How Subway Nabbed Michael Phelps

Olympian Is McDonald's Biggest Fan, so Why Is Swimmer Shilling for the Competition?

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CHICAGO (AdAge.com) -- If there was one thing Americans learned about Michael Phelps during his history-making eight-gold-medal run at the Beijing Olympics -- other than that he can swim really, really fast -- it was that he really, really likes McDonald's.
With the Phelps deal, Subway intends to use one of McDonald's most famous admirers to steal its market share.
With the Phelps deal, Subway intends to use one of McDonald's most famous admirers to steal its market share. Credit: Stuart Ramson

At a press event before the games, the in-training Olympian revealed he'd been on a double-cheeseburger kick. Newspapers all over the world noted his Arches-fueled 10,000-calorie-a-day diet. Then, in an interview with CNBC, his agent, Peter Carlisle, said: "If there's one deal [he's wanted], he's always said it'd be McDonald's. ... The truth of the matter is you can't stop the guy from eating the food."

So, how, then, did Mr. Phelps wind up signing a major, long-term endorsement deal for Subway, one of McDonald's fiercest and fastest-growing rivals? It makes about as much sense as Nike's Michael Jordan professing a love for Reebok.

Mr. Carlisle begs to differ. "The difference is that Michael Jordan only played in one brand of shoes, while Michael [Phelps] has consistently been forthcoming about his love for a variety of different foods and a variety of different quick-service restaurants," he said. "There was tremendous interest in that category well beyond McDonald's and Subway."

'More of a partnership'
Subway prevailed, Mr. Carlisle said, because it offered "more of a partnership and less of an Olympic program," and also because its fast-growing presence and ambitions in Europe and the U.K. dovetail with Mr. Phelps' own ambitions to promote the sport of swimming in advance of the 2012 London games.

Also a factor, Mr. Carlisle said, was the Subway brand's more-healthful image. While Mr. Phelps could have "easily" done a deal with McDonald's that focused on its more-healthful offerings, Mr. Carlisle said, "there are differences between the brands [regarding perceptions of healthfulness], and they were taken into consideration."

Those considerations appear to have become more pronounced after Mr. Phelps was criticized following a major deal with Kellogg that put his face on Frosted Flakes boxes. (Wrote MarketWatch: "Suddenly a newly minted celebrity had betrayed America's impressionable and overweight kids, who will doubtless now line up at the local Wal-Mart to buy pallet-loads of sugary non-fibrous crud.") Mr. Phelps may have been reluctant to take on the similar barrage that inevitably would have accompanied any McDonald's deal, though Mr. Carlisle said that was not a factor in his decision.

David and Goliath
Whatever the reason, Subway now intends to use one of McDonald's most famous admirers to steal its market share. "McDonald's is Goliath, and we're David," said Tony Pace, chief marketing officer for the Subway Advertising Fund Trust. "Fortunately I have a pretty good slingshot."

Mr. Pace said he expects ads starring Mr. Phelps to subtly refer to the swimmer's well-known burger habit.

Mr. Pace said he could forsee a commercial with pitchman Jared Fogle and Mr. Phelps together, one with a healthful foot-long and the other with several foot-long sandwiches. "And Michael might say, 'I need to eat more than you do, Jared,' and Jared could say, 'But at least I've got you eating right.'"

A McDonald's spokeswoman declined to comment on the extent of its attempt to strike a deal with Mr. Phelps. In a statement, she said: "We enjoyed a very positive working relationship with Michael, particularly at the Summer Games in Beijing. As a top Olympics sponsor, we wish Michael and all the Olympics athletes the best in their future endeavors."

Other deals
Mr. Carlisle said he expected to unveil other deals by the end of the year for Mr. Phelps, who has also inked agreements with AT&T and Hilton, in addition to Subway, Kellogg and others. He declined to disclose specifics but said technology and video games were two key areas of focus.

"These are tough economic times, no doubt, but ... the discussions have continued, and my goal is to have a handful of discussions finalized by the end of the year," he said.
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