The United States Postal Service is drawing criticism for mismanaging millions of dollars in sports sponsorships.
The USPS spent $48 million on sports sponsorship between 1996 and 2002, according to Citizens Against Government Waste (CAGW)—$40 million of which went to the USPS Pro Cycling Team, led by four-time defending Tour de France champion Lance Armstrong. Other sports sponsorships reviewed include the New York Yankees, New York Giants, the Chicago Bears and the Tampa Bay Devil Rays.
A recently publicized audit by the USPS Office of the Inspector General claimed that the USPS was unable to track or verify revenue associated with sponsorships; lacked goals and objectives for some sponsorships; and did not manage tickets and invitations appropriately.
“As a result, the Postal Service could not determine return on investments, measure the effectiveness of its sponsorships in light of its monopoly status, financial condition, investment returns and core mission,” the audit papers said.
The audit noted that two objectives of the Pro Cycling Team sponsorship were to increase revenue and sales of USPS products globally and in key international markets. However, the audit found that international sales represent only 2.6% of USPS’ annual revenue.
The current three-year Pro Cycling team sponsorship deal runs through 2004 and is worth $25 million, according to IEG Sponsorship Report.
“You can call this sponsorship into question because right now, except for the Tour de France, you don’t get a lot of mileage out of cycling here,” said Jim Andrews, editorial director at IEG Sponsorship Report, Chicago.
If the sponsorship’s goal is to build awareness in Europe, then they need to show an adequate return on investment, Andrews said.
Since 1998, the USPS has eliminated 200 sponsorships and five remain as of October 2002, the report said.
The USPS lost $676 million in 2002, despite raising the price of stamps. The Inspector General found no laws or policies precluding the USPS from sponsorship involvement, but said that due to recent media coverage of public policy debate on sponsorships, “it is even more paramount for the Postal Service to justify its actions.”
According the report, the USPS has agreed with six of the seven Inspector General recommendations. The one recommendation in dispute calls for appointing one executive to manage all sponsorships. The USPS said that the Pro Cycling team national sponsorship will be managed by its advertising sales department through 2004 and that any future national sponsorship will fall under its marketing department.
“Considering that all but one recommendation was agreed upon, we considered it a successful review,” said a spokesperson from the Inspector General’s office. “The Postal Service essentially admitted that its sponsorship programs were out of control.”
CAGW also criticized the postal service saying in a statement that “the USPS is a government-owned monopoly and does not need to spend money on brand advertising.”
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