Monday, August 18, 2008

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

The months and days that led to the Games opening ceremonies on August 8 positioned the Games of the 29th Olympiad as one that would be plagued by story lines that would take the focus away from the athletes. Media censorship, pollution, a global torch relay that was plagued by protests and arrests in many world capitals and failed human rights promises made by the Chinese government in the years took the focus far away from athletic achievement.

There was a real possibility the Beijing Games were going to turn into a political circus. There was a real possibility the Beijing Games were going to embarrass the International Olympic Committee. There was a real possibility the Beijing Games were going to have a tremendous negative impact on how the IOC conducted their business affairs for many years. There was a real possibility the Beijing Games were going to hurt the image of the IOC’s major sponsors for many years to come.

All that changed in the space of seven days when Michael Phelps stunned the world by winning eight gold medals in Beijing. All that changed when a Baltimore, Maryland native showed the world the Olympic Games stand as a platform to athletic achievement. There are other athletes that have and athletes that accomplish a great deal in Beijing but none will come close to having the lasting legacy Michael Phelps will have on the Games of the 29th Olympiad and on the Olympic movement. It’s not far fetched to suggest Michael Phelps saved the Olympics from implosion.

Phelps currently generates in excess of $5 million annually in endorsements. Octagon that have represented Phelps since he turned professional when he was 16 positioned most of Phelps current sponsor agreements to either end in the next 12 months. 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.

Noticeably missing from Phelps list – Nike. There has been a great deal of focus throughout the Beijing Games on Nike vs. Adidas and how the two have faced off throughout the Beijing Games in terms of receiving bang for their sponsorship buck. Speedo focus on swimwear and swimwear apparel. Nike remains an athletic shoe and sportswear brand.

Would Nike love to have Michael Phelps join their stable of athletes – there’s no doubt Nike is going to offer Michael Phelps tens of millions of dollars to entice him to move from Speedo to Nike. But what choice does Speedo have but to offer Phelps tens of millions of dollars more than Nike will offer Phelps. Michael Phelps is the biggest brand in swimming history. For Speedo to let Michael Phelps sign with Nike will be a sign for Speedo to wave the white flag and surrender to Nike. Is Michael Phelps worth tens of millions of dollars to Speedo? Would it make sense for Speedo to invest tens of millions of dollars in Michael Phelps? The answer to both questions is a resounding no. Michael Phelps is worth millions of dollars to Speedo, but Michael Phelps has positioned himself to generate tens of millions of dollars from his sportswear apparel agreement because of what he has accomplished. Case closed!!

There are many industry insiders who do not believe Michael Phelps will generate anywhere close to the dollars he will generate.

"There will be a rapid descent in interest," said Paul Swangard, head of the University of Oregon's Warsaw Sports Marketing Center in a Chicago Tribune report. "Within a few weeks, we'll have the NFL and college football and the homestretch of baseball."

What Swangard fails to point out – Peyton Manning has tremendous brand recognition in the United States but Michael Phelps is a global brand. Manning will earn much more money in the United States but Phelps overall endorsements will top Manning globally.

"Olympic athletes by and large have very short cycles in which they can generate revenues as sponsors," said Marc Ganis, president of Sportscorp, a Chicago-based consulting firm.

Again a fair point but consider this gem from a Los Angeles Times report: it's been 24 years since Mary Lou Retton's golden moment at the 1984 Los Angeles Games, yet 75% of Americans still recognize her name, according to Davie Brown Talent, a division of Marketing Arm, a Dallas-based promotions agency. In contrast, only 10% recognize Carly Patterson, who won the all-around gold in 2004 at Athens. Phelps has Mary Lou Retton brand power and a great deal more.

Ganis – understands Michael Phelps is your average Olympian.

"He's reached a level that no Olympic athlete has ever achieved," Ganis told The Denver Post. "I could see over four years him making $40 to $50 million. Those are big, big numbers."

"He's not going to just fall into a black hole" after Beijing, said Scott Sanford, an executive with Marketing Arm. "I think after the Games you'll see him have sustainability. And don't forget, he'll be competing in London in 2012."

Michael Phelps works on so many levels important levels when it comes to selling and marketing an athlete. Success and the image and feel of an All-American kid.

"The image of (Phelps) cheering the relay? I think it did more for him than any single moment," said Steve Sander, of Sander Marketing Group in Denver. "His individual accomplishments stand on their own, but that human side of him is most appealing.

"Just the idea of cheering so hard for his teammates transcends what sports are all about. It transcends that he's not only a great competitor but a great teammate."

And best of all – just ask Michael Phelps how he feels about making money from his fame. He made that clear a few days ago in Beijing.

