In the run-up to the Summer Olympics, swimming phenomenon Michael Phelps has been--to borrow a phrase from Visa, one of his sponsors--everywhere he wants to be. Since the 19-year-old became the first person to break five individual world records at a single meet last summer, his mighty fine physique has graced a slew of magazine covers (including those of SPORTS ILLUSTRATED, ESPN and TIME), thousands of credit cards (Chase started issuing them in April) and an unprecedented six national TV commercials that feature the hydrophilic Olympic hopeful doing everything from racing a dolphin (for Argent Mortgage) to swimming laps across the Atlantic (for Visa). Meanwhile, Phelps sponsor Speedo has garnered boatloads of free publicity by announcing a $1 million bonus should this Gen Y Mark Spitz rack up a staggering seven golds in Athens.
Even if Phelps belly flops, he will still come home a millionaire, thanks to his many endorsement deals. But the same is far from true for the 300 or so athletes who will leave the Summer Games with a gold medal. Compete in one of the less popular sports--one-man flat-water canoe, anyone?--and the ultimate prize for athletic achievement could be worth little more than what you can hock it for on eBay. "It's not the gold medal where the value lies--it's the neck it hangs around," says Dean Bonham, a sports-marketing consultant in Denver who specializes in valuing sponsorship deals. To receive one of the rare seven-figure offers in Olympicsville, an athlete must have what Bonham calls a "magical combination" of superior performance in a high-profile sport, good looks or telegenic charm and a compelling story, typically of the triumph-over-adversity variety.
The selling of Olympic medals has come a long way since Mary Lou Retton catapulted onto Madison Avenue in 1984. Back then, the sports-marketing industry was just starting to think outside the Wheaties box. As marketing muscle has become more sophisticated amid proliferating cable channels, the Olympics have remained among the few events that can rise above all the clutter, a 17-day Super Bowl in search of iconic moments. As a result, the handful of Olympic hopefuls who get singled out for their potential star power have started demanding more cash than they did a few quadrenniums ago. "Ten times as much," says Brandon Steiner, who negotiates endorsement deals for FORTUNE 500 companies. "An athlete that got $50,000 15 years ago gets $500,000 now."
One consequence of the higher price tags is that companies are no longer willing to ante up for anyone besides those at the top of the pyramid. "There's no real middle layer anymore," says Adidas global-communications chief Jan Runau. And the endorsement deals are becoming longer term. "If you get a crack at potentially the most compelling Olympic athlete to come around in a long time, I don't think you want to do a one-year deal," says Phelps' agent, Peter Carlisle, who heads the Olympic division of sports marketer Octagon. Phelps' contract with Speedo--and the accompanying $1 million bonus offer--is good through Beijing in 2008.