Monday, August 25, 2008
Will Michael Phelps Get Rich after these Olympics?
Phelps will get richer, at least in the short term
Companies will want to do deals, but swimming’s national appeal is limited
By extracting a record eight gold medals from the Summer Olympics, Michael Phelps has emerged as one of the most famous athletes in the world.
For days, stories of the U.S. swimmer’s successes were splashed on front pages from Asia to South America; he was the talk of network morning shows and innumerable blogs. At least 40 million in the U.S. watched Phelps nab two of his gold medals on television Aug. 12, millions more than turn on a World Series game.
Now that Phelps is the signature athlete of the Beijing Games, he faces another challenge — joining the ranks of sports’ marketing giants. Though his well-known name and affable personality will generate sizable endorsement pacts by year’s end, can the 23-year-old reach the heights of golfer Tiger Woods (more than $100 million in endorsement income in 2007, tops among U.S. athletes, according to Sports Illustrated ) or even Cleveland Cavaliers forward LeBron James (around $25 million."It is possible but unlikely for the simple reason that swimming commands our attention only once every four years, while Tiger and LeBron enjoy weekly, even daily coverage during their respective seasons," said John Davis, a professor of marketing at the Lee Kong Chian School of Business at Singapore Management University. His book "The Olympic Games Effect — How Sports Marketing Builds Strong Brands" was published this month.
"Swimming is really not the topic of our typical sports conversations once the Olympics end, so sustained visibility will be a challenge for Phelps," Davis added. In fact, once the Olympic torch is extinguished, football — both college and pro — will dominate the national conversation.
At the same time, Davis notes, Phelps' accomplishments are so stupendous he will attract a slew of suitors.
"Companies that become sports sponsors, whether of athletes, teams or events, want to associate with greatness," he said. "We love good stories, and Michael Phelps is one of the best, so he is a natural attraction for companies."
Ironically, the firms who may get the biggest boost from Phelps could be the ones who signed him up before Beijing and his eight golds. Visa capitalized quickly by releasing a "Go World" ad after Phelps captured his 10th Olympic gold medal overall, and Speedo has likely received more than a million dollars in publicity from its stunt to give Phelps $1 million if he tied Mark Spitz' 1972 mark of seven gold medals.
According to Joyce Julius & Associates, only days into Phelps' record-setting run, his corporate backers such as Speedo and Nike had already received $9 million of exposure value during primetime NBC broadcasts (shots of his swim cap and other apparel constituted the majority of the publicity). Firms who ink a deal with him in the next few weeks will not see a payoff from swimming events for years — Phelps will rarely compete on national television until the London Olympics in 2012.
How long will Phelps last as a marketing phenomenon? Davis believes he will be attractive for at least a year, as long as he avoids controversy such as his DUI arrest after the Athens Games in 2004.
"For Phelps to have staying power his agent needs to work overtime to place Michael on the various shows (Letterman, Leno, and so on) while, at the same time, not saturating the market with Phelps," he pointed out. "It is a tough balancing act."
Phelps could try to go beyond endorsements into the world of Hollywood celebrity. That's the route his predecessor Spitz — who also earned millions by promoting Schick and other products — took after capturing seven golds in Munich. But Spitz was roundly panned for his spots on TV shows and the like, and Phelps may want to avoid an acting career he is not cut out for. Aside from endorsements, the Olympian may be best off collecting enormous appearance fees (probably $50,000 and up) and getting royalties from posters showing the eight golds draped around his neck (a la Spitz in the 1970s).
During eight races in China, from butterfly to freestyle, Phelps matched the pre-Olympics hype, an extraordinary feat. Had his talents been applied to a different sport, he might have ended up as one of the top 10 most marketable athletes in the U.S. No doubt Phelps will earn $10 million or so in the next year from his heroics — a record among swimmers — but stars like Woods and other athletes will remain the top medalists in the marketing game.