Realizing the potential of the Lance Armstrong brand after the cycling star survived stage-three testicular cancer in early 1997, sports agent Bill Stapleton helped the now-disgraced athlete launch his cancer charity "Livestrong" in the late '90s. Over the next 15 years, Livestrong benefitted immensely from Armstrong's accomplishments in cycling, becoming one of the nation's leading cancer charities.
In turn, Armstrong appears to have personally benefitted from Livestrong, according to recently released court documents stemming from Armstrong's infamous doping scandal.
On Sunday, citing interviews with Armstrong associates and the former cycling star's financial records, the
New York Times reported several instances in which Armstrong's charity and his own business interests appear to be intertwined.
Howard Chalmers, a professional nonprofit executive who served as president at The Lance Armstrong Foundation from 1999 through 2001, told the Times that potential conflicts between Livestrong and Armstrong’s business interests began early on.
In 2000, Bristol-Myers Squibb, a global biopharmaceutical company, began using the foundation to promote its brand while at the same time employing Armstrong as a spokesman. In the same year, the company launched the "Cycle of Hope" campaign that featured advice from Armstrong in addition to an information kit on cancer risk factors and symptoms.
"It was presented to us: Here’s your cancer kit and we’re providing this as part of our relationship with the foundation . . . It could have looked to an outsider, wait a minute, Lance is using his foundation as leverage to get sponsors," said Chalmers, who remains a supporter of Armstrong, believing his good works through his charity far outweigh any misdeeds.
In 2008, Livestrong sold its iconic name to a commercial media company that also hired Armstrong as a spokesman. The company, Demand Media, then purchased the domain named Livestrong.com, apparently from the foundation, which is different from the cancer charity's Livestrong.org. Demand Media then used the .com domain to sell health and fitness products that were promoted by Armstrong.
Reacting to that arrangement on his blog, Brigham Young University Professor Mark Zimbelman, who specializes in accounting fraud, called the agreement “unprecedented” in the world of nonprofit organizations.
"Imagine if the American Red Cross decided to create a new website called ‘AmericanRedCross.com’ and sold the website . . . On the website they sold vitamins and other health products and used the same logos that the nonprofit organization uses."
The deal resulted in Armstrong receiving 156,000 shares of Demand Media for his promotion of the products, which amounted to approximately $2 million.
Also, Capital Sports & Entertainment, which is owned by Stapleton and has Armstrong as a key client and minority shareholder, benefitted from a partnership with Livestrong. Beginning in 2010, through its partnership with the foundation, CSE generated $423,000 from fees it billed to the foundation, a percentage of which went directly to Armstrong.
"There was a conflict. I felt there was," said Doug Kingsriter, a former Livestrong development officer in an interview with the Times. "And of course we run into this with nonprofits. Personal interests, personal agendas, should not be greater than the interest of the mission of the organization."
Despite the intertwining of Livestrong and Armstrong's business interests, it should be noted that in addition to being responsible for making building up the foundation through his own accomplishments, Armstrong was the single largest non-corporate donor, giving $7 million of his own money to the cancer charity over the years.
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