The fittest 37-year-old man in the world, Lance Armstrong, has announced that Radio Shack (RSH) will be the lead sponsor of his new LiveStrong professional cycling team. Armstrong and his team will race in next year's Tour de France, which he won seven times before retiring temporarily in 2005. The Tour ends Sunday; he is expected to finish third this year.
How does cycling-team sponsorship make sense for Radio Shack, when it proved a disaster in the past for the U.S. Postal Service? The only bike race that receives more than cursory coverage is the Tour de France, and it runs on Versus, Comcast's small blood-sports cable network. This year's real-time Tour coverage -- airing in the a.m. in the U.S., due to the time difference -- has drawn not quite half a million viewers. And that's up 77 percent over last summer's Tour, when Armstrong did not compete. Nielsen Media Research reports that 30 million viewers have tuned in for at least a moment during this year's race.
In reality, the partnership makes sense on several levels. The cost of sponsoring a team is surprisingly modest. The top team in this year's tour, Astana, is funded by companies in Kazakhstan that spent a reported $21 million. Armstrong reportedly sought to raise $20 million for his team, and some of that may come from the secondary sponsors eager to get their names on his jersey.
And while they're not enormous in number, the demographics of avid cyclists and fans are appealing to advertisers. Licensed racers in the U.S. have a median age of 34 with a family income of $75,000 and up; 89 percent are male. There are also an estimated 31 million avid cyclists, with a median age of 32 and household income above $60,000; this group is 45 percent female. These are juicy numbers for any retailers.
Radio Shack also stands to gain a huge amount of goodwill by associating itself with Armstrong's LiveStrong Foundation; its sponsorship will cover Armstrong as he competes in running and triathlon competitions. Look for the 6,000 Radio Shack locations to act as conduits for LiveStrong programs, which should drive quite a bit of traffic.
Radio Shack has already raced onto the course with two other U.S.-based teams, Team Columbia-HTC and Garmin-Slipsteam. This should help greatly in building a U.S. audience for the sport and inspiring more high-profile U.S. competitions, such as the Tour of California. I expect that the Tour will find a more distinguished network for U.S. broadcasts in the near future.
The Shack has been engaged in an effort to reposition its brand, and this sponsorship should be a positive move. Armstrong and LiveStrong evoke words like "fit," "determined," "young," "generous," and "compassionate." When a company is looking to reshape its brand, words like these are golden.
Investing Like Warren Buffett
Learn from one of the world's best investors.View Course »