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Volume 20 No. 42


Evan Morgenstein was drunk.

The Olympic agent was at the lobby bar of a Hilton in Dallas last month during the Team USA media summit, buying drinks and railing against the U.S. Olympic Committee’s exploitation of athletes. It hardly mattered that the people he was talking to worked there. That actually made him more exuberant.

Morgenstein, shown in his Cary, N.C., office, has been known to show up at business meetings in a T-shirt, shorts and flip-flops.
He spent $300 at the bar that night and irritated several people. But it was worth it. There’s nothing Morgenstein enjoys more than provoking the establishment. He’s practically built his career out of it. In the process, he’s become the most polarizing figure in the Olympics business.

Haters believe he is litigious, brash, inappropriate, dishonest and narcissistic. Fans believe he is smart, funny, loyal, blunt and a crusader for athletes’ rights.

About the only description both sides agree on is that he is scientifically unprofessional. He has been known to show up to business meetings wearing flip-flops, gym shorts and a tank top. He has threatened to beat up a rival agent for speaking negatively about his client. And he has a Twitter feed where he tweets about

overweight people on airplanes and tells newlyweds that 67 percent of marriages end in divorce.

Despite that, and largely because of it, Morgenstein has thrived as an agent as long as anyone in the Olympic world, and he has amassed a depth and scope of Olympians that rivals large agencies like Octagon, CAA and Wasserman Media Group. Last week, some 15 swimmers he represents, including Dara Torres, Amanda Beard, Jason Lezak and Eric Shanteau, as well as gymnast Nastia Liukin competed at the Olympic trials for a chance to go to London. Two other clients, diver David Boudia and beach volleyball player Phil Dalhausser, have already qualified for the Games.

This will be Morgenstein’s fourth Summer Games. Over the last 15 years, his niche athlete representation firm has evolved from a one-man shop in a 127-square-foot office in his house to an eight-person operation in a 3,700-square-foot office in Cary, N.C. He’s gone from representing what he and others considered second-tier Olympic athletes to handling the business of some of the biggest names in Olympic history, including Mark Spitz, Greg Louganis and Bruce Jenner. And he’s cut landmark deals like swimmer Cullen Jones’ reported $2 million, seven-year Nike swimwear agreement and Liukin’s partnership with Warner Bros. and JCPenney for a line of “Supergirl” apparel.

Through the years, he’s earned enough of a reputation as a salesman and marketer that celebrity chefs (Darren McGrady), professional fitness personalities (Jennifer Nicole Lee), coaches (American Swimming Coaches Association) and properties (USA Synchronized Swimming) alike have hired him. His business success serves as proof that being nice and well-mannered doesn’t necessarily win clients, but working hard, landing them deals and championing their rights does.

“He’s a fierce advocate for his clients even when it’s not in his best interest with sponsors and the media,” said Peter Carlisle, Octagon’s managing director of Olympics and action sports. “He’s smarter than people give him credit for. If he appears unfettered and reactive, there’s usually a reason for it.”

Torres, a five-time Olympian going into last week’s trials, put it this way: “He’s who he is and will say what he thinks. Every once in a while it’s not the best thing and you might cringe, but he’ll stand up for his athletes. That’s the great thing about him. … I feel I can trust Evan.”

And USA Swimming CEO Chuck Wielgus, who often finds himself opposite Morgenstein at the negotiating table, said, “He’s incredibly bright. He’s incredibly provocative. He’s incredibly entertaining. Some people find him incredibly difficult to work with, but like any good agent, he fights like a dog for his clients.”

Morgenstein’s detractors have a different perspective. It’s not that they don’t respect what he’s done for his clients. For the most part, they dislike his style.

“Agents I work with that I respect work for their athletes but at the end of the day want to get a deal done as fairly as possible,” said one agency executive, who declined to speak on the record out of concern that Morgenstein would use the quote as leverage in a future negotiation. “Everything with him has to include an argument. I’ve never thought of a deal we’ve done that went smoothly. He enjoys making it difficult.”

