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By John Stevenson
After his match sprint gold medal at the 1984 Olympics, Mark Gorski was perhaps the first American cyclist of the modern era to achieve fame beyond the bike community. In the process of becoming a marketable figure Gorski became fascinated by the business of sports marketing itself. 17 years later, Gorski is one of the owners of Tailwind Sports, the company that owns and manages the US Postal Service cycling team, and Gorski's day-to-day role is as the team's general manager.
Prompted by our recent report about criticism in the US media of the $25 million renewal of the US Postal Service's sponsorship of its team, Gorski spoke to Cyclingnews about the relationship of the team with its sponsors, the profile of Lance Armstrong, the team's future plans and, inevitably, the Tour wildcard selections.
Cyclingnews: The US Postal team has existed since 1996, and the service has signed for another three years. To what do you credit the longevity of the relationship, when other American cycling sponsors have usually lasted three years or so.
Mark Gorski: On a number of fronts the relationship has been effective for them and has been embraced at many levels, from the Postmaster General to an 800,000-plus employee base. We have worked very closely with the sales division of the Postal service since 1997 to bring new business to the Postal Service.
As you would imagine — they are a government agency, the board of governors is appointed by the president, these are very political positions — just the notion of advertising is relatively controversial at the Postal Service, let alone sponsorship. So sponsorship really has to be very well justified with a very strong business case.
Because our first three years with the Postal Service were one year contracts that had to be renewed each year we were really forced to justify that a cycling team could make business sense for the Postal Service and how it could provide a return beyond the feel-good things that a lot of sponsorship has. It had to make business sense.
We began to work very closely with the sales division of the postal service, which Gail Sonnenberg has headed for the last several years, and almost became an extension of the sales team. I have spent a lot of time out on sales calls around the country with cycling companies, other team sponsors and other clients of Tailwind Sports, to facilitate new business relationships for the Postal Service, in terms of new accounts for their expedited mail services and the large package services for catalogue companies and mail order companies.
CN: So it's a much broader relationship than is usual between a sponsor and team?
MG: We have done things over the years that go far beyond a typical sponsorship to give [the postal Service] the justification to continue their sponsorship. They set a benchmark of four times the sponsorship fee that we had to hit every year to continue, in terms of new business and we hit it every year, even before Lance won the Tour in 1999. We were very successful in providing this business-building case and then in 1998 Lance embarked on his comeback and started to do things competitively that surprised everyone.
What solidified our relationship for the long haul was the combination of the business-building program and the competitive success and resulting media exposure that Lance and the team have garnered. The knowledge and awareness of Lance Armstrong to the average American, is extremely high, and the knowledge of the association with US Postal is higher than I ever anticipated.
CN: Does the average American understand that in order for Lance Armstrong to win races he needs a team around him, and that involves spending money at the level that has been claimed [$12 million per year]?
MG: I think the average American probably does not know that professional cyclists based primarily in Europe, including Lance Armstrong, make salaries in the millions of dollars per year. I think that the average American doesn't want to have to pay more taxes in order to subsidise the US Postal service if the US Postal service is incurring large losses. Ultimately the taxpayer would be responsible for that.
CN: Surely the Postal Service doesn't actually get any tax dollars?
MG: That's exactly right. There is currently no need for taxpayers to subsidise the Postal Service at all, it's legislated to break even. Last year there was a slight loss, and before that they had three or four years of significant profit. There's a cycle of profit-profit-break even-loss-loss primarily based around rate increases so rather than look at the financial performance for just one year, they look at three or four year increments, with the average over the four years being a break-even. But you have highs like the billion-plus profit a couple of years ago.
There are certainly some factors that don't bode well for the future growth of the Postal Service with the growth of the Internet and the drop in the volume of mail, but it would be a mistake to look at what's happening in 2001 and make long-term judgements. This may be a very short-term slow-down.
CN: So if mail volumes fall the Service has to look for revenue sources that aren't affected by the Internet?
MG: Right. I'm a pretty normal American consumer and we get at least one catalogue in the mail every day, sometimes five or six, and with the advent of the Internet catalogue companies have ramped their efforts up to approach consumers. There are areas that have been off-setting the growth of email; companies continue to market to consumers via the mail, and that's not going to go away.
If you're the average American and you read that the Postal Service is spending millions of dollars sponsoring a cycling team you have to understand that someone like Gail Sonnenberg has made a decision that using the USPS Cycling Team and Lance Armstrong in the marketing and advertising of this government agency is a very effective tool.
The average American isn't aware of the business-building program that we have developed, but internally it's the first example that's brought up when the sponsorship is analysed. In addition, there are a lot of people who like that the Postal Service is associated with a winner and an American hero, and they feel a little bit better about the Postal Service because of its association with Lance. It really is a strong morale-building element within the company.
CN: Can you quantify the new business that the team has brought in to the Postal Service?
MG: Only by emphasising that we have hit the target of four times the sponsorship fee in tangible new business every year since 1997. The Postal Service commissioned an agency to quantify the media value of the 1999 victory and it was in excess of $50 million.
CN: What do you say about the figure of $12 million that has been estimated for the team's budget? That would make you the biggest-spending team in the sport, ahead of Telekom and Mapei.
