Sunday, August 17, 2008

The 2008 Beijing Summer Olympics – Michael Phelps the Beijing Games Marketing Machine – the legacy

Michael Phelps date with destiny arrived Saturday night (Sunday morning technically) in Beijing. Phelps won his eighth Olympic Gold medal in the men’s 4x100 relay. Over the last seven days Michael Phelps has made the impossible happen – winning eight gold medals in a single Olympic Games. In winning the eight gold medals, Phelps was either set or was part of seven new world records.

He has now won 14 gold medals in the last two Summer Olympic Games. Phelps will turn 27 when the 2012 London Games take place. By the time London comes calling Michael Phelps could easily top 20 career Olympic gold medals. Indeed when it comes to Michael Phelps all that glitters is gold and he’s created his own stairway to heaven.

In winning his eighth gold medal in one Olympic Games Speedo paid Phelps a $1 million bonus for toping the record of seven gold medals won in one Olympic Games first set my Mark Spitz at the 1972 Munich Olympics. Phelps tied that record Friday night when he won the men’s 100M butterfly in stunning, unbelievable, remarkable fashion.

Phelps was seventh at the turn (the race is only two laps of the pool), more than six-10ths of a second behind Serbia's Milorad Cavic. He was half a body length behind with 25 meters to go. He was still in midair when Cavic was at the finish.

And yet somehow, Phelps got his hand on the wall first to win by a hundredth of a second, setting an Olympic record (50.58), equaling the standard for most victories at one Games, which countryman Mark Spitz set in 1972 in Munich, and picking up a $1 million bonus from sponsor Speedo.

"When I took that last stroke, I thought I lost the race there, but it turns out that was the difference," said Phelps. "I'm at a loss for words."

Michael Phelps may be a loss for words but the nine companies who invested in Phelps will have a lot to say (with Phelps) in the coming days and weeks. Phelps has agreements with nine corporate partners. Currently the face of the 2008 Summer Games generates more than $5 million annually in sponsorship and endorsement opportunities. His biggest contract (with Speedo) is up for renewal next year. Time for Michael Phelps to cash in his chips – there is no way Speedo will allow the worlds most recognizable swimmer and the biggest name to emerge from the Beijing Games to sign a swimwear contract with any other manufacturer.

Phil de Picciotto the president of Octagon, the sports marketing firm that has represented Phelps since he became a professional athlete shortly after the 2000 Sydney Games when he turned 16, knows it will be important for Octagon to capitalize on Michael Phelps success right now.

"The partnerships that are established during that short window of their athletic performance excellence can be sustained over decades if the relationships are maintained and if the business works for both sides. So without being able to put a number on it, over time it's certainly possible that this will go from the tens of millions into the hundreds millions."

One issue de Picciotto and the gang at Octagon are going to have to consider in looking at Phelps in the corporate marketplace – over exposure. With nine current sponsors does Phelps run the risk of having to many products he endorses?

"The way that Michael's partnerships are taken into the public--the audiences for purchasing the services and products that Michael is supporting -- are very different...

"So we're very careful not only about the quantity, but also of the delivery into the marketplace.”

An Octagon spokesman said his sponsors were credit card company Visa Inc., Speedo, watch maker Omega, AT&T Wireless, energy food company PowerBar. Kellogg's, Rosetta Stone, and PureSport.

Of course, whether Michael Phelps -- now the face of the 2008 Olympics -- becomes the next Tiger Woods in the lucrative world of sports marketing may require a true Olympian effort.....because as big as Phelps is now, he's a superstar in a sport that captures the world's attention only every four years.

There are those industry insiders (present company included) who believe Michael Phelps may indeed become the first billion dollar Olympian.

"He's the greatest Olympian in the world and he'll be able to earn money everywhere as he's an international brand," Australia-based celebrity agent Max Markson told Reuters.

"He's a billion dollar man. He won't have to get a job ever. He can live off this for 50 years."

That will be the key – Phelps being positioned as an international brand. He’ll have tremendous earning power in the United States, more than any other American Olympian has ever enjoyed but in the United States he’ll be competing with Tiger Woods and athletes with bigger platforms (Kobe Bryant, Peyton Manning and Alex Rodriguez among others).

