Tarnished Gold?

February 4, 2009

By this point, I’m guessing more people have seen the photo of swimmer Michael Phelps taking a hit off a bong than watched Sunday’s Super Bowl.  I guess it shouldn’t be too surprising that a guy who eats 10,000 calories a day would smoke a little pot (perhaps it’s the munchies).  What is surprising is that he would be foolish enough do it at a random party in South Carolina.  Let’s just say the odds were pretty good that someone was going to snap a cell phone photo.

So, what does this do to the Olympic superstar’s image and endorsements?  There have been differing opinions, including an article in the L.A. Times quoting Assoc. Professor Larry DeGaris, a sports marketing expert from the University of Indianapolis, who outlines an argument that this incident might help his image by showing him as a human being with flaws rather than a medal-winning robot. 

“He’s been tagged as an uber-nerd, so this might give him an edge to keep in the public eye,” DeGaris says. “Other than the eight gold medals, he’s a lot like many other young American men. And he’s humble enough to apologize when he makes a mistake, which might make him more trustworthy in the eyes of the public and, hence, a more effective product endorser.”

I respectfully disagree.   I guarantee that photo will cost Phelps a lot of money – both now and in the future.

The problem with this mistake and subsequent apology is that we’ve seen it before.  Phelps was arrested for DUI shortly after the Athens Games in 2004 and we heard him talk about the lessons he learned from it.  Well, did he?

This is not about debating how big of a deal marijuana is or where it falls in relation to other athlete transgressions.  It is about Phelps failing his sponsors for a second time and giving pause to others who might consider working with him in the years to come.

I’ve collaborated with clients on a number of celebrity endorsements.  I know the level of effort spent on background checks and character assessment.  In addition, a morals clause is routinely added to every contract – which allows the company to back out (and sometimes seek damages) if the endorser’s actions have the potential to portray the company in a negative light.

A few sponsors, including Speedo and Omega, have said they plan to stick by Phelps, but many others have not yet commented.  There are some difficult discussions going on around conference rooms and I expect Phelps will lose some support. And if one high-profile sponsor goes, others are sure to follow.  Ultimately, it depends on who your target consumer is and what your brand stands for, but if I’m a sponsor like Kellogg’s marketing to moms and families, it would be hard to justify putting his face on your cereal box or using him in a campaign right now. 

There is no doubt Phelps can recover from this – particularly with actions over time, not words.  However, as a current or potential sponsor, you’ll have to think long and hard about whether you can afford to be around for strike three.