Somebody passed this along to me.
Postal Service Set to Pull the Plug on $50 Million Pro-
Cycling Team Boondoggle
WASHINGTON, March 22 /PRNewswire/ -- In a major victory for
consumers, Advertising Age has reported the Postal Service
(USPS) is "poised to abandon its lead sponsorship of Lance
Armstrong and the U.S. Pro Cycling Team" when their contract
expires in December. The Postal Service began the estimated
$10 million-a-year marketing initiative in 1996 and
Armstrong has since led the international cycling team to
five consecutive Tour de France victories.
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.
"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,"
said PostalWatch executive director Rick Merritt.
"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.
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.
"Congress has a once-in-a-lifetime opportunity to fix the
problem and compel postal accountability. It is currently
holding $78 billion of reduced federal retirement
contributions in escrow for the Postal Service. Congress
should consider holding the bulk of that money until a
qualified team of independent auditors can perform a top-to-
bottom operational audit and put in place comprehensive
accounting procedures to ensure the agency can accurately
account and attribute is costs ... Accountability is the
first order of business."
PostalWatch is a non-partisan, non-profit advocacy
organization committed to a fair, efficient and accountable
U.S. Postal Service. PostalWatch maintains a website at
www.postalwatch.org.