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M I N I C AS E 1

Michael Phelps: Strategizing for Gold

MICHAEL PHELPS, nicknamed MP, won an

unprecedented eight gold medals at the Beijing
Summer Olympics, and while doing so set seven
new world records. Eight short days in August 2008
changed Olympic history and Michael Phelpss life
forever, making MP one of the greatest athletes of
all time. Immediately after the event, The Wall Street
Journal reported that Phelps would be likely to turn
the eight gold medals into a cash-flow stream of more
than $100 million through a variety of business activities.1 The
more obvious ones were product
and service endorsements: His
official sponsors included AT&T
Wireless, Kelloggs, Omega,
PowerBar, Rosetta Stone, Speedo,
Visa, and PureSport. Other offers
included the exotic and the mundane: books and movies, sculptures eternalizing his muscled
torso, acrylic paintings, dog food (given Michaels
love for his British bulldog, Herman), commemorative
coins, tuxedos, car rims, and even bobblehead dolls.
In his youth, MP was diagnosed with attention deficit hyperactivity disorder (ADHD). Doctors prescribed
swimming to help him release his energy. It worked!
Between 2004 and 2008, Michael Phelps attended the
University of Michigan, studying marketing and management. He had already competed quite successfully
in the 2004 Athens Summer Olympics, where he won
eight medals: six gold and two bronze. Right after the
Athens Games, the then-19-year-old sat down with his
manager, Peter Carlisle, and his long-time swim coach,
Bob Bowman, to map out a detailed strategy for the
next four years. The explicit goal was to win nothing
less than a gold medal in each of the events in which
he would compete in Beijing, thus preparing the launch
pad for his superstardom.2
Bob Bowman was responsible for getting MP into
the necessary physical shape he needed for Beijing and
nurturing the mental toughness required to break Mark
Spitzs 36-year record of seven gold medals won in the
1972 Munich Olympic Games. Peter Carlisle, meanwhile, conceived of a detailed strategy to launch MP

as a world superstar during the Beijing Games. While

MP spent six hours a day in the pool, Carlisle focused
on exposing MP to the Asian market, the largest consumer market in the world, with a special emphasis on
the Chinese consumer. The earliest tie-in was with a
Hong Kongbased manufacturer of MP3 players and
other consumer electronics, Matsunichi, with whom
MP became affiliated right after the 2004 Athens
Games. MP made several other visits to China during the
20052007 period, among them the
Visa Friendship Lanes Tour to promote the Special Olympics.
MPs wide-ranging presence in the real world was combined with a huge exposure in
the virtual world. Phelps posts
and maintains his own Facebook
page, with millions of phans
whose click-through rivaled the
site of President Barack Obama in
popularity. MP is also a favorite of YouTube and other
online blogs (e.g., Swimroom.com), garnering worldwide exposure to an extent never before achieved by
an Olympian.3 The gradual buildup of Phelps over a
number of years enabled manager Peter Carlisle to
launch MP as a superstar right after he won his eighth
gold medal at the Beijing Games. By then, MP had
become a worldwide brand.
Clearly, a successful strategy rests on leveraging unique resources and capabilities. Accordingly,
some suggest that MPs success can be explained by
his unique physical endowments: his long thin torso,
which reduces drag; his arm span of 6 feet 7 inches
(204 cm), which is disproportionate to his 6-foot-4-inch
(193 cm) height; his relatively short legs for a person
of his height; and his size-14 feet which work like flippers due to hypermobile ankles.4 While MPs physical attributes are a necessary condition for winning,
they are not sufficient. Many other swimmers, like
the Australian Ian Thorpe (who has size-17 feet) or
the German albatross Michael Gross (with an arm
span of 7 feet or 213 cm), also brought extraordinary
resource endowments to the swim meet. Yet neither of
them won eight gold medals in a single Olympics.

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368 MINICASE 1

Michael Phelps: Strategizing for Gold

DISCUSSION QUESTIONS
Review Chapter 1: What Is Strategy and Why Is It
Important?
1. How did Michael Phelps turn into a global
brand?
2. What does the story of Michael Phelps have to do
with strategic management?
3. Following the Beijing Olympics, a photo published by a British tabloid showed Michael Phelps
using a bong, a device for smoking marijuana,
at a party in South Carolina. Kelloggs withdrew
Phelpss endorsement contract. What does this
incident tell you about maintaining and increasing
brand value over time?
4. According to a study by two economics professors
at the University of California, Davis,5 another
recent example of an athlete who lost significant
brand value is Tiger Woods, who destroyed an
estimated $12 billion in stock market value of the
firms sponsoring himAccenture, Gillette, Nike,

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PepsiCo (Gatorade), and Electronic Arts (EA). As

a manager, what lessons about celebrity endorsements can you draw from the examples of Phelps
and Woods? What are some general take-aways
that a strategist should keep in mind?
5. After reading Chapter 2: Did Michael Phelps or
his team follow one of the approaches to strategy making discussed in Chapter 2? Explain your
response.
Endnotes
1. Now, Phelps chases gold on land, The Wall Street Journal,
August 18, 2008.
2. Ibid.
3. Michael Phelps agent has been crafting the swimmers
image for years, Associated Press, September 14, 2008.
4. Profile: Michael Phelps A normal guy from another
planet, Telegraph, August 15, 2008.
5. Knittel, C. R., and V. Stango (2008), Celebrity endorsements, firm value and reputation risk: Evidence from the Tiger
Woods scandal, working paper, University of California,
Davis, http://faculty.gsm.ucdavis.edu/~vstango/tiger007.pdf.

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