Eli Portnoy, chief brand strategist at the Portnoy Group, a U.S. consultancy specialized in branding, told Reuters he doubted Phelps -- or any Olympian -- would match the earning power of Woods who is estimated to become the first billionaire athlete by 2010. Those sentiments aside – Portnoy did suggest Phelps would earn more than $30 million (at least short term) as a result of his unbelievable accomplishments in Beijing.

"In the heat and intensity of this event it may seem that his earning power is limitless, but you have to pull back and look at someone like Tiger Woods who has performed at a top level for years and years in front of the world," he said.

"The Olympics is only held once every four years. After a year to so Americans forget about the Olympics and move to stars they see more. Kids want someone else on their Wheeties box."

One of the best examples in recent memory of a sponsor and the athlete they endorse working together was the commercial spot Visa ran moments after Phelps won his fourth gold medal in Beijing. Halfway to his date with destiny – Phelps fourth Beijing gold represented the 10th gold medal of his Olympic career – more career Olympic gold medals than any other Olympian in history. During NBC’s first commercial break after Phelps won his 10th gold Visa ran a 30 second commercial spot congratulating Phelps on his accomplishment.

"You need to be out there early and establish your affiliation with the property, Michael Phelps," said Michael Lynch, head of global sponsorship management at Visa whose relationship with Phelps dates back to 2002.

"His performance here will benefit us as it will add to the visibility we will get through this affiliation ... and his earning ability will increase, there's no question of that."

The key as was noted earlier – ensuring that Phelps doesn’t saturate the marketplace.

"In the short term, he is a gold mine because he represents everything that is pure, young, strong and visionary about America. We haven't had anyone of this significance since Mark Spitz," said Portnoy.

"Guaranteed there will be marketers wanting a piece of him that make no sense and it will interesting to see how his handlers cope with this and if they get greedy because the Olympics has a narrow avenue of marketability."

Nonetheless along with Octagon renegotiating with Phelps on a current agreement in the next few months – there are several interesting sponsorship categories that Phelps currently doesn’t have any affiliation with.

Months after he returned home from the Athens Games, in November 2004 Phelps was arrested on a DUI change and later pleaded guilty to driving while impaired; got 18 months probation.

The biggest sports category sponsorship remains beer companies. Would Anheuser-Busch (the biggest of the beer company sports sponsors) consider an endorsement agreement with Michael Phelps – again an athlete convicted of a DUI charge?

"Obviously, we would look at the total picture--the total character," Tony Ponturo, Anheuser-Busch's vice president of sports marketing told CNBC’s Darren Rovell earlier this week. "His determination, inspiration, what he's doing, you know you would put all the into that decision making."

When Rovell pressed him again if he'd seriously consider Phelps he said, "You have to consider it. He's a tremendous talent and one little incident should not overshadow what he is an individual."

One opportunity Phelps won’t be able to enjoy after the Games – a post Olympic tour featuring his athletic ability being showcased.

Olympic gymnists Shawn Johnson, Nastia Liukin, Chellsie Memmel And Paul Hamm Plus The Men And Women Of Team USA To Unite After Beijing For The 2008 Tour Of Gymnastics Superstars

Just back from China, the country’s most celebrated gymnasts including reigning World Champion Shawn Johnson, Nastia Liukin winner of the woman’s overall in China, and 2005 All-Around World Champion Chellsie Memmel, will join Paul Hamm, Morgan Hamm, Shannon Miller, Blaine Wilson and the U.S. gymnastics team for The 2008 Tour of Gymnastics Superstars. A nationally televised special airing on MyNetwork TV on September 19th from 8:00-10:00pm (EST) will kick off the two month trek across the United States bringing world class gymnastics and music from Disney’s hottest young recording artists.

The 34 city tour begins September 7 in Reno and ends November 16 in Kansas City.

Following most Winter Olympic Games similar tours feature figure skaters. Speedo is expected to showcase Phelps during a multi-city goodwill speaking tour, but if Americans want to see Phelps at his very best (in a swimming pool) the 2009 World Championships in Rome or the 2011 World Championships in Shanghai.

Monday in the final part of our seven part look at the Beijing marketing machine that is Michael Phelps Sports Business News will take a look at the naysayers who despite his Olympic success Michael Phelps will not generate a great deal of post Beijing marketing success and how Michael Phelps may have saved the Beijing Olympics – from itself.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: CNBC’s Darren Rovell and Reuters.

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