"I'm not in it for the money," he said. "I'm in it because I love what I do. It was something I dreamed of as soon as I started swimming: winning an Olympic gold medal. And in Athens I was able to do that. I've been able to surpass my goals.

"I'm having fun at what I do, and I do it because I love it. I'm living sort of a dream world. Sometimes you have to pinch yourself to see if it's really real.

"And I'm just happy I'm in the real world."

That not to suggest Michael Phelps isn’t paying attention. In the moments leading up to winning his gold medal in Friday’s men’s 100m butterfly NBC’s cameras picked up iPod earphones dangling from the 23-year old ears.

"Obviously, the guy's perfect for iPod; it's always in his ear," said Bob Dorfman, executive creative director of San Francisco's Baker Street Partners. "Any kind of video games; I hear he's a big video game player. Something automotive – he really hasn't delved into that. Vitaminwater. Any type of energy drink seems to be a nice fit, anything water-based that way. Obviously fast food: The guy's got this incredible appetite, I don't know if you've seen what he eats. He eats, like, a dozen eggs a day – just being the spokesperson for, you know, the Egg Board makes a lot of sense.

"If anyone can keep the momentum going, in 2009, and '10, and '11," he said, "it would be Phelps."

But it’s that All-American boy next door that will push Phelps earning power to between $50 million and $100 million during the next four years leading up to the 2012 London Games.

"He's good-looking, healthy, vital, pure. It's sort of a cliché of what America is about," said Eli Portnoy, Los Angeles-based chief brand strategist for The Portnoy Group. "In that sense, he represents a gold mine to marketers ... this guy kind of comes out of the blue and sort of says, when we were an innocent land, and things were simpler and less complex – this is the image America had. Beyond being an athlete, he conveys the possibility that America can be that kind of place again."

One group that must be sad to realize Phelps won’t be swimming again in Beijing – NBC. Saturday night as he did every night he swam for Olympic gold, Phelps delivered both in the pool and with tremendous ratings numbers for NBC.

NBC's broadcast of the Olympics last night was the most viewed Saturday night program (31.1 million) on NBC since 1990, when Michael Phelps was four years old. On the night when Phelps, now considered the greatest Olympian of all-time, won his unprecedented eighth gold medal of these Games and record 14th career Olympic gold medal, the audience peaked at nearly 40 million viewers in the 11:00 p.m. half-hour during the Men's 4x100 medley relay.

"The mystery of China combined with the unbelievable phenomenon of Michael Phelps, the terrific performances by gymnasts Nastia Liukin and Shawn Johnson and defending Olympic gold medalists Misty May-Treanor and Kerry Walsh at beach volleyball have captivated the imagination of the country," said Dick Ebersol, Chairman, NBC Universal Sports and Olympics and Executive Producer of NBC's Olympic coverage.

NBC's 31.1 million viewers for last night's broadcast represents the best Saturday night viewership of a program on the network since Michael Phelps was four-years-old. The "Golden Girls" spin-off "Empty Nest" starring Richard Mulligan drew 31.4 million viewers on Feb. 24, 1990.

Through nine days NBCU has reached 191 million total viewers, 14 million more than the first nine days for Athens (177 million) and 5 million more than the Atlanta Games (186 million), which was the most viewed television event in U.S. history. The nine-day total for these Games now surpasses the final overall 17-day viewership totals for the Salt Lake City (187 million) and Sydney (185 million).

NBC's Beijing Olympic nine-day average primetime viewership is 30.1 million, 15 percent ahead of Athens in 2004 (26.2 million). NBC's average of 17.4 rating/30 share is the best through the second Saturday for a Summer Olympics outside the U.S. since Barcelona in 1992 (18.6/35) and is a 10 percent jump from Athens in 2004 (15.8/28).

Saturday night garnered 70 million total viewers in primetime and 31.1 million average viewers, a 38 percent gain from the comparable night in Athens (22.5). The night earned a 17.6 rating/32 share, which represents a 29 percent increase (13.6/26).

THE PHELPS PHENOMENON: Michael Phelps, over the last nine days has become the most decorated Olympian in history and the biggest star in the Beijing Games to date. NBC's broadcast peaked last night with 39.9 million viewers during the 11:00 p.m. half hour, as the U.S. team won the 4x100m medley relay, giving Phelps his eighth gold medal of the games. Below is what NBC's Bob Costas, Dan Hicks and Rowdy Gaines have said about Phelps:

COSTAS: "What Phelps provided in Beijing was more than just sustained excellence. He provided the kind of theater that none of us will soon, if ever, forget."

