USPS Spending (ESPN article)

[Benotti69]

Excellent points! Unfortunately you’ll never get the Armstrong lynch mob to see it that way. They have difficulty being objective on any issue where his name comes up. I’m afraid to them, you just crossed the line by offering an astute, contrary opinion; so there will be no other recourse than to label you a “fanboy” from here on so your comments can be dismissed out of hand! Thanks for trying though.

how about you address Race Radios post?

It appears some only want to focus on a 4 year period of realitivly positive press and ignore the lifetime of negative press.

you claim not to be a fanboy yet when presented with RR's post about 'a lifetime of negativity' you choose to ignore it a la a fanboy?

the most obvious form of fanboyism on here is calling people who see Armstrong for what he is, a doper and a fraud to say the least and currently under investigated for it, a lynch mob.

 

[thehog]

The fact that The US Postal service did not have a clear framework in place that allowed them to quantify and demonstrate a ROI on $32m+ says more about the organisation than it does about the impact of the team it sponsored.

Secondly if an organistion could not exploit the relatively untainted coverage that Armstrong and the team provided for many years, someone in the marketing dept should have been sacked long ago.

Not everything is Armstrongs fault

I have to agree with you. There’s nothing clandestine in the USPS sponsorship. To this day USPS are proud of sponsoring the team and believe they received a return. Granted as you state they really didn’t put the appropriate measures in place to record the success or non-success of the program. USPS sent out a communiqué 3 days ago stating they still believe there was a 100m+ return the investment.

The real problems that in the 30m+ there was no tracking on how the money was spent. A lot of it was in good faith. If it was a private company maybe that would be ok but because its essentially tax payers money there needed to be better checks and balances. The dirty deeds were conducted inside of Tailwind. In addition most of the riders had no idea how much USPS was paying Lance. Most of them took the Hog’s and Armstrong word for it when they said there was no more money for a pay rise or a bonus. Those end of season cheques that Armstrong used to cut came from USPS not Armstrong as he famously liked everyone to believe. As I stated before the release of this information is important to those sitting on the fence. Once the see the bonuses Lance was getting and how little they were being paid they’re going to dump their COLLECTIVE consciousness.

One thing that always struck me about the Armstrong team sponsorship was it was a haggled group of companies. USPS was arranged before his time but Discovery and Radioshack always seem to be such underwhelming sponsors to the status of Armstrong. You’d think the biggest man in cycling could get Nike/Coke etc. to the table and stump up the case for a team. I mean 30m over 5 years to Nike is what they were paying Jordan in a year!

I think by selecting “loose” sponsors they could keep the contracts nice and vague with Tailwind. Big corporates have very tight compliance and legal teams which keep the contracts well in control.

 

[miloman]

They did not get their money's worth.

Unfortunately you are either being deliberately obtuse, or understand nothing about ad and sponsorship campaigns.

A well-designed ad campaign includes the ability to measure the return on investment. What were the level of sales prior to the campaign, what was the return on the ad dollars. This is a well-honed discipline.
We know that:

1. USPS was concerned about doping, and how this might affect their image
2. There was no return seen for the investment.

Thus, they did not get their money's worth.

Moreover, there may be a causal link between the discussion of doping in cycling, how wonder boy became ground zero, and the lack of return on their investment.

This should already have been clear. Having spelled it out, if it was not understood before, it should be now.

Giving you the benefit of the doubt, suggesting that USPS got their money's worth could have been a statement from a position of ignorance, stupidity or trolling.

You are now educated.
Dave.

Well, I will not be so presumptuous as to think I can educate you. That being said unless you have insider information, how do you know what the criterion was for the ad campaign? It could have simply started out as an “image marketing” strategy, portraying the USPS as hip and progressive. Ask yourself why would the US NAVY sponsor the X-games? The mechanism was in place, if USPS didn’t take advantage of it, it was their fault. Do you know that they never saw a benefit from their sponsorship? Whose job was it to track those indices, certainly not Tailwind Sports. If they saw zero return on their investment, why did they continue to sponsor the team? Not trying to be obtuse, just don’t see it as black and white, more like shades of grey.

