Sponsors Standing by Phelps

By: AP Email
By: AP Email

Michael Phelps doesn't seem to be in much hot water with his sponsors despite being photographed inhaling from a marijuana pipe.

From apparel company Speedo to luxury Swiss watchmaker Omega,
several sponsors are standing by the 23-year-old swimming phenom -
at least for now - and have accepted his public apology. Other big
companies, like Visa Inc., Subway and Kellogg Co., aren't talking
yet.

Experts say if Phelps doesn't stick to the straight and narrow,
he could hurt his chances at future endorsements. And there's no
guarantee he won't be dropped quietly once the furor dies down.

Phelps, who won a record eight gold medals at this summer's
Olympics in Beijing, acknowledged "regrettable" behavior and
"bad judgment" after the photo appeared Sunday in the British
tabloid News of the World.

The paper said the picture was taken during a November house
party while Phelps was visiting the University of South Carolina.

Phelps handled the situation well by apologizing and saying he
regretted his actions, said John Sweeney, director of sports
communication at the University of North Carolina at Chapel Hill's
School of Journalism and Mass Communication. Phelps went a step
further and promised "it will not happen again."

In 2004, after the Athens Games, a then-underage Phelps was
arrested for drunken driving. He pleaded guilty, apologized and
again said he wouldn't make the same mistake again.

Sweeney said if Phelps is caught transgressing a third time, he
could stand to lose many sponsorships - and the public's trust. For
now, the public and his sponsors could look past it. After all, he
said, President Barack Obama has acknowledged using marijuana and
he still got elected.

"My prediction would be that this will pass," he said with
caution. "If it does happen again, it'll be twice the story and it
will hurt him."

Swiss watchmaker Omega said Phelps' actions were a private
matter and "nonissue" while Speedo called Phelps a "valued
member of the Speedo team."

Sports performance beverage PureSport's maker, which tapped
Phelps to be spokesman for its first national advertising campaign,
also said Monday that it stands by him but it said it does not
condone his behavior.

"We applaud the fact that he has taken full and immediate
responsibility for his mistake and apologized to us, his fans and
the public and we support him during this difficult time," said
Michael Humphrey, chief executive of Human Performance Labs.

Hilton Hotels Corp., whose relationship with Phelps dates to
2007, likewise stuck with him.

"We continue to support Michael Phelps as an athlete whose
numerous athletic feats outshine an act of regrettable behavior,"
the statement said.

But former sponsor Rosetta Stone, the foreign-language tutorial
vendor, which had a one-year deal with the athlete that ended Dec.
31, did not like the news.

"We do not condone his activities and are disappointed in his
recent judgment," Rosetta Stone said in a statement.

Both AT&T Inc. and PowerBar nutrition bar makers Nestle SA, two
other big sponsors, quietly ended their relationships with Phelps
at the end of 2008. Neither company would comment on the photo or
describe the duration or value of their contracts.

Companies are getting pickier about their marketing and
sponsorships amid the recession, when they need to get the most
impact for what money they do spend on marketing, said Joe Terrian,
assistant dean in the college of business at Marquette University.

It makes sense that, say, Speedo and PureSport would continue to
support Phelps because their products are ones that he uses for his
sport, Terrian said. But companies with products not directly
linked to athletics, like foodmaker Kellogg and credit card company
Visa, may not see him as kindly.

Terrian said that, given the 2004 incident, sponsors may look to
cut their ties soon.

"Do you want to risk those sponsorship dollars when money is
really, really tight?" he said. "I think that some of them will
think twice."

Visa, Kellogg, Subway and 505 Games did not immediately return
multiple messages left by The Associated Press seeking comment.

A spokesman at sports marketing agency Octagon, which represents
Phelps, said the athlete is taking this seriously.

"He has spoken with his sponsors to personally apologize. We
are encouraged by their support," the spokesman said.

Terrian said Phelps's sponsors could be looking in their
contracts for so-called 'morality clauses' - ways that they can
back out of deals if certain instances happen. Those became more
widespread after Los Angeles Lakers star Kobe Bryant was charged
with rape in 2003. Those charges were dismissed.

More companies could choose to end their relationships with
Phelps quietly. And those whose ads he stars in could publicize
such a move as evidence of "their goodwill and social
responsibility," Sweeney said.

But Sweeney said companies may be willing to overlook
indiscretions depending on how prominent an athlete is. A minor
indiscretion could get a minor athlete tossed from a sponsorship,
but it could take a bigger incident to bring down a bigger athlete,
he said. Considering Phelps's unique accomplishment, sponsors still
may want him.

"There's only one of him," Sweeney said of Phelps. "There's
only one person with eight gold medals, and there's probably going
to be one for a long time."


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