Since October I've been going over all the Lance Armstrong Foundation annual returns that are available to the public. I'm doing this because I'm a) very interested how the money that comes in is spent and b) want to see exactly how much Lance gets paid (along with all the directors) for their work on behalf of the Charity.
I know, October to January (at the least) is a ridiculous amount of time to spend going over the returns but it's close to 650 pages of information written for accountants to understand. I'm getting there.
One thing I will say that jumped out as a worry from the start was that a (substantial) annual fund-raising event cost *exactly* as much to put on as it managed to raise. Every year. Without exception. That's not particularly efficient to say the least. So far, LAF have not responded to my request for information as to why this should be the case.
I don't want to say too much until I've completed all the returns and had my findings checked by someone who understands US tax returns and how 501c's work better than I do. For now I'll just say that there are several apparent sizeable discrepancies between declared annual incomes and what detailed accounting of those incomes says *should* be declared over (so far) 4 years. The worst example of this was for 2009 when the declared funding was $2 million LESS than what they actually took in & declared on their returns.
But hey, what's $2,000,000 between friends?
As for licensing: Demand own & operate Livestrong.com - an entity that didn't exist until Demand set it up in an agreement directly with Lance, not with LAF. The deal was that Armstrong would provide exclusive content for Livestrong.com and promote the website as a health / lifestyle portal *in partnership* with LAF & livestrong.org - Demand don't pay LAF for the use of the Livestrong brand. The payment comes from the stock options allocated to LAF which depend on a successful IPO. Lance is the only one in this agreement who gets a direct payment regardless of the IPO going ahead or not.
I Tweeted about the IPO and how Lance & Co will profit on November 4th -
- Demand Media, (owners of livestrong.com) of which Lance Armstrong is a major stakeholder, are set for IPO this month
http://smij.in/u33
- Details of how Lance acquired a stake in Demand Media - through use of the Livestrong brand
http://smij.in/2hb
- With Demand IPO valued between $1 - $1.5 Billion Lance, with 1,062,500 options @ $6/share is set to make $6,375,000 profit
- LAF with 1,250,000 options @ $6/share will make $7,500,000 - (only right that the Charity makes more than Lance does out of this).
- Remember Bart Knaggs & Bill Stapleton of Tailwind Sports (now CSE)? well they do OK from the Demand IPO as well with a $2,250,000 profit
- Lance & partners stand to clear over $8,600,000 between them for selling the 'goodwill' attached to the Livestrong brand to Demand Media.
I'm trying to get clarification on a number of other things (where did Armstrongs appearance fee go, did Australia pay travel expenses for him at TDU as well as the appearance fee and why, when Doug Ulman denied that LAF paid any of Armstrongs expenses for appearing at his comeback Tour de France did LAF then list them under promotional expenses). So far I'm running into a general unwillingness to discuss these questions from anyone at LAF, Livestrong.com or CSE.
Something else that I've questioned is the nature of the relationship between Nike, LAF and Livestrong. We all know that a portion of the proceeds from the sale of Livestrong branded products goes to the LAF but according to the wording of the licence agreement (
click here to see it) LAF and the Better Business Bureau
"requires full disclosure regarding the benefit to the organization when funds are raised through a consumer product purchase or promotion (e.g. $1 from the sale of each item) on all packaging, advertising and promotional materials in clear and unambiguous terms. Your company/organization must be able to comply with this requirement" IF this is a requirement, why does Nike not detail exactly how much from the sale of each Livestrong branded item goes to LAF? (The licensing agreement actually makes quite interesting reading if you've got a couple of minutes free and will make you question a number of Livestrong branding agreements).
There can be little doubt that Armstrong is profiting from the charity side of his business and branding efforts as well as doing quite nicely from all his personal endorsement deals. I'm not against the man making a profit, in the least, but I do think it's only right that there is full disclosure over exactly how being the figurehead for an organisation like LAF benefits Lance.