Morgenstein shrugged when he heard that.

“If you talk to someone at the IOC or the USOC, they don’t get me,” he said. “They’re a movement. They’re a family. Everyone comes into the house. My philosophy is: That’s not my house. I didn’t build it. I’m not invited. I’m the pariah. I’m the guy who wouldn’t shut his mouth. But I believe that they only will become a successful movement with the athletes when they give the athletes a seat at the table.”

Morgenstein landed in the Olympic world by coincidence. It was 1997, and he had recently opened his own sports consultancy, PMG Sports, to do marketing work for brands and represent athletes such as beach volleyball player Rob Heidger and NBA player Eric Mobley. He was in Atlanta with his first major client, Jumpsoles, for the world’s largest sporting goods trade show.

While he was sitting at the back of the brand’s booth, he watched a guy carrying three gold medals from the Atlanta Games walk up and ask for a free pair of shoes. As the guy turned to leave, Morgenstein ran after him and learned he was Josh Davis, the only man on the 1996 U.S. swim team to win that many golds.

Davis was there signing autographs for a hot tub company for $1,000. The paltry number floored Morgenstein, who had spent the previous two years representing NBA players at Fluid Sports & Entertainment, an agency founded by former New York Knick Charles Smith.

Morgenstein asked for Davis’ phone number and said he’d give him a call. Five days later, Morgenstein called and said he had three deals for Davis.

“How cool is that?” Davis said, recalling the episode. “In five months, [my other agent] had gotten me zero deals. In five days, Evan had gotten me three.”

Davis signed with PMG Sports immediately, and Morgenstein brought him deals with the shoe company Brooks, a safety swim vest sold on QVC, Speedo and others.

When Davis became captain of the 2000 U.S. Olympic swim team, he recommended that his teammates sign with PMG. It wasn’t long before Morgenstein was representing more than a dozen swimmers, most of them what Olympic insiders call tier-two athletes — not the Michael Phelpses or Mary Lou Rettons of the world, but ones like Brad Schumacher, Angel Martino and Lindsay Benko.

“He handled that whole middle of the pack group that really had to crawl for anything they could get,” said Skip Gilbert,who was USA Swimming’s chief marketer at the time. “He was able to literally bring money to athletes that you would be shocked they could earn.”                                                                                                                                

Among Morgenstein’s clients are (clockwise, from top) Dara Torres, shown in an ad for HP; Amanda Beard, featured in People magazine in 2010; Cullen Jones, who has a reported $2 million apparel deal with Nike; and Nastia Liukin, whose “Supergirl” line of apparel is sold at JCPenney.

As he began to understand the Olympic system, he pushed USA Swimming to pay athletes more. His did so by describing swimmers as “indentured servants.” It was a term he said he chose because he knew it would bother Gilbert and other USA Swimming executives. When Gilbert, who didn’t remember the exchange, later told Morgenstein to back off or lose his access to the pool deck, Morgenstein felt he was onto something.

“That made me feel that I was right,” Morgenstein said. “If a guy like that who is in charge of a sport doesn’t appreciate that the athletes haveintrinsic value to the sport, then I’m going to keep signing athletes because you know what theathletes want? They want to believe that someone’s got their back.”

That attitude is at the heart of PMG’s culture and a major reason athletes have signed with Morgenstein through the years. He typically signs two types of athletes: those who have similarly forceful personalities and big dreams of deals and success, and those who are more mild-mannered and gravitate to his forceful personality because they know he will stick up for them.

Swimmer Tyler Clary, a silver medalist behind Ryan Lochte at the last two world championships, falls in the former category. He said he signed with Morgenstein in large part because, unlike three other agents he spoke to, Morgenstein knew about his times in the pool and understood his goals as a swimmer. He also believed Morgenstein would fight for him.

