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SBD Global/October 22, 2012/Marketing and Sponsorship

Sponsors Question Their Cycling Involvements Following Lance Armstrong's Doping Scandal

Rabobank has ended its cycling sponsorship after 17 years.
Cyclist Lance Armstrong's doping scandal "is causing sponsors to question their future in a sport that allows them to reach mass audiences at a moderate price but risks tainting their brand," according to Keith Weir of REUTERS. The Dutch Rabobank "pulled out of professional cycling on Friday, ending a sponsorship deal worth €15M ($19.6M) a year and leaving one of the Tour de France's best-known teams facing an uncertain future." Nike "dropped seven-times Tour de France winner Armstrong last Wednesday." The choice for companies "is stark." Do they cut their losses to avoid contamination from the sport's dark past or buy into the view that Armstrong's demise marks the end of that era? Garmin-Sharp team Manager Jonathan Vaughters said, "I know that our sponsors continue to be very supportive and view this as a necessary process to move the sport forward. We have very strong clauses in the contract, which means if there are any current anti-doping infractions, that can cause total termination." The team "won over Japan's Sharp Electronics," which signed up as a sponsor in June, sharing naming rights with U.S. navigation devices manufacturer Garmin. Besides sponsorships, "cycling teams can earn prize money in major events like the Tour de France." The Tour de France, which is run by the family-owned French group Amaury Sport Organisation, "does not charge spectators but generates its income through the sale of TV rights to an estimated 190 countries and has its own sponsorship deals." IFM Sports Group Managing Dir Ulrich Lacher said that "Rabobank's departure is unlikely to trigger a mass exit from a sport that delivers such exposure." Lacher said, "There is hardly any other sport that offers such good return on investment in terms of media exposure, especially in western and southern Europe." Rabobank's departure "was the biggest blow to the sport since the German mobile phone company T-Mobile quit in '07, sick of a series of doping scandals" (REUTERS, 10/20).

DUTCH DEPARTURE:
In London, Brendan Gallagher reported that the professional cycling world is "reeling" following an announcement that "Rabobank is to withdraw from the sport as a direct consequence" of the USADA's Armstrong report and its contents. The bank's withdrawal "sends out a strong message to the Int'l Cycling Union (UCI) that even the most loyal and committed sponsors have their breaking point and will not tolerate indefinitely a sport that is beset by a doping culture." Rabobank will end its sponsorship of both the men's and the women's professional cycling teams "at the end of this year but will continue its ties with amateur cycling as a sponsor, including the youth training and the cyclocross team." Rabobank CFO Bert Bruggink said, "It is with pain in our heart, but for the bank this is an inevitable decision. We are no longer convinced that the international professional world of cycling can make this a clean and fair sport" (TELEGRAPH, 10/19).

TIME TO RECONSIDER
: REUTERS' Webb & Deutsch wrote in a nation "obsessed with both amateur and professional cycling, Rabobank is the biggest sponsor in Dutch professional cycling with total sponsorship" worth $19.64M a year. Another sponsor, SKINS, which is a partner of the Rabobank team, "said on Thursday it would reconsider its association with the sport if its UCI governing body failed to act on doping" (REUTERS, 10/19).

BLANK CHESTS:
CYCLINGNEWS.com's Hedwig Kröner reported that Rabobank will honor contracts "but not under its name." The squad's management announced that the Rabobank professional cycling teams "will continue to exist next year, but under a 'white label.'" Despite the Dutch bank's withdrawal from sponsorship, Rabobank confirmed in a separate press conference that it would "honour the contracts," ensuring the teams' immediate financial continuity. Rabobank said in a statement: "The professionals and the women will be put as 'white label' under a new foundation yet to be established, while the continentals and the crossers will be accommodated by the Dutch Cycling Federation. The careers of a generation of riders will this way be secured." In a TV press conference on Friday morning, Rabobank Financial Dir Bert Bruggink confirmed this by saying, "We will honour our contracts with the riders. The pro teams come in a separate foundation and hence contractual and financial obligations are unconditional. For the riders it is not possible now to move to another team" (CYCLINGNEWS.com, 10/19).

RIDERS REACT
: In London, Sam Munnery reported Rabobank "immediately received criticism for walking away." Cyclist David Millar, "a reformed doper who served a two-year suspension after being caught in '04, said the bank’s decision was 'sickening.'" Millar tweeted, "Dear Rabobank, you were part of the problem. How dare you walk away from your young clean guys who are part of the solution" (LONDON TIMES, 10/19).
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