HICKS: "That is the kind of feat that just may never be surpassed and certainly one of the greatest feats of sports history."

GAINES: "The sport of swimming will never be the same. The name Michael Phelps will be synonymous with perfection."

Building a $100 million endorsement potential will in part be helped by the United States Olympic Committee who Sunday made it clear – they’re at the head of the Phelps Phan club.

Statement from U.S. Olympic Committee Chairman Peter Ueberroth: "An extraordinary chapter in Olympic history has been written here in Beijing by one of the greatest athletes of all time. We could not be more proud of Michael, in the manner by which he competed, represented our country, and represented the Olympic Movement. The fact that his eighth medal was won in a team relay signifies Michael's commitment not only to his own quest, but to the importance of teamwork and representing his country."

Statement from U.S. Olympic Committee Chief Executive Officer Jim Scherr: "It is fitting that at one of the most significant events of our generation, we have witnessed one of the greatest performances in Olympic history. Michael's record-breaking performance during these Games will inspire millions of people around the world to reach for their goals and aspire to greatness. He is an example of the very best values of the Olympic Movement and our country."

And yes a grateful President Bush called Phelps soon after he won his eighth gold medal.

The White House says Bush told Phelps: "If you can handle eight gold medals, you can handle anything."

Bush called Phelps on Sunday morning from his Texas ranch. A white House spokesman says Bush told Phelps that he and first lady Laura Bush were proud of the swimmer's achievements and that he handled himself with "humility."

And the president told Phelps to give his mom a big hug for him.

Phelps mother Debbie was front and center throughout his date with destiny – something that wasn’t lost on one of the USOC’s sponsors.

As part of the JOHNSON'S(R) Olympic Games campaign, "Thanks, Mom," the company has designated Debbie Phelps, mother of 15-time Olympic medalist and 13-time Olympic gold medalist, Michael Phelps, its official "JOHNSON'S(R) Baby Mom of the Olympic Games."

To celebrate this honor, JOHNSON'S(R) will donate money in Ms. Phelps's name to a group of its global children's charities and earthquake relief projects (www.babycause.com).

"Behind every champion there's a mother and what better way to honor moms everywhere than to name Debbie Phelps 'JOHNSON'S(R) Baby Mom of the Olympic Games'," said Bridgette Heller, Global President of JOHNSON'S(R) Babycare. "Debbie represents every mother that has helped her child to succeed whether in simply learning how to take those first steps or winning Olympic gold. We are thrilled to partner with her to celebrate and thank moms around the world."

"It is a wonderful honor to be named 'JOHNSON'S(R) Baby Mom of the Olympic Games'," said Debbie Phelps. "As I look back, one of the hardest things I had to do with raising my son and both my two daughters was to trust they would be okay without me always by their side as they grew older. Like all mothers, we just want our children to be happy, safe and to excel in what they enjoy most. And as a mom, we do everything we can to make that possible."

This special recognition builds on a comprehensive campaign, which is part of Johnson & Johnson's company-wide Beijing 2008 Olympic Games sponsorship. Currently, JOHNSON'S(R) is running a series of national television advertising showcasing 2008 U.S. Olympians including recent Olympic champion Cullen Jones, who played an instrumental role in helping to secure a gold medal in the men's 4 x 100 relay team. The spots celebrate the special relationship the athletes have with their mothers, providing viewers with an unscripted peek into a personal side of their lives that they rarely witness. Longer versions of the TV spots run online at www.baby.com/thanksmom or youtube.com/baby.

How much might Michael Phelps eight gold medals be worth in terms of dollars? As much as $1 billion, likely somewhere near $500 million.

In the next quadrennial Phelps should generate between $150 million and $200 million (the key will be Nike and Speedo creating a bidding war for Phelps). Assuming he competes in the London Games and wins five to eight gold medals he’ll likely realize an additional $200 million in the following four years.

Factoring in the $20 million to $25 million he’s made since he turned professional as a 16-year old and Phelps will have earned more than $400 million by the time the 2016 Games arrive. If Phelps decides to compete in the 2016 Games (he’ll be 31) and those Games are awarded to Chicago – Michael Phelps could come close to becoming the first Olympian to earn $1 billion as a result of his success in the Olympic Games.

Michael Phelps is a once in a life-in-a generation athlete. Michael Phelps is a once-in-a lifetime athlete. Enjoy Michael Phelps while you can – his likeness isn’t likely going to come this way again. Michael Phelps the very best of what we can be as an athlete. Michael Phelps the greatest Olympian ever!!!!

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Los Angeles Times, The Chicago Tribune, The Toronto Star and The Denver Post

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