Inside The Business Following Phelps’ Run To History
Maybe, just maybe, with his past Olympic week of medals and records, Michael Phelps has single-handedly changed the nature of swimming. It sure feels that way in Beijing.
Let the Phelps Phrenzy begin. His agent is in full leverage mode. His current sponsors are in activation overdrive.
Let us count the ways that Michaelmania is manifesting itself …
'Everything Michael Phelps-related Will Spike'
Straight from Phelps’ agent, Octagon’s Peter Carlisle: “In this case, you don’t just have a good performance, you have a perfect performance. … Everything Michael Phelps-related will spike. … We’ve been pushing and speculating for four years and all these things are there. It’s a bit like he’s pouring gasoline on a smoldering fire. You don’t get there without him winning eight (gold) medals.”
Appearances Set Throughout The Week
Phelps’ appearances are constant this week.
Today there’s a kickoff sponsored by longtime Phelps partner Visa at the credit card company’s hospitality headquarters at the Prince Jun Palace. (By the way, Visa released yet another 30-second spot congratulating Phelps, this time on his eighth gold medal. The company previously had done an ad congratulating him for tying Mark Spitz when he won his seventh gold.)
Later Monday, Phelps showed up at the McDonald’s on the north end of the Olympic Green, about a 20-minute walk from the Water Cube where he won all his medals. It was a photo op.
Speedo, his swimwear partner, is hosting three social events, which began Sunday night in Beijing for swim athletes. Also on the schedule are a coaches’ event Monday and another athlete photo-op Tuesday.
Wednesday, Omega will host Phelps and other swimming legends
Agent Peter Carlisle Targets New Categories
New deals are expected to follow. Carlisle is targeting endorsements in the consumer electronics category, which he believes fits Phelps’ interests, and in the quick-service restaurant category, which Carlisle said, “Obviously, that makes sense because he eats all the time and loves it.”
“He’ll definitely expand his portfolio,” Carlisle said. “It’s astounding how this has changed things. All rules, all values, all categories have changed. This is an athlete that is reaching global-icon status and the marketplace is reacting. It’s phenomenal.”
Phelps’ current earnings are estimated at $5 million a year.
While new endorsement opportunities are sure to emerge for Phelps in the coming days, the most immediate way he’ll profit from his record-setting medal count is with licensed merchandise and apparel, Carlisle said.
Just like an NCAA team sells T-shirts commemorating a national championship, Carlisle plans to go to market with a line of commemorative Phelps T-shirts, hats, posters and DVDs.
“I can’t imagine that things that work in the Big Four sports can’t work here,” he said. “And it might work even better because he’s a global star.”
Within minutes of Phelps collecting his eighth gold medal, NBC was promoting a commemorative Michael Phelps DVD. Carlisle also is in discussions with the U.S. Olympic Committee to create a line of shirts, hats and posters that feature the five-ring logo and images of him with his eight gold medals. (The USOC owns the rights to the five rings and controls any overt Olympic images, such as ones that feature U.S. athletes with Olympic medals.)
Carlisle also expects pre-existing merchandise sales to spike.
Visitors to Michael Phelps’ Web site can buy merchandise that includes I “Heart” Michael Phelps T-shirts; a Michael Phelps “Reach” poster showing his wing span; and the “Unfiltered” DVD featuring Phelps and Crocker.
Octagon’s Swimroom.com is another beneficiary of Phelps’ success. The site has seen a major spike in traffic during his unprecedented run in Beijing.
“As great as the exposure is now, it will diminish,” Carlisle said. “We want to be out there and service the marketplace immediately.”
‘A Big, Fat Speedo Commercial’
A blue Speedo jersey — with “Phelps 04” on the back — is completely sold out at Speedo.com. Phelps himself picked that “04,” but Speedo marketing chief Craig Brommers told SBJ that the number will change — presumably to “08” when a new product line is unveiled.
Phelps T-shirts and caps with Speedo branding will expand, and a holiday line of Speedo/Phelps clothing is being planned. Among the product line will be a trainer suit that has the LZR Racer technology that Phelps and others wore in Beijing to break records. Phelps will share in the licensing revenues, Brommers said. Another line of products will be set for release in the spring of 2009.
“We’re his most endemic sponsor,” Brommers said. “Swimwear is what we do. For us, he’ll have legs for a very long time. For us, he’ll have a long shelf life.”
Plus, Brommers expects a spike in interest in the sport and in sales. Normally, an Olympics triggers a 5 to 6 percent spike in youth swimming participation.
“We think with the Phelps phenomenon that will at least triple, which will be great for our business,” Brommers said.
Speedo has had record traffic to its Web site, where merchandise is sold. Speedo brand impressions from Phelps’ swimsuit (and others) were all over NBC the past week.
Brommers called the last week’s prime-time swim coverage, “A big, fat Speedo commercial.”
No Insurance Available On Speedo’s $1 Million Bonus
With seven golds, Phelps gets $1 million from Speedo.
“The happiest check that Speedo will ever write is Phelps’ million-dollar bonus,” Brommers said.
The $1 million bonus idea was hatched by agent Peter Carlisle and Brommers way back in 2003 over dinner in Barcelona when Phelps was just 18 and had yet to win any Olympic medals. The bonus was a tool to generate interest in Phelps, Speedo and swimming, Brommers said.
One issue: In 2004, Speedo could insure the potential bonus. This time around, no one would underwrite such a policy. Speedo’s gotta pay.
The check will be turned over soon, but not in China.
Speedo’s deal with Phelps expires in 2009. Look for a renewal.
“It’s a mutually beneficial relationship.” Brommers said.
Omega Times Things Right With Phelps
It could have been controversial, but it turned into vindication and worldwide publicity that money couldn’t buy.
Saturday, when Phelps won his seventh gold medal by one-hundredth of a second, there was a protest lodged by the Serbian swim federation. The Serbs believed their swimmer, Milorad Cavic, had beaten Phelps to the wall in the 100-meter butterfly. To many, with the naked eye, it appeared as if Phelps was second even as the Omega timing system said otherwise. (By the way, Omega has been a Phelps sponsor since 2004.)
Then, the race judges re-examined the finish, and they brought in the Serb officials to examine the evidence as produced by Omega’s exact timing system.
The protest was dropped.
What’s the president of Omega to do at such a touchy time as this?
Well, nothing. Stephen Urquhart, president of Omega Worldwide, saw the Phelps-Cavic dispute as vindication of his company’s timing system, and it made people aware of the importance of timing and Omega’s work with the IOC.
“The exposure we’ve had is unbelievable,” Urquhart told SBJ’s Beijing Bureau on Sunday after the timing issue was long forgotten. “I went on the Internet and checked out 15 newspapers worldwide; we were mentioned in all of them.”
Plus, with its timing devices apparent on TV at swimming and track, Omega is the lone Olympic sponsor that gets its brand beamed amid the IOC’s otherwise corporately cleaned in-venue environments. With ratings so high for Phelps, Omega’s brand name was flashing into a high percentage of U.S. homes this past week.
Phelps' Final Word On Making Money
“I’m not doing it for the money. I’m doing it because I love what I do. If Bob [Bowman] and I were doing it for the money, I think we’d be in different sports.”
