IT WAS CLEAR WHICH SIDE RADIOSHACK wanted to be on. Not long after the Nike ad aired, during the 2009 Tour, the electronics retailer stepped up to sponsor a 2010 squad built around Armstrong, paying him a reported $10 million to be team leader. The deal was negotiated by L.A.–based superagent Casey Wasserman, who donated $1 million to Livestrong via his family foundation. The RadioShack deal was brilliant in its own way. Not only would the company support Lance and his team, but it also made a major commitment to support Livestrong. The cancer charity, in fact, was the key to the whole thing. “We wouldn’t have done it without Livestrong,” says Lee Applbaum, RadioShack’s chief marketing officer.
But rather than simply donating money outright, RadioShack got its customers to pony up $1 or more at the checkout counter. So far, the Shack’s customers have kicked in more than $10 million, according to company spokesman Eric Bruner. (Sometimes without knowing it: early on, a few customers complained that the $1 donation had been accidentally added to their bill.)
Not all the money goes where Livestrong says it goes, however. In January 2010, after the devastating earthquake in Haiti, Armstrong made a personal video statement: to help earthquake victims, Livestrong would give $125,000 each to the charitable organizations Doctors Without Borders and Partners in Health, which it subsequently did. RadioShack also hopped on board, soliciting $538,000 in customer donations for the Haitian cause. According to Livestrong, it gave $413,000 of the RadioShack money to Partners in Health. And the foundation’s 2010 tax form shows a $458,000 donation to the group. But $333,000 of that had been previously allocated to a separate hospital project in Haiti that “had nothing to do with the earthquake,” says a spokesperson for Partners in Health. That means Livestrong used the RadioShack earthquake donations to cover its prior hospital pledge.
IN ONE CASE, ARMSTRONG himself stood to profit from the sale of a major Livestrong asset: its name. Most people are unaware that there are two Livestrong websites. Livestrong.org is the site for the nonprofit Lance Armstrong Foundation, while Livestrong.com is a somewhat similar-looking page that features the same Livestrong logo and design but is actually a for-profit content farm owned by Demand Media.
In 2008, the foundation licensed the Livestrong brand name to Demand, the online media company behind eHow and Cracked.com, among other properties. Livestrong.com was positioned as a “health, fitness, and wellness community,” offering an online calorie counter, exercise and yoga videos, and articles about such topics as “What Are the Signs and Symptoms of Rejecting Belly Button Rings?”
As compensation for the use of its name, the foundation received about 183,000 shares of stock, which it sold for $3.1 million when the company went public in January 2011. Armstrong also received 156,000 shares of his own as part of a spokesperson agreement. (His agents, Bill Stapleton and Bart Knaggs, also received shares.) After the deal was criticized in the media, Armstrong donated his initial sale proceeds—roughly $1.2 million—to the foundation and said he planned to donate the rest, too.
Livestrong executives describe the deal as good for everyone, a way to spread their message of healthy lifestyles to a wider audience. Under the agreement, Armstrong provided blog entries, videos, and other content to Livestrong.com. “I actually have to do work for them,” he told me in an interview.
Adds Ulman: “They guaranteed us certain levels of traffic. They said, ‘We will build a site, and we will ultimately send people to the foundation.’ ” But traffic to the for-profit Demand Media site has surged, in part thanks to Lance’s promotional work, while the foundation’s traffic has remained essentially flat. And it was the foundation that paid to defend their joint trademark against the Barkstrong dog-collar salesman.
