Already a Bloomberg.com user?
Sign in with the same account.
Now that Lance Armstrong has been found guilty of doping, stripped of his seven Tour de France titles, dropped from nearly all his endorsement deals, and prompted to resign as chairman of the foundation that bears his name, the question for Livestrong is whether it can succeed without him.
Today, Livestrong is a $46.8 million enterprise with a dizzying list of programs. It helps cancer patients understand the health-care system, lobbies for federal resources for cancer prevention programs, and provides emotional support groups for survivors and their families. Last year it even launched a line of “non-toxic” sunscreen. One thing it doesn’t do: donate to cancer research. Livestrong focuses on “survivorship research,” or everything about what it’s like to live with cancer. Its brand has been closely tied to Armstrong’s, and its revenue has risen and fallen with his career.
Livestrong grew rapidly in the early 2000s, from roughly $9 million in revenue in 2001 to $40 million in 2004, the year that Livestrong teamed with Nike (NKE) to produce that rubbery yellow bracelet. The next year was arguably the organization’s most successful: In 2005, Armstrong won his seventh Tour de France title, more than 50 million Livestrong bracelets were sold, and the nonprofit’s revenue peaked at $52.5 million.
Armstrong retired from cycling in 2005. The following year, Livestrong’s revenue dropped by $20 million and remained depressed until Armstrong announced his return to the sport in September 2008. While most charities saw steep declines in donations during the recession, Livestrong’s revenue grew to $41.8 million in 2009 and kept rising. While Armstrong was competing and visible, Livestrong did well.
The foundation’s merchandise hasn’t yet been affected by the scandal—not officially, anyway. Nike has dropped its sponsorship agreement with Armstrong, but the company has reportedly said it will continue to sell Livestrong-branded products in its stores. (Neither Livestrong nor Nike could be reached for comment to verify this,) But if Armstrong’s 2005 retirement is any indicator, the brand will undoubtedly lose value with customers. Perhaps even more so with the taint of scandal.
“It’s similar to Tiger Woods,” says Jonathan Berman, a doctoral student at the Wharton School at the University of Pennsylvania who studies the way people separate a public figure’s personal disgrace from his or her performance. “When he had his scandal, a lot of people withdrew their support. But those that stayed said, ‘I don’t like what he did, but that’s not relevant to [golf].’” That’s what Livestrong has to do, Berman says. It has to concede that Armstrong cheated, but this doesn’t mean you shouldn’t donate to a cancer foundation. That will require a nearly impossible feat of re-branding and marketing to accomplish. “If they weren’t called the Lance Armstrong Foundation, maybe they’d have a better chance of it,” says Berman.