If Michael Phelps swims, subway sinks

Kavitha A. Davidson

The swimmer Michael Phelps announced today that he’s coming out of retirement with an eye toward continuing the greatest career in Olympic history at the Summer Games in Rio in 2016.

According to the Associated Press, the 18-time gold medalist will get back in the pool April 24 in Mesa, Arizona, for his first meet since the 2012 London Olympics. The big winners from the announcement are easy to spot: NBC would probably see a boost to its Olympic television and online viewership, while Olympic sponsors, like Procter & Gamble, that have endorsement deals with Phelps can rejoice at their pitchman’s increased exposure during the Olympic trials and competition.

The biggest loser? Subway.

Not all sponsorship is created equal when the Olympics are involved. When Phelps hung up his Speedo after the London Games in August 2012, ESPN’s Darren Rovell pointed out an oft-forgotten rule that actually renders many Olympians’ endorsement deals more valuable once they retire from the games. According to Rule 40 of the International Olympic Committee charter, “Except as permitted by the IOC executive board, no competitor, coach, trainer or official who participates in the Olympic Games may allow his person, name, picture or sports performances to be used for advertising purposes during the Olympic Games.” The obvious, and only, exceptions are those companies that are already Olympic sponsors. Non-Olympic sponsors can’t use athletes with whom they have separate deals for a period before, during and after the competition - when their visibility, relevance and marketability would be at their peak.

In Phelps’s case, the brands include those of Subway Restaurants, Hewlett-Packard and LVMH Moet Hennessy Louis Vuitton SA, which are well aware of their Olympic limitations.

A photo campaign for Louis Vuitton leaked shortly after the London Games but still within the IOC’s advertising blackout period, leading to speculation of possible punishment against Phelps. No action was taken as the source of the leak couldn’t be determined.

Subway, however, might have perfected the art of capitalizing on Olympic hype without paying the enormous fees required to be one of the few, elite brands that are officially global Olympic partners - a practice known as “ambush marketing.” In addition to Phelps, the sandwich chain counts gymnast Nastia Liukin and speed skater Apolo Ohno among its roster of former Olympians and bypasses the blackout restrictions by using generic references and innuendo without featuring any trademarked images or language. Subway is by no means the only company that employs this strategy; heading into this year’s Winter Games in Sochi, 10 of the top 15 brands associated with the Olympics were not official sponsors, suggesting that the $100 million required to join the Olympic Partners program could be in vain.

Come summer 2016, Subway might not be allowed to use Phelps in any of its advertising, but don’t be surprised if you suddenly get a craving for a $5 Footlong while watching the 100-meter fly.

By Kavitha A. Davidson, A Bloomberg View sports columnist