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US government to sue Lance Armstrong

Cyclist accused of fraud for claiming he was winning Tour de France titles while abiding by rules against doping.
Last Modified: 22 Feb 2013 21:07
Armstrong's lawyer argues that the US Postal Service profited from its association with his client [Reuters]

Seeking "tens of millions of dollars" paid to Lance Armstrong for "years of broken promises", the US government has joined a lawsuit alleging the doping cyclist defrauded former sponsor US Postal Service.

The lawsuit was filed by Floyd Landis - a former Armstrong teammate who was stripped of the 2006 Tour de France crown for doping to which he admitted - alleging Armstrong defrauded US taxpayers by claiming he was winning Tour de France titles without taking performance-enhancing substances.

"Lance Armstrong and his cycling team took more than $30m from the US Postal Service based on their contractual promise to play fair and abide by the rules - including the rules against doping," Ronald Machen, US attorney for the District of Columbia, said on Friday.

Robert Luskin, Armstrong attorney, said in a statement that talks with federal lawyers collapsed over how to measure damages, with Armstrong's side saying the Postal Service reaped huge benefits from its cycling sponsor deal.

"Those talks failed because we disagree about whether the Postal Service was damaged," Luskin said.

"The Postal's Service's own studies show that the Service benefited tremendously from its sponsorship - benefits totalling more than $100 million."

Sponsorship evaluations

To support the claim, Armstrong's camp released sponsorship evaluations from 2001, 2002 and 2004 that attempted to place a monetary value on the exposure benefits to US Postal at that time.

The studies claimed that for $32.276m spent by US Postal from 2001-2004, there was $103.636m in publicity benefits with never less than a 300 percent return in investment in any year of the sponsorship.

There was no study to show any potential fallout in negative publicity from being attached to Armstrong's now-tainted era in the wake of his confession to being a dope cheat in a television interview with Oprah Winfrey last month.

Links to the greatest doping scandal in cycling history could have provided damaging publicity and a more-recent negative payback for US Postal, already forced to stop Saturday delivery later this year because of financial woes.

Armstrong was deprived of his Tour de France titles last year after the US Anti-Doping Agency (USADA) uncovered overwhelming evidence, included testimony from 26 witnesses, that he was at the heart of a major doping conspiracy.

Equivalent costs

FCB Sports Marketing's evaluation of US Postal's 2001 benefits said that $6.138m in sponsorship investment brought US Postal $18.539m in exposure and global publicity could boost the value as high as $40m.

The studies used equivalent costs of advertising time on television coverage of the Tour or print advertising in newspapers or on websites where mentions of US Postal or photos with its logo were shown.

Also measured was the value of Armstrong's image with the US Postal logo in such areas as magazine covers, television talk shows, commercials for other sponsors such as Nike and other appearances and marketing opportunities.

Studies also recognised "intangible benefits" from Armstrong's popularity at the time, but noted "there are no standards and the value lies with the individual corporation and their objectives".

The 2002 sponsorship of $6.138m was given a return value of $19.297m, the $10min 2003 was given a value of $31.2m and the 2004 backing, also $10m, was given a value of $34.6m.

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Source:
Agencies
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