“I like the fact that he’s not afraid to piss people off if he thinks it’s necessary,” Clary said. “If he were in the business to be everybody’s friend, he wouldn’t be as good at what he does.”

Morgenstein’s style doesn’t work for everyone. Olympians Apolo Anton Ohno, Allyson Felix and Brendan Hansen all worked with him for a period and left. (All of them declined through representatives to speak for this story.) But most clients who sign with him have stayed for years.

A big reason for that is because of the deals he brings them. Torres is an example of what he is capable of doing. Prior to signing with him in 2005, she said she wasn’t getting any deals. Today she has 13 deals with brands ranging from McDonald’s and HP to AmLactin, a skin-care brand, and Sleep Innovations, a mattress manufacturer. She is expected to make more than $2 million in endorsements this year.

But not all of the deals he has brought to his athletes are clear-cut winners. In 2007, he put together a deal that saw swimmer Beard pose for Playboy. It’s an opportunity that Morgenstein said Beard chose to take, but it has had repercussions for both. It caused some blue-chip brands that had considered Beard for their roster of Olympians to ignore her, and it has caused parents of female Olympians to second-guess signing with Morgenstein, who has two daughters of his own, and tell him that they don’t want to see their daughter in Playboy.

“It helped and hurt my career in ways I’m still feeling,” Morgenstein conceded.

A lawsuit that 18 of Morgenstein’s athletes, including Jackie-Joyner Kersee, Torres and Spitz, filed earlier this year against Olympic sponsor Samsung has the potential to do the same thing. The lawsuit alleges the company did not have permission to incorporate the athletes’ names and photos into a Facebook application known as the Samsung Genome Project. No other agency or athletes have joined the lawsuit, but the PMG athletes, who Samsung removed from the Facebook app, stand by their decision to participate and said Morgenstein didn’t push them into the lawsuit.

Though his name’s not on the lawsuit, Morgenstein knows he will be the one to deal with the fallout of it. Olympic sponsorship executives will wonder if they can trust him in the future. If his athletes are willing to sue Samsung, why wouldn’t they sue Coke or Visa or McDonald’s? But that’s beside the point, in Morgenstein’s eyes.

“It’s not about me,” he said. “I never filed a lawsuit. … I never coerced anybody to file a lawsuit. Everyone needs to take a deep, big-boy breath and realize these athletes aren’t the cattle they think they are and recognize that each one of them deserves the respect of a conversation if they want to be involved [in a marketing initiative].”

Twitter has become Morgenstein’s megaphone of choice in his crusade for Olympians’ rights. He has just 2,600 followers, but many of his 14,000 tweets raise questions about the IOC or USOC. Last week, as the IOC ramped up its investigation into black-market ticket sales for the London Games, he posted this tweet.

“Find it interesting that the IOC is so concerned about athletes #tweeting yet their own members r scalping tickets for a fortune!”

For Morgenstein, provoking the establishment will never get old.

While NBC expects to lose money for its second straight Olympic Games, it has sold more than $60 million in digital inventory.

Not surprisingly, the figure represents an all-time high for digital ad sales. But it also showcases how digital is becoming a significant part of NBC’s Olympic revenue and could help the network mitigate losses in future Olympic years.

The Summer Games will be the first time every event will be streamed live online via NBC’s ad sales are reaping the benefits of that added online programming.

NBC Sports Group’s Seth Winter says London digital sales are more than double Beijing.
Photo by: NBC
The $60 million figure has helped the network achieve record-high ad revenue around the Games. During the Beijing Games four years ago, NBC brought in $24 million in digital ad sales, which represented just 3 percent of the total $850 million in ad sales. Digital sales this year account for 6 percent of the $950 million in ad sales that NBC has booked, said Seth Winter, NBC Sports Group’s executive vice president of sales and marketing.

“Digital sales are more than double versus Beijing,” Winter said.

