Thursday, February 12, 2009

Lance Armstrong, $3 million and the silence of the Rann

Bob Gosford writes from Yuendumu: (from

Lance Armstrong went to Adelaide for a fortnight in January. While there he spoke to a few cancer charities, visited hospitals, charity fund-raisers and cancer victims, and schmoozed with Kevin Rudd, a fawning South Australian Premier Mike Rann, assorted SA Ministers and half the population of Adelaide.

Oh, and between schmoozes he rode around on his bike for seven days during the Tour Down Under.

For his troubles he trousered a wedge understood to be up to $AU3 million in cash.

As an anonymous tipster told Crikey in mid-January:

The SA Government are paying Lance Armstrong USD $1 million to appear at the Pro Tour. USD $500k has been paid up front, with the balance after the race. Think back a few months when it was announced somewhat prematurely that Lance was on his way.

Neither Rann nor Armstrong have denied the figure of $US1 million ($AU1.52 million). While Crikey was in Adelaide there were strong rumours among the media and others closely connected to the race that the figure was more like $US2 million ($AU3.05 million).

Armstrong and 186 other professional cyclists came to South Australia to ride in the Tour Down Under -- Australia's premier cycling road race event and part of the l'Union Cycliste Internationale (UCI) Pro-tour.

That Armstrong would be paid at least $1US million large to talk about cancer research, a matter close to his heart, attracted a lot of attention, particularly within the world cycling community. Particularly when the wages of the peloton, the riders that make up the bulk of the pro-cycling community, are reported to have fallen by up to 40% in recent years.

The Boulder Report at the website noted: one's talking. South Australia Premier Mike Rann refused to discuss any negotiations, and other than saying that any money paid "will go to his charity," Rann's spokesman, Lachlan Parker, declined to discuss the matter further with reporters.

...Why's this a big deal? Armstrong is an in demand public speaker, commanding at least $175,000 per engagement.

...It's less the donation than the secrecy surrounding it that seems strange and excessive…But [appearance fees] made with taxpayer dollars, in an ostensibly democratic and open government, fit a different standard of disclosure.


But in South Australia, as is common in too many Australian jurisdictions, answers to questions about what should be publicly available information are deemed "commercial-in-confidence".

The only way you or I will get any closer to the truth is via an expensive, and most likely unsuccessful, Freedom of Information application or if the Opposition asks the right questions during Parliamentary estimates. Neither is satisfactory in the short term or in keeping with the spirit of "ostensibly democratic and open government."

Lachlan Parker's story that the payment to Armstrong was a donation to charity, the Lance Armstrong Foundation, was soon given the lie by Armstrong himself.

As The New York Times reported, Armstrong:

...did not specify the amount of his fee but said Saturday that, contrary to what had been reported here last week, he was not donating the fee to his foundation but treating it as income, the same way he has his other speaking and appearance fees since retirement.

"It's not simply showing up to a bike race and getting paid to race the bike," he said. "I'm not being paid to race. Is there a fee for other things? Yes, but that's not any different than what I've done for the last three years or four years, actually longer than that."

The SA Government -- i.e., the SA taxpayer – is the sole sponsor of the Tour Down Under.

Armstrong has provided an undoubted boost to the public profile of the Tour Down Under and to the worthy cause of cancer research in Australia. Whether his presence made any impact on the SA economy is but one of a number of outstanding questions about the overall cost of the event.

Other questions as yet unanswered include whether the SA economy really got the big 'bang for its buck' that Rann has trumpeted, the total costs involved in staging this year's Tour Down Under and how much Armstrong, and others involved in the Tour, were paid to participate.

That last issue is what Crikey has been trying to confirm for the last week and half.

Crikey sent a brief list of questions to Rann and his media minder Lachlan Parker and to SA Tourism Minister Jane Lomax-Smith. We first sent the questions on 3 February, again on 6 February and again yesterday, advising that this story would be published today.

Up until late yesterday we'd received not a whisper in reply. After we'd advised we were going to run with this story today we finally received the following from Leah Manuel, Jane Lomax-Smith's media minder:

Any payments associated with teams or cyclists taking part in the Tour Down Under are commercial in confidence. This has been the case since the inception of the race 11 years ago.

Another question that Rann and the Australian Taxation Office could be asked is whether the ATO got its slice of Armstrong's income from the SA government.

As the Indian Cricket team found out to its horror in late 2007, the ATO is particularly attentive to earnings in Australia by foreign sportsmen and women.

As the Explanatory Memorandum to the Taxation Administration Amendment Regulations 2004 (No. 1) notes:

Foreign resident entertainers and sportspersons who derive income in Australia are liable to pay income tax in Australia on that income ... [t]hey are required to lodge an income tax return in Australia.

Dependent upon whether the SA government made the payment to Armstrong personally or to some corporate or charitable entity associated with him, it may have been required to:

...retain an amount and pay that amount to the ATO under section 255 of the Income Tax Assessment Act 1936.

But, regardless of how much, and to whom or what the South Australian government paid the money, Armstrong clearly saw that money as his own.

And, as Armstrong told the gathered press in Adelaide, he'll be back for the Tour Down Under in 2010.

There are more than a few wondering what his fee will be next year.

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