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JockStocks: RadioShack to sponsor Lance Armstrong -- is it a smart move?

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Lance Armstrong is in the midst of a comeback over in the Tour de France, but he is making news for reasons other than his exploits on his bicycle. Yesterday, Lance announced that he will return to the Tour de France in 2010 and will be riding for a new sponsor, RadioShack (NYSE: RSH).

The terms of the deal were not available, but it also includes rights to Lance as he participates in marathons and triathlons. On his website, Livestrong.com, Armstrong said, "RadioShack has agreed to partner with us on this venture and ensure that this partnership and this team stays alive for years to come." This means that Armstrong will be leaving Team Astana after this year's Tour, and will probably be taking a number of teammates with him. There will also be other sponsors named, with Nissan the most prevalent, and the rumored budget for the team is $20 million.

This is an interesting move for Armstrong, who has been the focus of this coverage. However, I feel this is equally as interesting a move for RadioShack. When one thinks of the electronics retailer, failure may be the first thing that comes to mind. That said, the company is actually holding up well, as it has reaped benefits from the failure of former rival Circuit City. Nevertheless, the retail environment remains soft -- so why step into a sports sponsorship?

One reason for RadioShack to enter into this alliance would be the international exposure. Now, RadioShack is located mainly in the United States, so why is international exposure a good thing? Perhaps the company is planning on expanding overseas. If this is the case, sponsoring a cycling team would make sense. Cycling truly is an international sport, with riders from all around the world participating in the Tour de France, and while we only get tape-delayed coverage and highlights here in the States, many countries cover races live. Emblazoning RadioShack across the chests of some of the world's preeminent riders is plenty of free advertising.

Another reason to sponsor Armstrong is the amount of coverage he receives here in the United States. When ESPN covers the Tour de France, they are always updating on the leaders and Lance. If some of the rumored riders jump ship to Lance's team, these top riders will be wearing RadioShack jerseys and the company will again receive a bit of publicity. Furthermore, you know that Lance will get a ton of coverage on American television as he participates in marathons and triathlons. His story is a tremendous testament to survival, and you know the American public will eat up the coverage ... all the while, Lance will be smiling and sporting RadioShack on his chest.

To get this sort of publicity for free for nearly a month is priceless for any company. This move by RadioShack may put it ahead of the curve, or in front of the breakaway pack (to use a cycling term). Bottom line: this deal all comes back to the amount of "free" publicity that RadioShack could garner -- of course, let's not forget that it is going to cost the company however much it is dishing out to Team Armstrong.

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Last updated: November 24, 2009: 05:16 PM

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