June 7 (Bloomberg) -- Lance Armstrong’s cancer foundation may lose up to $10 million in donations because of doping accusations against the seven-time Tour de France champion.
Federal prosecutors in Los Angeles are investigating Armstrong’s possible drug involvement, according to a person familiar with the matter who declined to be identified because details of the probe aren’t public. Former teammate Tyler Hamilton said on CBS News’s “60 Minutes” on May 22 that Armstrong, who survived testicular cancer, used performance enhancers. Armstrong, 39, has repeatedly denied violating doping rules.
Armstrong’s Austin, Texas-based Livestrong, the largest athlete-founded charity by donations, has sold 80 million yellow bracelets to raise awareness of cancer and had $48.4 million in revenue and earnings in 2010, according to its annual report, a year after taking in $50.4 million. At least 10 percent to 20 percent of that support might be lost if the allegations against Armstrong prove true, said Doug White, academic director at New York University’s Heyman Center for Philanthropy & Fundraising.
“A lot of support this organization gets is peripheral, that is to say they’re moved by the moment,” White, 58, said in a telephone interview. “Those people will be the most likely to be affected, the most likely to say, ‘Whoops, this is not good, I’m going to walk away.’”
White said he based his estimate on other major charities that have faced public discredit. Livestrong may be in even greater danger because “he is that charity,” White added.
Jennifer Linn, who has battled a rare abdominal cancer since 2004, is among the steadfast believers in Armstrong’s message of hope.
Linn, 40, has relapsed six times since her initial diagnosis. Inspired by Armstrong and his book, “It’s Not About the Bike,” she created “Cycle for Survival,” a charity indoor bike-a-thon that’s raised more than $9 million to fight rare forms of cancer.
“When I talk to people, they say, ‘We don’t care if he doped,” Linn said in a telephone interview. “What we’re concerned about is if he takes the cancer movement back 10 steps.”
Livestrong, which until 2009 was known as the Lance Armstrong Foundation, has raised $400 million since its 1997 founding, spokeswoman Katherine McLane said. She said the doping allegations are “a distraction to our mission.”
“We show up to work every day as devoted as we’ve ever been to supporting people and families affected by cancer, and we’re not going to speculate and waste time thinking about what if,” McLane said in a telephone interview.
‘Not About Me’
Armstrong, in a statement released by McLane, said Livestrong “is about 28 million people worldwide who live with cancer every day. It’s not about me.”
“The reason the foundation has such strong support is they do great work serving cancer survivors and their families through some of the hardest times of their lives,” he said. “That dedication is never going to change.”
Mark Fabiani, Armstrong’s spokesman, referred in an e-mail to repeated public denials of drug use by the cyclist when asked for comment.
Livestrong was the 358th-ranked charity in 2009, raising $49.3 million in private support, according to the most recent figures compiled by the Chronicle of Philanthropy. It was the only athlete-founded charity among the top 400.
Any financial hit might last only as long as Armstrong is in the news, especially if Livestrong redefines his role, said Stacy Palmer, editor of the Washington-based publication.
“They could take steps to change how the foundation operates to deal with the fact that they don’t want him as their spokesman,” Palmer said, adding that Livestrong has been around long enough to survive a scandal surrounding its founder.
People making donations have a right to expect more from those overseeing the money, said White, who teaches about philanthropic ethics at NYU.
“We are that sector of society whose sole purpose is to do good, and so if we’re falling short of that ideal, and in this particular case, assuming that there’s something that he did wrong, then it does matter,” White said. “His image is tarnished and his message is changed.”
Armstrong was diagnosed with cancer in October 1996. He underwent chemotherapy and returned to professional cycling two years later. In 1999 he won the first of seven consecutive Tour de France titles, a record in the 97-year history of cycling’s biggest race.
Doping accusations against Armstrong began shortly after his first Tour victory, including a French book, “L.A. Confidential -- The Secrets of Lance Armstrong.” Last year, Floyd Landis, who was stripped of his 2006 Tour title after a positive drug test, accused Armstrong and other former teammates of using illegal substances.
Hamilton, who handed back his 2004 Olympic gold medal after his own doping admission, told “60 Minutes” that Armstrong used endurance-boosting erythropoietin, or EPO, during the Tour in 1999 and to prepare for the Tour in 2000 and 2001. He also said he saw Armstrong transfuse blood during the 2000 race. “60 Minutes” reported that Hamilton said the same thing to investigators under oath.
George Hincapie, Armstrong’s teammate for all seven of his Tour titles, told federal investigators that he and Armstrong supplied each other with EPO, “60 Minutes” also said. The federal investigation of drugs in cycling was reported by the New York Times in May 2010 and subsequently by media outlets worldwide.
Hincapie said in a statement released by his lawyer, David Anders, that he never spoke with “60 Minutes” and had “no idea where they got their information.
“As for the substance of anything in the ‘60 Minutes’ story, I cannot comment on anything relating to the ongoing investigation,” Hincapie said.
Armstrong’s attorneys have demanded an on-air apology from “60 Minutes,” saying the accusations were “incorrect, false and broadcast in error.” CBS News said its story was “truthful, accurate and fair.”
Armstrong retired from professional cycling in February to focus on Livestrong. According to his website, he also has endorsements including Anheuser-Busch InBev NV’s Michelob brand, Nike Inc., Nissan Motor Co. Ltd., Trek Bicycle Corp. and RadioShack Corp., which sponsors the racing team he formed in 2009.
The doping accusations are more likely to hurt his marketability than his work as a cancer fighter, said David Abrutyn, global managing director for New York-based IMG Worldwide Inc.’s consulting unit.
“He’s probably saved lives and that puts you on a bit of a higher plane than being a corporate spokesperson for Michelob,” Abrutyn, 41, said in a telephone interview. “While it would be disappointing if all of that was done on the false premise that he was a winner, the core of the personality and what clearly was part of his DNA is wanting to give back, and he gave back in an amount that not many people have.”
Nike, which makes the Livestrong bracelets and clothing, said in an e-mailed statement that “Our relationship with Lance remains as strong as ever,” and that the company “does not condone the use of banned substances.”
Anheuser-Busch said in an e-mailed statement that it supports Armstrong as an “extraordinary athlete” who is “admired by millions who lead active lifestyles.”
Trek spokesman Bill Mashek declined to comment in an e-mail, citing the federal investigation, and Nissan spokesman David Reuter said that a 2010 commercial featuring Armstrong was no longer in the company’s rotation.
RadioShack spokesman Eric Bruner said in an e-mail that “we recognize the serious nature of the allegations.” He said the company was “proud of the good work we’ve accomplished with Livestrong and Team RadioShack.”
The allegations against Armstrong are likely to lead to concerns about using him as a pitchman, according to Darin David, an account director at The Marketing Arm in Dallas.
“Yellow has always been the color of the Tour de France leader and it’s the color associated with Livestrong,” David said in a telephone interview. “Now, it’s more like yellow is a caution to brands when associated with him.”
Linn, the charity founder and cancer patient, called Hamilton’s allegations “very upsetting.”
“I don’t care about the biking (scandal), I just know that the world will, and that will make me very sad,” she said.
To contact the editor responsible for this story: Michael Sillup at email@example.com.