To Those Who Say the Postal Service Got What They Paid For

[BikeCentric]

Since this thread is largely about whether sponsors make money in cycling, I would like to ask how a company like liquigas and even more so, the companies behind astana make money.

With liquigas it is my understanding that they are a gas company. Now when specialised have a cycling team I can see where they would make money, because more fans will buy specialised bikes. But a gas company. Are people going to invest their shares in liquigas because of the cycling team??? How on earth is a bike team worth anything to them.

Even more so with astana because astana isn’t an actual company but a coalition of Kazakh companies united under the name of the Kazakh capital. What are they going to get out of this when their names aren’t even on the shirts?

Thanks

It's just advertising Hitch. Every company that "invests" in a cycling team is essentially just buying a billboard to plaster their brand name on. As such, all expenditures for any company on a cycling team simply get booked as "marketing expense." It is a cash outlay that takes away from revenues every year it is spent. As such, pretty much every company making this choice is expecting to see an increase in sales due to increased product visibility from spending this money on advertising. If they don't see an increase in sales during the period of time when money is being spent on the marketing then they are going to eventually stop doing it in order to avoid "throwing good money after bad."

See a one Michael Ball and Rock Racing for exhibit A on doing just that. And please reference eToys and their ridiculous sockpuppet Super Bowl ad for exhibit B on that, LOL.

 

[Dr. Maserati]

Thanks for clearing that up. I posted this point earlier, but it seems nobody caught it. To increase brand awareness in the European market, their sponsorship made total sense.

No - this is not the point - it never made sence.

Putting your logo on a a jersey ensures recognition - but it does not highlight the activities. This is where USPS, as a sponsor failed (IMO). If USPS had launched an advertisement campaign to highlight their specific interests in Europe then it could have been a smart move, to the best of my knowledge they never did.

Sponsoring Cycling is a great investment for most companies - we as cycling fans are very loyal to those sponsors - and the companies get high visibility of their name. I have a Garmin for when I am in Europe, and I bought a separate one for the US and I bought it in a Radioshack store.

 

[Dr. Maserati]

Interesting, but all that is prior to signing each one-year contract. It's a process of persuading them that, essentially, it's a good business bet (ultimately everything in business is a bet since nothing is for sure, though there are good bets and bad bets). But once USPS is persuaded, unless the information given to them was fraudulent and relevant to whether the bet turned out good or not, USPS takes the risk.

Now, consider what would have happened if Armstrong had been caught with his hand in the EPO/blood/etc. jar in '99, '01 or any of the USPS years. Clearly that would have been bad for the sponsorship, and would have been relevant to whether the bet was good or not. So if USPS agreed to sponsor based on the contractual understanding that the team in general and Armstrong in particular was clean, by racing dirty he was causing them to take a risk that they did not agree to assume. Had he been caught he would have been guilty of not only the doping, but also of whatever breach of contract crime is appropriate here. Not getting caught doesn't it make it any less of a breach of contract. The breach is the doping itself, not in the getting caught and hurting of the sponsorship.

I really hope you brought a map & compass with you before you wrote that post so you can find your way out.

It is simple - USPS set Tailwind a clear target for the continuation of the sponsorship as Gorski explained:
"They set a benchmark of four times the sponsorship fee that we had to hit every year to continue".

USPS did not just pay to have their name on a jersey -it was not a bet, not a wish - it was a clear target with an obvious conclusion if Tailwind did not deliver.

 

[MacRoadie]

I really hope you brought a map & compass with you before you wrote that post so you can find your way out.

It is simple - USPS set Tailwind a clear target for the continuation of the sponsorship as Gorski explained:
"They set a benchmark of four times the sponsorship fee that we had to hit every year to continue".

USPS did not just pay to have their name on a jersey -it was not a bet, not a wish - it was a clear target with an obvious conclusion if Tailwind did not deliver.

From the sounds of that Inspector General report, Tailwaind failed to deliver from year one, but through a combination of bureaucratic ineptness and greed (free trips to France anyone?), the sponsorship was renewed several times when it should have been terminated.