 

[BotanyBay]

They did not get their money's worth.

Unfortunately you are either being deliberately obtuse, or understand nothing about ad and sponsorship campaigns.

A well-designed ad campaign includes the ability to measure the return on investment. What were the level of sales prior to the campaign, what was the return on the ad dollars. This is a well-honed discipline.

We know that:

1. USPS was concerned about doping, and how this might affect their image
2. There was no return seen for the investment.

Thus, they did not get their money's worth.

Moreover, there may be a causal link between the discussion of doping in cycling, how wonder boy became ground zero, and the lack of return on their investment.

This should already have been clear. Having spelled it out, if it was not understood before, it should be now.

Giving you the benefit of the doubt, suggesting that USPS got their money's worth could have been a statement from a position of ignorance, stupidity or trolling.

You are now educated.

Dave.

While I can not remember the sources, I actually remember reading an article specifically about the USPS sponsorship and how they measured success. And (at the time), they cooperated and were very willing to go on-record saying that it was more than just successful.

It came down to their main objective. Press hits. Their service's name being mentioned in the European press. They add up the total number of press hits (there are consulting services out there that offer this service) and then look at how much it cost them to get these press hits. Their main European objective was to increase brand awareness of the USPS global service offerings in the European market. This sponsorship was a small part of that objective.

In their view, according to the article, the sponsorship provided a phenomenal value in terms of cost per media mention. The numbers that I seem to remember were $75-125MM in press-hit value, for a cost of $8-10MM.

The article also mentions their stated reason for the ending of the sponsorship: Goal achieved. Brand awareness in Europe was firmly established. Need for further action no longer required. On to the next marketing objective. I imagine this article was written in 2005, and would have been like a NYTimes or WSJ.

 

[thehog]

According to a February 2003 USPS Inspector General (OIG) report, the objective of the sponsorship was to "increase revenue and sales of Postal Service's products on a global basis and to increase sales in key international markets" with a specific monetary goal of increasing [annual international] revenue by $20 million. However, despite the cycling team's outstanding performance and extremely high profile, revenues from USPS international operations in 2003 were actually $12.8 million less than four- years earlier in 1999.

Calling USPS's decision a "major victory for consumers," PostalWatch executive director Rick Merritt stated in a press release, "Talk about a government boondoggle, the pro-cycling sponsorship exemplifies just how delusional postal leadership can be. They 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."

"This is just one more stunning example of the Postal Service indulging its misguided obsession with pretending to be a commercial enterprise, instead of what it really is; an accountability-challenged governmental bureaucracy with a statutory monopoly over domestic mail delivery," said Merritt.

http://usgovinfo.about.com/cs/consumer/a/uspslance.htm

The OIG report also criticized the Postal Service for its accounting procedures, lack of justification and mismanagement of sponsorships stating, "The Postal Service has not effectively managed sponsorships. We found the Postal Service was unable to verify sponsorships' financial performance ... the Postal Service does not have adequate controls and measures over the sponsorships. Therefore, it was not possible to measure the effectiveness of the program in its current state, and in our view, it is questionable whether the Postal Service could support a business case to retain the sponsorships."

Controversy over Postal Service sponsorships and its inability to perform basic cost-accounting functions is nothing new. More than a decade ago the Government Accounting Office studied the agency's $98 million sponsorship of the 1992 Olympic Games and concluded, "Given the lack of available data in key revenue and cost areas, neither we nor the Service can state with certainty whether the Olympic sponsorship had a profit or loss."