MG: That figure is for 2002-4 and it's not far off the mark, so our budget for 2002 is bigger than Telekom's is now. You have to understand that Lance Armstrong commands a substantial salary and that budget includes Lance. I anticipate that Lance's extension of his relationship with the Postal Service and our company will be the largest deal ever for a pro cyclist, and I don't think that's surprising given what he's accomplishing on and off the bike, both competitively and in the value he's bringing for the Postal Service and other sponsors.
You could get into arguments about Lance and Miguel [Indurain] and Greg LeMond and Bernard Hinault and there will be debate about that for a long time, but in terms of the value he is delivering for our sponsors he is exceeding what has ever been done before in this sport. He is generating an enormous value and awareness in the US which didn't happen through the Greg LeMond years. Greg was a legend and a hero in America but didn't have close to the same marketing and sponsorship impact in the US that Lance has had.
CN: To what do you attribute the difference? The cancer comeback story?
MG: Yes. His story and his comeback from cancer has really magnetised the American public and the awareness level among the American public is so enormous. When Lance won in 1999 it was on the cover of every American newspaper, on television, in magazines Greg's victory accomplished that too, certainly the 1989 victory did, but the big difference has been the extent to which Lance has been incorporated into the advertising and marketing campaigns of the US Postal Service, Nike, Bristol-Myers-Squib, American General Insurance, on the cover of the Wheaties box and so on.
That didn't occur with Greg. Greg's story was covered by the American media but then it kind of went away. Lance and our sponsors are in your home almost every day of the year and the sport of cycling has been the beneficiary here in America.
CN: To return to the team budget, will that budget allow US Postal to be more than a Tour-winning team? Can you put some more emphasis on the Classics, support Hincapie better?
MG: Being able to re-sign Lance is a major part of our budget, and Lance's continued success at the Tour de France is objective number one for our program. I hear you on George, I've known him for many years and he did a great job at Paris-Roubaix. I feel his frustration, in not having more support in the last few k's of Paris-Roubaix and we are going to try to bring the support for George to the Classics to give him a rider or two that can be with him in the final against the machine that Domo is, and well, it's really Domo frankly. Patrick Lefevere does a great job with that program
But the Tour is the primary objective. We are in the process of signing the final contract with Roberto Heras, and that was a big move for us. His is a big salary as well, not at the level of Lance's or a Jan Ullrich, but I'd think in the top ten in the sport. He's relatively young, he has very consistently improved his performances in the Vuelta and now in the Tour. Clearly he is a real, natural talent and really believes in Johan and in our team's ability to help him move to the next level in the sport.One of our aspirations is to win the Vuelta and the Tour. With Roberto on the team we have someone who can do that, and is able to support Lance in the next two or three Tours.
The Tour is our focus, because that's the primary focus of the American sports media. What are the objectives of our sponsors and our team? There has not been a lot of need for tremendous exposure in Europe for the Postal Service.
CN: That's past tense, and most of the business-building you have talked about has focused on US clients. What are the Postal Service's objectives in Europe?
MG: There is now a partnership with DHL, providing expedited services that originate in Europe, so there may be opportunities for us to impact business in Europe with the team, but there hasn't been up to this point. They have talked about this since we first started our relationship in 1996, and it's taken a while for them to launch it. It's exciting for us because what better way to promote it in Europe than with Lance and the team?
The Postal Service's International Business Unit is one of their growth areas and in the first days of the sponsorship there was a notion that we could help grow the International Business unit, but there wasn't a product or service we could help drive, and now there is.
CN: What's your reaction to the wildcard selections for the Tour? Would you have liked to have seen a Pantani and a Cipollini in the Tour to increase its excitement?
MG: I know the Tour de France people are in a difficult position, they have to support the other French companies but I have to admit I'm disappointed not to see Cipo and Marco Pantani in the race. They have contributed to the drama, the colour, everything the Tour is, both good and bad, so it is disappointing. Obviously there are some issues with Mercatone, with Pantani exceeding the haematocrit level, and the Tour doesn't want to have to answer all those questions from its sponsors, so it's a difficult position on that front. But the rivalry between Marco and Lance was good for the sport, and whenever I bring friends and family to the Tour Cipo is the man they want to get a look at. He's a handsome guy, he's an incredible talent, he's incredibly fast, he's part of the colour.
Euskaltel David Etxebarria is a great talent and he's very colourful in the way he wins. That team will do well, I think they have a couple of climbers that will perform very well.
CN: What about the exclusion of Mercury-Viatel? Is it good or bad for you to be the only American team?
MG: Without a doubt it will keep the focus of the American media on our team, but in the big, big picture it's probably not good for American cycling because it's not going to be very encouraging for the Lincoln-Mercury division of the Ford Motor Company which is investing a lot of money in that team. I want to see more American companies involved in the sport of cycling, so while it'll keep the focus on our team I'm not applauding the fact that they are not in. I didn't ever see that Mercury a threat to Lance and the yellow jersey, they would have been more focused on stage wins.
It has to be really disappointing for them. I think it's clear that the Societe du Tour de France was under a lot of pressure to ensure not only strong French participation but, there wasn't a French stage victory last year, and I think it would be very disappointing to the organisers and to jean-Marie LeBlanc if that were to happen again this year.
CN: Hard to image Big Mat and FdJ winning any stages though.
MG: I know. Heulot has been in yellow before and they have a couple of contenders on each team, but there's no-one you look to on those teams and go "OK, there's a guy who is going to win a stage."
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