Mr. Armstrong's agent, Bill Stapleton, said he has been in talks with potential replacements in anticipation that the Postal Service won't renew its contract, scheduled to end Dec. 31. He said he hopes to have a replacement sponsor signed before the Tour de France begins July 3, although the sponsorship would still take effect next year.
The Post Office is "obviously still our first choice, but we have been in a full-scale sales cycle for the title sponsorship based on the possibility that they might not renew," said Mr. Stapleton, founder-CEO of Austin-based Capital Sports & Entertainment. He declined to identify companies he has talked with, but said it's possible the Postal Service could keep an association in a diminished role.
The Postal Service will decide in the next month whether to renew the sponsorship, which has become a larger part of its marketing mix in recent years as its measured advertising shrinks. Last year the Postal Service, which has been under pressure to cut costs by eliminating or cutting back on sponsorships, spent less than $40 million on measured advertising.
Sponsorship of Mr. Armstrong and the cycling team costs the Postal Service an estimated $8 million to $9 million a year. While it hasn't recently run ads featuring Mr. Armstrong, Interpublic Group of Cos.' Campbell-Ewald, Detroit, has shot a broadcast ad to air this year.
The Postal Service has been the cycling team's main sponsor for eight years, five with the 32-year-old Mr. Armstrong, who battled cancer and rose to become the pre-eminent world cyclist. Mr. Armstrong has said that after this year's race, he expects to compete for only one more year.
The team already has a long roster of co-sponsors that includes Berry Floors, Nike, Coca-Cola Co., Bissell, Visa USA, Dial Corp., Subaru of America, Yahoo! and Trek. But the Postal Service has been the lead sponsor since 1996.
There has been pressure to drop the sponsorship for years as critics regularly question whether sponsoring a racing team is a proper use of stamp money and whether the sponsorship generates real results for the Postal Service. "It's an egregious waste of taxpayer money that provides no value," said Rick Merritt, executive director of PostalWatch, a group that has been critical of Postal Service spending. "[It is] a feel-good for Postal Service management and an excuse to go to Europe each year."
A year ago, the Postal Service's inspector general issued a report that questioned the service's sponsorships, which have also included pro sports teams, including the New York Yankees. The Postal Service "has not effectively managed its sponsorships," said the report, noting that though the Postal Service claimed it generated $18 million in revenue over the earlier four years of sponsorship it could only confirm $698,000 of that.
Still, "from a PR point of view, it was good for the post office," said Nova Lanktree, principal at Lanktree Sports. "The parallels between racing and meeting deadlines and reaching goals is a very good comparison with an entity like the post office," she said. "What they paid Lance has nothing to do with the cost of a stamp rising."
The Postal Service has cut back on other sponsorships, but repeatedly defended biking, saying it generates awareness and millions of dollars of free publicity for a relatively small marketing investment and bolsters employee spirit.
Joyce Carrier, director-public affairs, said the sponsorship allowed the Postal Service to bring Mr. Armstrong and other team members to events and trade shows. But, she added, "The postal business is changing, and just like any other organization we are constantly reevaluating what we are trying to accomplish."