"Congress will soon consider legislation giving the Postal Service added flexibility to set prices, negotiate special pricing for specific mailers and offer additional work-sharing discounts. In order for these new flexibilities to be fairly administered, the Postal Service must be able to accurately attribute its various costs to specific functions within its operations at a highly granular level ... a cost-accounting task for which the agency is undeniably inept, as again demonstrated by the mismanagement of its sporting sponsorships. Granting additional flexibility without first fixing the agency's cost-accounting problems will only produce a more fertile environment for abuse, market distortions and unfair practices," said Merritt.

 

[thehog]

Should also be mentioned that of the 10million a year 4m went to Armstrong. That’s 6 left over for the minions.

Now thats a waste of tax payers money!

 

[miloman]

how about you address Race Radios post?



you claim not to be a fanboy yet when presented with RR's post about 'a lifetime of negativity' you choose to ignore it a la a fanboy?

the most obvious form of fanboyism on here is calling people who see Armstrong for what he is, a doper and a fraud to say the least and currently under investigated for it, a lynch mob.

USPS really can’t be responsible for things that took place before or after their sponsorship. They made the choice to enter the world of pro cycling. As misguided as that may turn out to be, no one held a gun to their heads and made them sign the checks. They can’t control what happens in the sport or inside other teams and the ensuing possible negative publicity. They should have known that, and if that was a concern for them, they should have spent their money elsewhere. Ignorance is not a good excuse, especially when you are talking $30 + million dollars. USPS has not sponsored a pro cycling team for almost 6 years. In another 6 years, if Armstrong or Tailwind Sports hits the headlines again, will USPS have to answer for a sponsorship decision that took place almost 20 years before? A lifetime of negative press? USPS has been around a while, and I suspect will be around long after Tailwind Sports and Lance Armstrong and this is not the worst scandal they have had to weather in their 200+ year history..

 

[BotanyBay]

Hey, I have no doubt that the people quoted in the article I read were probably the internal folks at USPS that were pushing for the sponsorship. They might have been weekender Cat3's for all I know. It's interesting to have read direct quotes from USPS praising the sponsorship (as it was ending) while others are calling it a debacle.

Myself, I always wondered what possible benefit it provided, but then again, few sponsorships seem to "speak to me"... But I'll admit, I once chose a Skil saw over a Ryobi.

 

[thehog]

Hey, I have no doubt that the people quoted in the article I read were probably the internal folks at USPS that were pushing for the sponsorship. They might have been weekender Cat3's for all I know. It's interesting to have read direct quotes from USPS praising the sponsorship (as it was ending) while others are calling it a debacle.

Myself, I always wondered what possible benefit it provided, but then again, few sponsorships seem to "speak to me"... But I'll admit, I once chose a Skil saw over a Ryobi.

“Lance Armstrong is a champion and hero to millions of Americans. Each year, he delivers a stirring performance at the Tour De France,” said CAGW Director of Special Projects Leslie K. Paige. “Unfortunately, Armstrong’s top sponsor, the USPS, is going downhill fast financially and managing to lose millions on its sports sponsorships. Despite a corporate loss of $676 million in 2002, the most recent sponsorship contract with the cycling team reportedly cost the USPS more than $40 million. This does not include the costs associated with sending postal executives and their spouses on junkets to the Tour De France as they have done in the past.”

http://membership.cagw.org/site/PageServer?pagename=news_NewsRelease_07082003c

 

[Dr. Maserati]

The fact that The US Postal service did not have a clear framework in place that allowed them to quantify and demonstrate a ROI on $32m+ says more about the organisation than it does about the impact of the team it sponsored.

Secondly if an organistion could not exploit the relatively untainted coverage that Armstrong and the team provided for many years, someone in the marketing dept should have been sacked long ago.

Not everything is Armstrong's fault

No-one said it was all Armstrong's fault, but other than that it is broadly correct.

It was up to USPS to make the most of their investment and it always struck me that they did not promote particular products or services.
However none of this gets away from the fact that USPS had sought reassurances from Tailwind and included doping clauses in their contract.