NBC’s record digital ad revenue does not surprise industry experts, like BTIG analyst Rich Greenfield, who describes the market as being in its infancy with a lot of room to grow.

“We’re still very, very early in the digital ad sales business,” Greenfield said. “The Olympics is something where you can see more digital activity.”

NBC’s total sales figure of $950 million for this year’s Games shows that NBC has sold $50 million worth of Olympic ads in the past 4 1/2 months. In February, the network said its revenue was at $900 million (SportsBusiness Journal, Feb. 13-19 issue).

NBC is not selling digital ads on its own; it is packaging digital ads with TV sales.

“If you buy our digital media, you have to invest in all of the platforms that we distribute our Olympic content on,” Winter said.

NBC’s digital performance is important, considering that NBC executives have been hinting that they expect to lose money on the London Games on top of the $220 million the network lost from the Vancouver Games.

“We don’t necessarily expect that they will be profitable,” NBC Sports Group Chairman Mark Lazarus told a press conference last week. “We will have an improved financial position over the plan that was inherited at the time of the merger over a year ago.”

Procter & Gamble is doubling the size of its hospitality house at the London Games from what it offered in Vancouver, and it expects to host more than 20,000 Olympians and their families.

The P&G U.S. Family Home and Global Family Home will be on the south bank of the Thames near the Tate Modern at a large event and restaurant space called Vinopolis. About 40,000 square feet inside the facility will be used for the U.S. Family Home, which will be accessible to U.S. athletes and family only. An additional 25,000 square feet will house the Global Family Home.

The P&G Family Home will be the physical extension of its “Thank you, Mom” program in London. The facility is designed to help the mothers of Olympians and their families defray costs during the Games by providing meals, services and a quiet place where they can watch the competition and spend time with their children.

More than eight P&G brands will be showcased inside Vinopolis. Each will be

In Vancouver, speed skater Allison Baver tried the salon and Tide was ready for laundry duty.
Photo by: P&G / GETTY IMAGES (2)
integrated into branded rooms and areas. For example, Tide will provide a laundry service where families can drop off laundry for cleaning; Olay and CoverGirl will offer makeup and styling for moms and athletes; Gillette will have a “man cave” with giant TV screens, video games and shaving services; and Duracell will offer a computer and phone recharging area.

The offerings mirror what P&G, a worldwide Olympic sponsor, provided in Vancouver. During those Games it developed branded rooms and services throughout the facility such as the Pringles Snack Room, where chips were served and video games offered, and the P&G beauty and grooming salon and spa, which offered CoverGirl mini-makeovers, a Pantene pro studio for haircuts, and Olay and Venus leg treatments.

The company had much more time to find and plan the 2012 edition of the family home. In 2010, it became the sponsor of the family center after former U.S. Olympic Committee sponsor Bank of America, which underwrote the cost of the hospitality center during the 2008 Beijing Games, decided to drop its sponsorship. P&G had only 96 days to find a location, develop a concept and design the first family home. It wound up renting a conference center at a local university and hosting more than 200 athletes and 700 of their family members.

Team USA will send four times as many athletes to the London Games, which has more than three times as many events as a Winter Olympics. P&G expects to host as many as 1,000 guests a day at the Family Home.

GMR helped P&G develop the center for London. The company worked with GMR and its sister agency, Sportsmark, on the Family Home it offered in Vancouver.

The upstart sports channel Universal Sports looked to have a bright future four years ago. It broadcast some Olympic trials and received steady cross-promotion on NBC.

Last week, as the most popular Olympic trials were being held for the London Games, the Olympic sports channel was an afterthought. The channel’s diminished presence underscores how much NBC’s priorities have changed since the Comcast merger closed last year.

Universal Sports has rights to Olympic trials highlights for its “Countdown to London” show.
The merger saw NBC Sports switch its priorities from one small sports channel — in which it holds an 8 percent stake — to two well-distributed sports channels that it fully owns — NBC Sports Network and Golf Channel.

