As pundits debate whether Michael Phelps will resist the temptation of returning for the 2016 Olympics, there’s one more factor that should convince him to stay out of the pool: He can make more money in retirement.
Olympic champion Michael Phelps began swimming at the age of seven. He competed in the 2000 Summer Olympics in Sydney, Australia, becoming the youngest male to make a U.S. Olympic swim team in nearly 70 years. While he did not win a medal 2000, he did make the finals.
He became a superstar at the 2004 Olympic Games in Athens, Greece, winning eight medals (six gold and two bronze), which tied with Soviet gymnast Aleksandr Dityatin (1980) for the most medals in a single Olympic Games. At the 2008 Summer Olympic Games in Beijing, China, Michael won eight gold medals, which surpassed swimmer Mark Spitz’s seven-gold performance at Munich in 1972.
After Beijing he became a global icon and amassed an endorsement portfolio that would make the biggest stars in the NFL and MLB blush, as these players rarely see any endorsement deals outside the U.S.
Phelps has 11 sponsors including, Subway, Hilton, Omega, and all but two of them use Phelps on a global scale. Speedo is the longest tenured, having signed Phelps in 2002. Speedo offered Phelps a $1 million bonus if he could win eight gold medals in Beijing. Phelps used the bonus money to start the Michael Phelps Foundation.
As popular as Phelps is in the U.S., his stature might be even bigger internationally. He has been to China almost every year with sponsors since 2005. Visa, which inked Phelps in 2003, is currently running an ad campaign featuring Phelps in more than 40 countries. Procter & Gamble brand Head & Shoulders signed Phelps up last year and is running ads starring Phelps in over 200 countries. Baltimore-based Under Armour used its hometown hero in a print campaign in Shanghai last year.
The sponsorship deals have helped Phelps earn $5 million to $7 million annually since Beijing. Phelps is likely to retire after the London Olympics and his agency, Octagon, is working to extend many of Phelps’ long-term sponsors into his post-swimming life. His accomplishments should act as an annuity of sorts, kicking off a few million dollars a year from sponsors for decades after his time in the pool is done. There are several factors that work in Phelps’ favor.
It has, however, been commented that because Phelps is an Olympian it is harder for him to cash in if he’s still competing.
The International Olympic Committee has something called Rule 40, part of which prohibits athletes who endorse non-Olympic sponsors cannot promote those companies for a period before, during and after the Games. That means that if a non-sponsor wants to have a Olympian endorser, it can’t capitalize on their relationship when the athlete is most in the public eye. That doesn’t exactly lead a company to want to fork over big dollars.
Take, for example, Under Armour. The shoe and apparel brand sponsors Phelps, but during the Games, not only did it have to take his image off of the company’s website, but Phelps’ name and likeness couldn’t publicly appear in association with the brand.
Meanwhile, Under Armour’s competitor, Nike, has the rights to the podium uniform, so Phelps had to wear its shoes and garb for every medal ceremony, even though its competitor is the one who writes him checks.
The truth is Phelps makes so much more sense when companies can activate their campaigns during the Games. That’s why 40 percent of Phelps’ current sponsors — Visa, Omega, Hilton and Procter & Gamble — are also official sponsors of the Games. But for the others — the biggest names include Under Armour, Subway and HP — it’s more difficult to rationalize a return on investment if the affiliation can’t be mentioned when Phelps is starring in the pool.
The Marketing Arm’s Celebrity DBI evaluates celebrities for brand marketers. It found before the Olympics that Phelps was known by 89% of the public versus 21% for his closest rival in the pool, Ryan Lochte. The top current Olympian outside of basketball players besides Phelps, Misty May-Treanor, is known by 33% of the public.
Phelps ranks 281 out of 2800 celebs in the DBI database when it comes to influence. It is on par with global sports icons Michael Jordan and Arnold Palmer, who make roughly $100 million combined annually from their myriad of sponsorship deals. Jordan and Palmer are the two highest-paid retired athletes in the U.S. when it comes to making money on their legacies. It is good company to keep as Phelps sets up his post-swimming life with sponsors.