 

[BotanyBay]

I think the point is, if the USPS people were so reckless in how they spent the sponsorship dollars to begin with, how is anyone going to claim fraud if the team diverts funding to buy dope?

I'm sure Armstrong's people can find the same article that I read about how the overseers of the sponsorship dollars went on-record about being pleased with ROI. They basically said it was the best money they'd ever spent.

But I guess this is how the chips fall. The USPS execs that jetted out to Paris for hookers and blow while celebrating the TDF finish will be legally protected, while others will be indicted for the defrauding of the federal government for selling team bikes.

 

[thehog]

I think the point is, if the USPS people were so reckless in how they spent the sponsorship dollars to begin with, how is anyone going to claim fraud if the team diverts funding to buy dope?

I'm sure Armstrong's people can find the same article that I read about how the overseers of the sponsorship dollars went on-record about being pleased with ROI. They basically said it was the best money they'd ever spent.

But I guess this is how the chips fall. The USPS execs that jetted out to Paris for hookers and blow while celebrating the TDF finish will be legally protected, while others will be indicted for the defrauding of the federal government for selling team bikes.

Timely.....

@MJ4030 and got 103 million in return. 300%! We should all be so lucky to be victimized like that. Sign me up!!
9:19 PM Jan 14th via ÜberTwitter in reply to MJ4030

 

[MacRoadie]

I'm struggling to understand why people are so dismissive of the OIG report quoted throughout this thread.

The report was prepared in 2003, long before the vast majority of the Armstrong doping allegations had to come to light. No 1999 sample re-tests, no SCA lawsuit, two more Tours to win, etc. It certainly wasn't motivated by then-current negative publicity (or at least nowhere near the level that came later). It was motivated by then-current concerns about misuse of Postal Service funds and resources, a concern that was subsequently confirmed in an official investigation by a duly authorized investigative office of the government.

The report was prepared by the Office of Inspector General, United States Postal Service which has as it's mission:

The U.S. Postal Service Office of Inspector General's (USPS OIG's) mission is to conduct and supervise objective and independent audits, reviews, and investigations relating to Postal Service programs and operations. The USPS OIG prevents and detects fraud, waste, and misconduct; promotes economy, efficiency, and effectiveness; promotes program integrity; and keep the Postal Service Governors, Congress, and Postal Service management informed of problems, deficiencies, and corresponding corrective actions.

http://www.uspsoig.gov/faq.cfm?SECTION=GEN

This is an office that report directly to Congress, not to Postal Service officials.

Further, the OIG defines Fraud as follows:

What exactly is fraud, waste and misconduct?


Fraud is any knowing deception designed to unlawfully deprive the United States of something of value or to secure from the United States for a benefit, privilege, allowance, or consideration to which an individual(s) is not entitled.

Waste is the extravagant, careless, or needless expenditure of Government funds, or the consumption of Government property that results from deficient practices, systems, controls, or decisions.

Misconduct is intentional or improper use of Government resources. Examples include misuse of position, authority, or the misuse of resources such as tools, vehicles, or office equipment.

Note the recurring use of the term "Government". For those who continue to argue that the Postal Service is a non-governmental entity, or that taxpayer funds are not used to support the Post Office, the OIG (an entity that reports directly to Congress) appears to consider the funds and resources of the Post Office to be the Government's, without apparent exception.

 

[Polish]

More than a decade ago the Government Accounting Office studied the agency's $98 million sponsorship of the 1992 Olympic Games and concluded, "Given the lack of available data in key revenue and cost areas, neither we nor the Service can state with certainty whether the Olympic sponsorship had a profit or loss."
.

Spending $98mil on a 2 WEEK Olympic Game a bit much? Maybe?

Spending $32mil for 5 MINUTES of Super Bowl Ads a bit much?

Spending $32mil on a 4 YEAR Sponsorship of a leading global team a bit much? Absolutely not. Use ANY marketing metric and you will see this was a marketing HOMERUN, a TOUCHDOWN, a GOOOOOAL. And USPS is STILL getting publicity for this campaign - years after they stopped sponsorship.

