PHELPS' DECISION ON 2012 GAMES TO HAVE DEEP IMPACT

No Matter What, There Will Be Ripple Effect on Those With Stake in Him

For a week now, Michael Phelps has been one of the most polarizing
figures in sports. And though this isn't the first time Phelps'
judgment has been questioned, fallout from the incident has
introduced something new to his career: indecision.

Maybe, Phelps told The Baltimore Sun last week, in his first
interview after the story broke, he wouldn't swim in the 2012
Olympics after all. Perhaps it was a rare moment of unscripted
honesty from a celebrity whose life has been scripted for so long.
Was it simple frustration and fatigue talking? Or a calculated
comment by an athlete who must know, on some level, that his sport
and maybe even the Olympics need him more than he needs them?

Whatever his motivation, Phelps' decisions for his career and for his
personal life have millions of dollars at stake. NBC, which owns the
broadcast rights to the 2012 London Games, has thus far declined to
comment on the controversy ignited when a British tabloid published a
photo of Phelps presumably smoking marijuana at a party, but there is
no question the network would be nervous if it thought Phelps might
choose to hang up his goggles and retire. The swimmer's legacy is
already secure, and he has accumulated enough wealth already that
he's unlikely to ever go hungry. The network, on the other hand, paid
$2.2 billion for the rights to the 2010 Winter and 2012 Summer Games.

"I think they have a lot of things to be nervous about," said Kathy
Sharpe, chief executive officer of Sharpe Partners, an award-winning
digital marketing agency in New York. "If he doesn't go to London,
he's probably got a couple of years left to collect and make hay.
With what he has to live up to in London, I can see where he would
not want to go. There are also a lot of great swimmers in the world
who will want to take him on."

The Beijing Games were the most watched Olympics in broadcast
history, with an average of more than 31 million people tuning in
each night to watch Phelps' races, a number typically associated with
American Idol. The network reportedly pulled in close to $1 billion
in ad revenue for the Games and was able to sell an additional $10
million of time to advertisers eager to climb aboard the Phelps
phenomenon after the Games began.

Phelps, who has won 14 gold medals, turned into such a cash cow for
General Electric, NBC's parent, the company bought the broadcast
rights to the 2009 FINA World Championships in Rome in July, making
it the first time that swimming event will be televised. Without
Phelps, who has made it clear he plans to compete in Italy, it's
unlikely that would have happened.

That was certainly something USA Swimming had to take into account
when it decided last week to suspend Phelps for three months, a
suspension the governing body said was made in "collaboration" with
Phelps. The punishment, which ends in May, still allows him to
compete at U.S. nationals in Indianapolis on July 7, which is the
qualifying meet for the world championships.

Does that mean Phelps is bigger than the sport?

"I don't think it's fair to ask whether Michael needs the sport or if
the sport needs him," Chuck Wielgus, director of USA Swimming, said
in an e-mail to The Baltimore Sun. "We are incredibly thankful that
he has chosen swimming, and I certainly hope he doesn't lose his
passion for something that has been such an important part of his
life for so long. Michael's swimming future is up to him, and I hope
he knows that USA Swimming will always be his sport family and that
we'll be there to support him. However, as in any family, there are
times when people foul up and the situation needs to be addressed,
but the caring and love for that family member is still there."

Still, it did not go unnoticed in January when swimming was named one
of the country's 10 most popular sports for the first time since
1985, according to a survey taken by Harris Interactive. High school
swimming coaches around the country have reported big increases in
the number of kids trying out for teams this season, and almost all
of it has been attributed to Phelps. Can the sport afford to threaten
that momentum?

"The sport of swimming has never received as much public exposure as
it has over the past year, and there is no question that Michael
Phelps has been the primary reason for this," Wielgus said. "Michael
is our sport's greatest star, and he deserves our appreciation for
all the things he has done to raise the sport's profile. In this
instance, we were not concerned about disrupting any momentum, rather
we were concerned about addressing an issue that was of great
importance to the 'swimming family' of which Michael is our favorite son."

On one hand, the mantra of the Olympics is that the uniqueness of the
event transcends the individual. But, in reality, it's possible the
Olympics have never had a star quite as big as Phelps. Would losing
him hurt the London Games?

"It depends on what arises between now and then," said Jim Lampley,
who has been a broadcaster in a record 14 Olympic Games, including
Beijing. "In early 2005, for example, the world did not know who
Usain Bolt was. Certainly, Michael was one of the most guaranteed
important stories heading into Beijing. If he's out, it removes a
huge, central, compelling story. Would something replace it? I don't know."

David Warschawski, who runs a Baltimore-based public relations firm,
said the 2012 Olympics would probably take a ratings hit if Phelps
does not swim, much as golf tournaments do when Tiger Woods doesn't play.

"If Michael Phelps does not compete, I think it does damage the
Olympics. If he's not there, you're looking for the next-best story,
and I don't know what the next-best story is. The question after
every race becomes, 'Would Michael have won this?'"

It could, however, work in NBC's favor to a greater degree if Phelps
does decide to compete.

"In some regards, if he does compete in 2012, his story becomes even
more interesting," Warschawski said. "It becomes a boon for NBC
because you have a great athlete mixed with a story where everybody
wants to see how it turns out. That makes for great television, and
NBC desperately wants that."

Corporate America is still somewhat divided about what to do with
Phelps. Most of his sponsors have stood by him this week, with the
exception of KelloggCo., which decided it would not attempt to renew
its deal with Phelps when it expires at the end of the month. But, in
some situations, Phelps might simply be too important to drop.
Subway, which signed Phelps to a long-term deal in November, released
a statement late Friday saying it was disappointed in Phelps'
behavior but he "remained in their plans." Speedo, which dumped
swimmer Gary Hall Jr. as an endorser in 1998 after he tested positive
for marijuana, has stood by Phelps.

"Speedo does need him," said Dr. William Sutton, a sports marketing
consultant and professor of sports business management at the
University of Central Florida. "He gives them a presence, because
they make the suit worn by the champion swimmer of all time. That's a
market position they own now."

Sutton said the best advice anyone could give Phelps right now is to
simply lie low and not say much. Don't bring up the 2012 Olympics
because then it looks like you're trying to garner sympathy. Just
return to the pool and hope no other controversial pictures surface.

"In this day and age, you are in the public eye 24-7 and 365," Sutton
said. "It's not a reporter that's going to find an incriminating
picture, it's somebody he meets, somebody he's a friend of or not a
friend of. He's in public, no matter what he does. When [he] said he
was thinking about not swimming in 2012, I thought he must be
wondering: 'My God, it's still four years until [the] Olympics. Do I
really want to live my life like this?' I think he's really
questioning if this is worth it. I think it's a valid concern for him."