishing return. The diminishing benefit I receive from, for instance, the purchase of a car continues after my final payment.


Well it's convenient but I'm not being pedantic at all. The diminishing value of the investment after 2003 is an important part of the discussion - or at least this twig of this branch of this tree in this forest of the "Lance Armstrong" discussion thread.

There's obviously a natural decline in the benefit. That decline has been strengthened by the allegations -> investigation -> admissions and charges of Sir DopesaLot that have followed since the sponsorship ended. If you want to assess how much value was lost you need to assess the current value (which may be negative) at each year vs. what the value would have been sans the allegations, charges etc...



Sure.

Ok, we are probably driving everyone else nuts here, but the accounting lesson isn't complete.

1. No, you are trying to describe declining value, and not diminishing value.

Diminishing value has a very specific definition. As there is a potential application of Diminishing Vale to one variable in the overall sponsorship evaluation equation, it is actually important to get this right.

2. A residual value is not necessarily diminishing nor declining.

Consider the case of a Zero coupon bond. The Residual value could increase, and could be worth far, far more than the original value.

Under some circumstances, the residual value of a sponsorship could exceed the value derived during the actual sponsorship and/or the value accrued to date.

Your sense of things could be correct in this case, but we are dealing with numbers not senses.

Dave.

 

[eleven]

Ok, we are probably driving everyone else nuts here, but the accounting lesson isn't complete.

1. No, you are trying to describe declining value, and not diminishing value.

Diminishing value has a very specific definition. As there is a potential application of Diminishing Vale to one variable in the overall sponsorship evaluation equation, it is actually important to get this right.

the diminishing (marginal) value of the return is a decline in the marginal value. The value of a return over time can decline for many reasons, one being the basic principle of dimishining returns. If my explanation of that caused confusion I apologize. It's quite possible that I was loose with language earlier in the discussion (in part, perhaps, because I had no idea we'd drive this far into the side conversation. The two of us, it seems, pretty much agreed at the outset on the basic premise of impact on USPS).

As for accounting lessons, I really don't need one. This conversation, from my perspective at least, has more to do with economics than accounting but perhaps that's because I'm not an accountant...

2. A residual value is not necessarily diminishing nor declining.

Consider the case of a Zero coupon bond. The Residual value could increase, and could be worth far, far more than the original value.

Well sure, but that's because a zero coupon bond might actually gain real value over time due to the very fact of its interest rate. That's sort of internal to the bond or endogenous to the bond model. When the value of a sponsorship increases after that sponsorship ends, the source of the added value would need to be something external - correct? For instance, when Andy Schleck became a TDF champion after the fact, the now-defunct Radio Shack probably gained some value (to be fair, no amount of gain is going to help a penny-stock Radio Shack at this point...)

Under some circumstances, the residual value of a sponsorship could exceed the value derived during the actual sponsorship and/or the value accrued to date.

Yes, I think that's a bit of what I mentioned above. At any rate, we have truly taken this conversation into a small twig on the end of a long branch. As it's very much a topic of my interest, I'm happy to continue - but I also understand the mod's might want us back on track.

Whatever else, it's an entertaining mental exercise.

 

[Bosco10]

lol.. I wonder if Tim Herman is taking notes..... or is totally confused.

 

[D-Queued]

lol.. I wonder if Tim Herman is taking notes..... or is totally confused.

He doesn't care.

But, he should have taken notes about the 'why would USPS have sponsored in the first place'.

Lance's arguments about USPS knowing about doping seem absurd.

Arguing that USPS made a bad business decision in the first place, that said bad decision was independent of doping, and is now seeking to try and recapture something from their folly (on false pretense) seems like a much stronger argument.

In other words, if they can shift the argument to have nothing to do with doping - as was done in the original SCA arbitration - then they could have a path to a win.

Dave.

 

[Granville57]

Yes indeed. So let's recap:

Oh God, No. NO. NO. NO. NO NO NO NO NO NO!

Can we move on?

Oh God, Yes.
Please? Please? Please? Please? Please? Please? Please?!

Ok, we are probably driving everyone else nuts here...

but the accounting lesson isn't complete.

Oh God, No. NO. NO. NO. NO NO NO NO NO NO!

 

[eleven]

Oh God, No. NO. NO. NO. NO NO NO NO NO NO!



Oh God, Yes.
Please? Please? Please? Please? Please? Please? Please?!






Oh God, No. NO. NO. NO. NO NO NO NO NO NO!

Point taken! Well played, sir.

 

[mewmewmew13]

pretty much had to stop visiting this thread...
c'mon let's get moving ...

 

[Bosco10]

pretty much had to stop visiting this thread...
c'mon let's get moving ...

Yes. Any news on the SCA depositions. Will they be released to the public?

 

[mewmewmew13]

If not released pretty sure they will be leaked by someone...
I hope it's soon!