Take off your hater goggles guys.

How many people can name a postal service from a country besides their own?

 

[Dr. Maserati]

I think the point is, if the USPS people were so reckless in how they spent the sponsorship dollars to begin with, how is anyone going to claim fraud if the team diverts funding to buy dope?

I'm sure Armstrong's people can find the same article that I read about how the overseers of the sponsorship dollars went on-record about being pleased with ROI. They basically said it was the best money they'd ever spent.

But I guess this is how the chips fall. The USPS execs that jetted out to Paris for hookers and blow while celebrating the TDF finish will be legally protected, while others will be indicted for the defrauding of the federal government for selling team bikes.

It doesn't matter.
USPS had inserted a clause in the contract to protect their image or brand from negative publicity - so the end's do not justify the means.

I asked earlier (and Miloman offered to answer, but didn't) but do you believe USPS would have sponsored the team had Tailwind not signed the doping clauses in the contract?

 

[BotanyBay]

Timely.....

@MJ4030 and got 103 million in return. 300%! We should all be so lucky to be victimized like that. Sign me up!!
9:19 PM Jan 14th via ÜberTwitter in reply to MJ4030

Wow. We're being watched. Spooky.

 

[andy1234]

No-one said it was all Armstrong's fault, but other than that it is broadly correct.

It was up to USPS to make the most of their investment and it always struck me that they did not promote particular products or services.
However none of this gets away from the fact that USPS had sought reassurances from Tailwind and included doping clauses in their contract.

Thanks for your seal of approval Doc. Im glad to be "broadly correct"

 

[Polish]

Wow. We're being watched. Spooky.

The Associated Press is watching too yikes...

http://www.dailynews.com/news/ci_17098401?source=rss
.
.
.
.

 

[BotanyBay]

It doesn't matter.
USPS had inserted a clause in the contract to protect their image or brand from negative publicity - so the end's do not justify the means.

I asked earlier (and Miloman offered to answer, but didn't) but do you believe USPS would have sponsored the team had Tailwind not signed the doping clauses in the contract?

Of course not. But I've seen this happen before with other things. The problem ends up being finding someone at USPS willing to to name USPS as the "victim" of Tailwind (I'm sure we can find plenty of outsiders and watchdogs, though). U.S. Companies like to position themselves as "all good, all the time", and will even fight attempts at being sucked-into anything that casts a negative light on current or former management. That's just the way things work.

Companies will typically only go back and revisit past mistakes if it involves a nice payday/payout for themselves. Human beings are a bit different. But you'll probably not find a bruised ego at USPS, especially if any of that marketing team is still with the organization.

 

[Polish]

It doesn't matter.
USPS had inserted a clause in the contract to protect their image or brand from negative publicity - so the end's do not justify the means.

I asked earlier (and Miloman offered to answer, but didn't) but do you believe USPS would have sponsored the team had Tailwind not signed the doping clauses in the contract?

Sure, I believe that USPS WOULD have sponsored the team had Tailwind not signed the doping clauses in the contract. They would have worked something out. It was a super sweet win-win deal

Do you have any evidence to the contrary, ie your opinion that they would not have?

But why would Tailwind not sign it?
The doping clause, as you call it, gives the right to USPS to fire riders if they are caught being naughty. Heck, Tailwind probably would have fired the riders too if they got caught. How could they not?

 

[DirtyWorks]

Note the recurring use of the term "Government". For those who continue to argue that the Postal Service is a non-governmental entity, or that taxpayer funds are not used to support the Post Office, the OIG (an entity that reports directly to Congress) appears to consider the funds and resources of the Post Office to be the Government's, without apparent exception.

