SCC Blog

The “Phelps Effect”

He’s done it.  The man with a target on his back and a chip on his shoulder has won an Olympic record eight gold medals…but my guess is that you already know that.  Let’s face it.  You can’t turn on the TV without seeing some montage commemorating the achievements of Michael Phelps in the 2008 Summer Games in Beijing.  In an Olympics where the NBA’s elite re-claimed the basketball throne and a Jamaican sprinter bolted into the record books, Phelps remains the story of these Games.  So what now?  Well, I think we can all say with a certain amount of confidence that Mr. Phelps is now in a position to begin minting more gold, this time out of the water.

What is on the horizon for Phelps remains to be seen.  It has been widely speculated that he earned between $3 and $5 million per year in endorsements before these Olympics.  His record setting performance is expected to double those earnings at a minimum.  Speedo, Omega, and Kellogg’s and the rest of Phelps’ current corporate supporters will no doubt have to make room for new partners.  New sponsors are already courting him.  Pizza Hut went public this week with an offer to provide Phelps and his teammates with free pizza and pasta for a year.  All told, Phelps’ agent told The Wall Street Journal that the swimming sensation could earn up to $100 million in his lifetime.  According to the Sports Business Journal, Phelps’ agent (Peter Carlisle) said “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.” 

It also appears as though Phelps has a lot to gain outside of endorsements.  Although it can be difficult to monetize some areas of an individual celebrity or athlete brand, Phelps’ managers will definitely be doing everything in their power to maximize the momentum generated by the Summer Games.  Plans are already in place to begin marketing Phelps related merchandise.  After Phelps captured his eighth gold, NBC began promoting a Phelps DVD almost instantly.  Phelps’ agent has also reportedly engaged in preliminary discussions with the U.S. Olympic Committee to create Phelps branded apparel (shirts and hats).  The USOC has the rights to the five Olympic rings logo and control of other Olympics related images so a licensing arrangement would need to be negotiated prior to including Olympic imagery in any merchandise.

Clearly the success Phelps enjoyed at the Games will have a significant impact on him personally, both in the present and in the future as he vaults into the world of American and global celebrity, but Phelps accomplishments transcend any personal financial growth.  The impact of Phelps’ achievement is being felt around the world, referred to by many as the “Phelps Effect”.  While the Phelps Effect was apparent throughout the games for NBC as the network set ratings records left and right, the impact is being felt in many more places.  Sales of swim related apparel are surging and people are heading to the swimming pool in droves. 

Of course, the Phelps Effect was also felt by those companies sponsoring him throughout the games.  According to Joyce Julius & Associates, Inc. (a company who measures sponsorship value and effectiveness), Phelps’ eight days of competition generated $24 Million of media exposure for sponsoring brands.  Speedo in particular made great strides throughout the Games, as the Speedo logos on Phelps’ warm-up jacket, swim cap and bodysuit were prominently displayed in over four minutes of airtime.  That exposure alone was worth approximately $6.5 million according to Joyce Julius.  Speedo’s presence at the games led to a 128% boost in global online awareness relating to the brand.  Clearly while winning eight gold medals was a crowning achievement for Phelps, it was also a big win for his sponsors.

In the end however, where was the Phelps impact felt most?  Probably at home with the kids, at work around the water cooler and in the general social consciousness of American culture.  The Michael Phelps story gave Americans the feel-good story of the summer…maybe the feel-good story of the year.  It gave us another hero, another reason why we love sport and the Olympic Games, and another reason to smile.  In that regard, I think the story of the swimmer from Baltimore and his impact on the world in the summer of 2008 is a win for us all.

*** Questions for Classroom Discussion ***

1) What is sports and entertainment marketing?

2) Is this an example?  Why or why not?

3) What do you think companies look for in a product endorser?

4) Will Phelps continue to be a powerful spokesperson for companies?  Why or why not?

Posted in Endorsement, Marketing, Shoe & Apparel Marketing, Sponsorship |

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