[News] Phelps Image as Hero Hurt by Photos
http://online.wsj.com/article/SB123361765484841387.html?mod=googlenews_wsj
By SUZANNE VRANICA and EMILY STEEL
During the Beijing Olympics, Michael Phelps's sports agent said
the gold medalist could earn $100 million in endorsement deals
over his lifetime. Now, with Mr. Phelps photographed smoking
marijuana, that figure may have to be adjusted, though for the
time being most brands say they are standing by the swimming
champion. Mr. Phelps was caught up in a torrent of bad publicity
Sunday when photos of him appeared in a British tabloid. Although
he apologized immediately for the incident, sports-marketing
experts expect some fallout.
Associated Press
Michael Phelps at a press conference in Riyadh, Saudi Arabia, on
Tuesday, Jan. 27.
"There is no arguing that this will definitely impact his future
earnings and marketing," says Kevin Adler, chief solutions officer
at Engage Marketing, a New York sports-marketing firm. "The guy
has been marketed as Captain America, and now this has materially
damaged that image."
Drew Johnson, a spokesman for Mr. Phelps's agent Octagon, a unit
of Interpublic Group of Cos., said the swimmer has spoken with all
current sponsors and apologized. "The response we've received has
been very positive, and we are encouraged," Mr. Johnson said.
Mr. Phelps earns an estimated $5 million a year by endorsing big
name brands such as Visa Inc., Nike Inc., Speedo International
Ltd., Kellogg Co., PureSport and Doctor's Associates Inc.'s Subway
restaurants. Sports experts point out that marketers have the
legal right to terminate their contracts because most endorsement
deals contain a "morality clause."
Subway is planning to use Mr. Phelps in a high-profile marketing
event this summer and is now monitoring the situation to see if
the sandwich chain will have to scrap those efforts, according to
a person familiar with the matter. A spokeswoman for Subway
declined to comment. Many of the companies whose brands Mr. Phelps
endorses have expressed support for him. Watchmaker Omega, owned
by Swatch Group AG, said the "story in the press involves Michael
Phelps's private life and is, as far as Omega is concerned, a
nonissue."
But many also remained tight-lipped about whether the incident
will affect the contracts they have with the swimmer. "Speedo
would like to make it clear that it does not condone such behavior
and we know that Michael truly regrets his actions," the swimwear
maker said in a statement. "Michael Phelps is a valued member of
the Speedo team and a great champion. We will do all that we can
to support him and his family."
Still, a spokeswoman for the company declined to comment on
whether its contract with Mr. Phelps, which comes up for renewal
at the end of the year, would be affected. Speedo has been
sponsoring Mr. Phelps since he was 16 years old. Speedo gave him a
$1 million bonus for his record eight gold medals at the Beijing
Olympics.
The photos appeared in News of the World, which is owned by News
Corp. News Corp. also owns Dow Jones & Co., publisher of The Wall
Street Journal.
This isn't the first time the 23-year-old Mr. Phelps's image has
been dented. In 2004, he pleaded guilty to drunken driving and was
sentenced to 18 months' probation. But sports experts say this
incident could be more damaging because it was caught on camera.
It also broke on Super Bowl Sunday, the biggest sports and
advertising day of the calendar. Some fans have expressed their
disappointment on the Web. On Mr. Phelps's site, swimroom.com, one
commenter said: "And I look up to u?? As a little 13-year-old girl
I'm now very sad." Others expressed their support. One wrote: "In
bad times is when you know your true friends, you are an ordinary
human being and as such can make mistakes."
PureSport, a performance-drink brand, said in a statement that it
isn't going to discuss the terms of its contract with Mr. Phelps.
"Suffice to say, Michael is one of the best performing athletes in
the world and we are very proud that he believes strongly in and
endorses our product," Chief Executive Mike Humphrey said in the
statement. "While we certainly do not condone his recent behavior,
he is a key part of our PureSport family, will remain a member of
our family and we are supporting him during this difficult time."
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