The modern USPS is better described as a public/private enterprise. Congress doesn't want to be involved in the daily operation, so they charter it as a private organization with Government over site. There are a bunch of inconsistencies and 'yeah but....' things with hybrid public/private entities like the USPS. This public-private issue is non-controversial. The USPS service is so good and the minutae of government services unexamined by most people they just aren't aware of the details.

BotanyBay,

You may believe the USPS were reckless with their spending, but everything I read attached to the SI article suggests it had strong over site for a sponsorship of that size. At some point, it was revealed that budget was blown to take USPS execs to France and party. That's why the sponsorship was modified part way through. That's an example of good over site. Some horrible decisions the first time around, but it was addressed. It happens all the way through the USPS sponsorship until they know it was ending and therefore put on autopilot.

The doping was intentionally outside the scope of the USPS marketing project.

 

[BotanyBay]

As Polish pointed-out, if anyone tries to sign-up USPS for the victim fund, their marketing execs will simply pull these reports out:

http://www.dailynews.com/news/ci_17098401?source=rss

$32MM : $104MM

These figures sound like the ones I remember reading in the article way back in '05.

But: it doesn't matter what the answers are if you're asking the wrong questions. That "$104MM in value" applies mostly to press hits, not actual ROI as it applies to stated business objectives. The question is, what was the stated measure of success? That, we have not seen. The reports I see seem to state business goals that are broader than a cycling contract can ever hope to deliver on. I think the $104MM in press hits was in SUPPORT of that bigger goal.

 

[MacRoadie]

The modern USPS is better described as a public/private enterprise. Congress doesn't want to be involved in the daily operation, so they charter it as a private organization with Government over site. There are a bunch of inconsistencies and 'yeah but....' things with hybrid public/private entities like the USPS. This public-private issue is non-controversial. The USPS service is so good and the minutae of government services unexamined by most people they just aren't aware of the details.

I fully understand the complexities of the public/private nature of the USPS.

However, as far as the contemporaneous audit of USPS spending by the OIG, an entity with full law-enforcement authority and reporting directly to Congress, if they want to call the funds/resources/property "Government", then I'm not going to argue.

I like their credibility.

As sworn federal law enforcement agents, Special Agents have the power to serve warrants and subpoenas issued under the authority of the United States; make arrests without warrant for postal-related offences committed in their presence; make arrests without warrants for postal-related felonies congnizable under the laws of the United States, if they have reasonable grounds to believe that the person arrested has committed or is committing such a felony; carry firearms, and make seizures of property as provided by law.

 

[BotanyBay]

The doping was intentionally outside the scope of the USPS marketing project.

I know, but are Novi and his prosecutor buddy allowed to claim on USPS' behalf that the USPS was "injured" by this?

It's one thing for a government agency to front millions of dollars for a new spy plane, and people misappropriate the money and buy a new S-class with it, but this is a sponsorship agreement. I'm not sure what kind of latitude they have after they money goes out (do they?). They're not building highways or developing tanks. This is a "get me some of that" kind of thing.

Don't get me wrong on my intention here. I just remember reading how happy the USPS said they were 5-6 years ago. Can a prosecutor come back later and tell them that they're not really happy?

 

[D-Queued]

Awareness has to be translated into revenue.

The OIG report provided the bottom line. Actual revenue generated was less than what was being spent to create it. Forget about margin or profit, the revenue didn't even justify the expense.

It would be interesting to see these marketing reports - and who provided them. With that kind of return, the cycling team should have had potential sponsors lined up around the block.

The USPS sponsorship did happen during the Internet bubble. This was a period of 'new commerce' models where sticky eyeballs were worth money. The Internet bust underscored the lack of sustainability of such models. Perhaps the metrics in the marketing reports were based on similar models.

DirtyWorks, you are incorrect when you state that: "The modern USPS is better described as a public/private enterprise"

The USPS is, officially, an "independent establishment of the executive branch". It is not even a true corporation. And, because it reports through the executive branch - with the President appointing the directors - Congress has little to do with its operation or governance.

Dave.