There's one rule for Lance Armstrong's private jet: Be late, and you might get left behind.

That's why two of the founders of Austin's Capital Sports and Entertainment Inc., Charlie Jones and Bill Stapleton, rushed out of the office on a recent Tuesday afternoon to accompany Armstrong to Chicago.

On the agenda: Armstrong's taping of the Oprah Winfrey show, followed by a presentation to Chicago city officials by Jones and Stapleton of their plan for the 2006 Lollapalooza music festival.

The symbolism couldn't be better. The off-the-charts success of Armstrong, the seven-time Tour de France champion, gave CSE the financial cushion to expand its business into concert promotions, representing musicians and professional athletes, producing movies and television shows and managing the Discovery Channel cycling team from which Armstrong retired this year.

This weekend's Austin City Limits music festival, the fourth one CSE has produced, is the company's most visible product outside of Armstrong. And it might be one of the most memorable if Hurricane Rita turns Zilker Park into three days of music and mud.

Stapleton, the president of "Planet CSE," as the company calls itself, professes to be unfazed by the looming hurricane threatening to flood Austin on Saturday. He said the company didn't buy rain insurance.

"We have always been a rain-or-shine festival," CSE spokesman Mark Higgins said Wednesday. "It's too early to tell. Besides, the rain might be a nice break in the weather."

Stapleton also doesn't seem to worry much about which new businesses will succeed for CSE.

"We will always have something going on that may not be profitable or exactly on point," he said. "But I don't think we'll continue to grow and do fun cool stuff if we don't say, 'Let's go try this and see if it works,' and then make every effort to make it work."

Flush with money, a mostly 20-something staff and an anything-goes atmosphere, CSE recalls the brash young companies of the tech boom.

Stapleton, 40, scribbles sayings on his office window with Magic Marker. Jones, 36, keeps a bottle of tequila on his desk; it's broken out when CSE wins a new client or big account. Co-founder Bart Knaggs, 39, jokes about riding bicycles through the office.

So far, CSE has hit a few roadblocks in its attempt to become Austin's go-to entertainment company.

Despite losing money on its first attempt to revive the Lollapalooza festival, CSE plans to put on a second in Chicago next year.

The company has dropped some other ventures, including the Saveur Texas Hill Country Wine and Food Festival.

CSE's changes, including moving part of the event from Driftwood to Auditorium Shores and expanding it from one day to two, didn't boost ticket sales and bruised some feelings among organizers of the 20-year-old event.

Striking yellow gold

The company that Lance built still reflects his success: Almost everyone on the staff of 50 sports a yellow "LiveStrong" wristband from the cyclist's cancer foundation. But bicycles and signed cycling jerseys now share wall space with signed concert posters and guitars in the offices at San Jacinto Center on Town Lake.

The push to expand its business, Knaggs explained, "was about getting three legs to a stool so it wasn't all about Lance."

Stapleton, Knaggs and Jones started CSE with little clarity about how it would evolve.

In 1998, Stapleton left the law firm Brown McCarroll & Oaks Hartline to manage Armstrong, who had been diagnosed with cancer two years earlier. His return to cycling was still uncertain.

"I was never freaked out about what was going to happen to me," Stapleton said. "But I always believed in my heart (Armstrong) was born to race bicycles. It was an undeniable force within him, and that's what he was going to do."

Armstrong won the first of his seven Tour de France victories in 1999, and CSE has been profitable every year since, Stapleton said. He wouldn't disclose financial details.

Armstrong said he originally picked Stapleton even though larger agencies courted him because he didn't want to be "lost in a sea of athletes."

By 2000, Stapleton was restless. He faced the choice of building a business entirely around Armstrong or expanding.

"I started thinking about what I could build in (Austin) that would make it special," Stapleton said. "We set out with a strategy to leverage the Austin vibe with music and sports and do things that were fun and cool for the city."

Stapleton pulled together Knaggs, a longtime friend of Armstrong and former software entrepreneur, and Jones, a concert promoter.

They split their duties and share office space with Charles Attal, 37, a principal of the Austin City Limits festival. As owner of Charles Attal Presents, he books bands for CSE events.

The Austin City Limits festival was one of the company's first profitable events, Stapleton said. It was also one of its biggest gambles, coming after a string of false starts.

The headline band dropped out of CSE's first concert on Auditorium Shores, a radio station festival scheduled for one week after the Sept. 11 terrorist attacks. The next project, a blues festival, happened on the day in 2001 that the U.S. started action in Afghanistan, dampening walk-up attendance to 300 instead of the 3,000 expected.

CSE's "most defining failure," Stapleton said, was Lance Armstrong's Rock for the Roses, a music festival in April 2002.

"It was a financial failure, and it hurt," he said. "At the time, it was significant and potentially backbreaking. That would be something that could have driven the partnership apart, but it really drove us together."

The concert didn't bring in the expected revenue because it was poorly promoted and had a flawed sponsorship agreement with Hard Rock Cafe, Stapleton said.

The company jumped back into the concert business, spending more than $1 million on the first ACL festival in September 2002. It plans to spend $4 million on this year's event. It sold 65,000 tickets, for an estimated $6 million.

Now CSE wants to transform Lollapalooza using the ACL model: a broader lineup of bands instead of dependence on one big headliner, increasing corporate sponsorship and food and drink sales spread over days instead of a few hours.

Lollapalooza revival

Conceived by former Jane's Addiction frontman Perry Farrell, Lollapalooza had been a touring stadium concert of big-name bands. When the tour sputtered last year, organizers Farrell and the William Morris Agency canceled it.

Reviving a worn-out brand was why CSE started ACL and what attracted it to Lollapalooza. CSE hoped to make ACL appeal to younger audiences and Lollapalooza appeal to older concert-goers.

It holds the shows on weekends and in cities, rather than weeknight tours in remote locations such as Woodstock, N.Y.

CSE produced its first Lollapalooza this July in Chicago. It brought 60,000 fans over two days, but wasn't profitable. One reason: CSE didn't spare many costs in trying to improve the festival's reputation.

"When you have Wolfgang Puck as your caterer, it pushes the break-even point up," said Marc Geiger, head of contemporary music at William Morris Agency Inc. "If it was just on my own, I would have cut that budget."

CSE is carving a niche in a business dominated by corporate giants such as Clear Channel Communications Inc., the nation's biggest radio station and owner of major concert venues.

CSE officials are less certain about the eventual shape of their sports management and film divisions.

The company represents more than a dozen NFL players and signed eight this year. The biggest name may be veteran Seattle Seahawks defensive back Bobby Taylor. CSE receives the NFL-regulated 3 percent of contracts and between 15 to 20 percent of endorsement deals.

Former University of Texas quarterback Peter Gardere heads the revamped unit, which has five employees.

"They put the money behind it and got the people," Gardere said. "Now it's just a matter of getting out there."

Stapleton said managing Armstrong gives CSE leverage to attract the next superstar athlete.

CSE has dabbled in film production, but now has created a three-person film unit.

"Film is one of the things that makes Austin cool," Stapleton said. "I think five years from now, it's something we'll really be involved in."

Stapleton is executive producer of a film about Armstrong's life, being written by Scott Silver, who also wrote the loosely veiled Eminem biopic "8 Mile." CSE is also working on a television pilot for a reality show about film students competing against each other to produce short movies.

rrayasam@statesman.com; 912-2942