Networks Await Cyclist’s Plans

Aug 2, 2004  •  Post A Comment

Now that American bicycle racer Lance Armstrong has won the Tour de France for a record sixth time, his sponsors at Discovery Networks and U.S. Tour rights holder Outdoor Life Network could be on the path to many more winning seasons.

But there may be a problem: Mr. Armstrong may not want to ride in another Tour de France next year or in subsequent years.

After his recent victory in France, he said he wants to race less and spend more time with his children. He does plan to continue to race, but it may not be in the high-profile Tour de France, one of the few cycling events outside of the Olympics that mean anything in the U.S. television market.

Instead, he may choose to participate in lesser-known races such as the Giro D’Italia, a three-week stage race in Italy, or in some spring one-day European classic races.

Is this a problem for his sponsors and those who hold Tour de France TV rights?

“Possibly,” said Bob Williams, president of Burns Sports & Celebrities, a Chicago-based sports marketing agency. “Sometimes [sponsors] don’t have a full understanding of sports. They don’t understand what could happen when retirement is close. Sometimes there is such a great short-term benefit, you are willing to roll the dice.”

OLN has a multiyear deal to air the Tour de France and other major cycling events. In June, just before the Tour de France, Discovery signed up Mr. Armstrong and his road cycling team to a three-year sponsorship deal for $10 million a year. In January, Discovery Networks takes over from the U.S. Postal Service as the team’s lead sponsor.

Marketing analysts said that even if Mr. Armstrong continues racing in the Tour de France, his value may begin to diminish. “He is like a stock right now,” said Larry Novernstern, senior VP and director of national broadcast for advertising agency Deutsch, New York. “You are buying him at the high. He already broke the record. He may not be as hot in years to come.”

Discovery disagreed. “We see incredible value above and beyond Lance racing,” said David Leavy, the network’s senior VP of communications.

Asked whether Discovery’s deal requires Mr. Armstrong to race in the big cycling event next year, Mr. Leavy would only say: “Our hope and expectation is that he’ll ride for years to come. “

OLN executives have said they believe the involvement of the much larger Discovery Networks will help promote its cycling programming in future years. OLN also is counting on newer competitive U.S. riders, such as Tyler Hamilton, Levi Leipheimer and Floyd Landis, to grow the sport and its TV ratings.

For the past six years, Mr. Armstrong has made it a point to concentrate virtually all his efforts on the Tour de France, which he calls the Super Bowl of cycling. He has gained tremendous fame for accomplishing his feat after surviving cancer.

U.S. marketers have hopped on the bandwagon. Mr. Armstrong has a plethora of sponsorship deals, including Subaru of America; Nike; Coca-Cola’s Dasani water brand; Trek, the official USPS bicycle supplier; electronics manufacturer AMD; and Bristol-Myers Squibb, for cancer drugs. Mr. Armstrong is one of the leading sports endorsers, pulling in about $15 million annually.

Calls to Bill Stapleton, Mr. Armstrong’s agent and a principal in Austin, Texas-based Capital Sports & Entertainment, which co-owns his cycling team, were not returned by press time. San Francisco-based Tailwind Sports, the other owner of the team, also did not return calls.

In numerous press accounts, Mr. Armstrong has said he has yet to evaluate his 2005 racing season and that he needs to discuss his plans with Discovery.

Discovery declined to discuss details of the contract as it concerns Mr. Armstrong’s racing. But Mr. Leavy did say Mr. Armstrong will be spokesman for various Discovery networks no matter what he does next year. There are no specific plans yet, but he is expected to host science-, travel- and fitness-oriented programming for niche networks such as Discovery Health Channel, Discovery Science Channel and FitTV.

Discovery also wants to use the international talent of the cycling team to help promote its channels globally. Discovery will start brainstorming on the programming specifics of its cycling marketing deal in September.

Burns Sports’ Mr. Williams compares Mr. Armstrong’s situation to Tiger Woods and one of his major sponsors, General Motors’ Buick division.

“They want him to play in all four golf events,” Mr. Williams said. “Sometimes you can strongly suggest this to a celebrity. You definitely have some leverage, but if it’s not in the agreement it’s not in the agreement.”