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Tuesday, August 7, 2012
Michael Phelps more valuable in retirement

By Darren Rovell

Michael Phelps
Michael Phelps is retiring from competition, which actually increases his endorsement earning power.
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.

While fading off into the sunset is normally the way to fall off the radar of corporate America, the distinction is that Phelps is an Olympian, which makes it harder for him to cash in if he's still competing.

Why?

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.

Meantime, Phelps has several things going for him.

He will always be seen as an Olympic legend, and his status as the most decorated Olympian of all time will be difficult to beat.

The companies that endorse Phelps also have to like where they are. Most of his deals extend through 2016, and most of those were extended when those companies already knew that he had no intention of swimming in the Rio Games. By staying with the same brands, Phelps can give them a bigger bang for their buck by appearing in advertising during future Games. That's to say nothing of Olympic hospitality, meet-and-greets, speeches and autograph signings.

Plus, sticking with the same brands instead of starting over also helps Phelps with his endorsement credibility.

Expect Phelps to strike a bunch of deals in the next couple months. I know he wants a bigger beverage deal. (He has an ownership stake in a company called Pure Sport that never really took off.) He also wants to play a ton of golf, so with the attention he might get on the links it should be interesting to see how he parlays that into some fresh cash.

Phelps, of course, does have to be careful in his free time. Now that we've built him up again, you know there's a party-goer waiting to take a picture that could get him back in trouble, as the "bong photo" of him in 2009 did. Kellogg's was the only major endorser that dropped him in the fallout after the photo went viral and he was suspended from competition for three months by USA Swimming, and Kellogg's contract wasn't a long-term deal anyway.