Executives at both NBC Sports Group and Universal Sports say they remain committed partners. But they acknowledge that their relationship has changed since NBC Sports Network burst onto the scene.

“We recognize there’s a different reality at NBC Sports now,” said David Sternberg, CEO of Universal Sports, which is owned by Leo Hindery’s InterMedia Partners. “We remain a part of that family, but there are some new relatives.”

NBC Sports Group Chairman Mark Lazarus said, “We have a business programming agreement with them. But it is an independently owned channel. There’s a partnership that has a shelf life to it. We work very closely with them. We share a lot of programming. We give them windows on the broadcast network to do things. That will continue. We strive to be good partners with them and them with us.”

Though NBC didn’t include Universal Sports in its trials coverage, the two groups are still working together on some Olympic-themed initiatives. NBC’s ad sales team helped Universal Sports secure advertising support from U.S. Olympic Committee sponsor Chobani for 90 seconds of Olympic news that the channel plans to air hourly during the London Games.

Universal Sports, which is in 35 million homes, also has the rights to re-air marquee Olympic trials competitions in the coming weeks, and it will be the only channel to re-air the Olympics after they end Aug. 12.

NBC will provide contractually obligated advertising during the Games. It will give Universal Sports $1.5 million in online digital advertising and $8 million of TV advertising, including prime-time spots.

“That will open up casual fans to the existence of our network,” Sternberg said. “Our promotional message is if you like watching these athletes — Usain Bolt, Ryan Lochte, Missy Franklin — you’ll love watching Universal Sports because it’s where they play all year long.”

In June 2008, NBC had bigger plans for the channel. It invested in World Championship Sports Network, which provided Olympic-style programming to 2 million homes via over-the-air TV stations and a website, and rebranded it Universal Sports. The investment was made at a time when the USOC planned to launch an Olympic channel, and NBC Olympics President Gary Zenkel said the network planned to put “the full weight of NBC behind [Universal Sports] over the entire 52 weeks of the year.”

Weeks later Universal Sports streamed and broadcast some of USA Track & Field, USA Diving and USA Gymnastics Olympic trials competitions. The two partnered a month later on a deal to jointly broadcast the 2009 world swimming championships and 2009-11 U.S. national championships.

During the 2010 Vancouver Games, NBC used its leverage as an Olympics rights holder to secure space for Universal Sports to build an outdoor studio adjacent to the International Broadcast Center. The channel produced five hours of news programming daily, and NBC funneled the feed to Universal Sports’ headquarters in California for broadcast.

Later that year, the two media companies partnered to acquire rights to the Rugby World Cup. It was their last major acquisition.

Since then, most of their collaboration has been limited to sharing broadcasts of events.

In an effort to control costs, Universal Sports opted not to send staff or produce studio shows from London during this summer’s Olympics. The channel is airing a weekly studio news show called “Countdown to London” and receiving Olympic trials highlights footage from NBC for it. But it’s clear its relationship with NBC has changed.

When asked last week whether any live Olympic trials would be offered on Universal Sports, Zenkel said, “This is the Olympics, which you don’t see on Universal Sports. What you do see is a lot of promotion on Universal Sports. That is the destination for the fans of these sports when you’re not in the Olympics.”

Lazarus added, “The trials are an important part of what is the fabric of NBC Sports Network.”

Sternberg hopes that the London Games on NBC perform well enough to raise enough visibility and awareness of Olympic sports to drive interested viewers to Universal Sports after the Olympics. The channel will try to differentiate itself from NBC and NBC Sports Network by noting that those channels show Olympic sports and cycling events like the Tour de France occasionally, while Universal Sports shows them year round.

“This is still a pivotal and positive year for us,” Sternberg said. “This is when, every four years, real attention is paid to our sports not just by consumers but advertisers and distributors, and we’re working hard to make the most of that.”