A Marketing Formula to Match Eight Gold Medals

The firm traces its roots to the sports marketing practice of the now-defunct D.C. law firm Dell, Craighill, Fentress & Benton. Donald Dell was one of the original partners there when a group of attorneys broke away to form a stand-alone sports marketing agency called Advantage. Dell headed up another sports marketing agency called ProServ. Advantage later was snapped up by international ad agency conglomerate InterPublic, which then rebranded the firm as Octagon.

Dell now works for a private-equity firm in Kentucky that acquired pieces of the last agency he ran when it dissolved. These days, he characterizes Octagon as a "major player" with "great relationships" and "great people skills."

But he questions whether the past accounting and financial woes of InterPublic affected Octagon's ability to grow through acquisitions.

"I think they've struggled very hard with their parent company," Dell said. "It would seem they don't have a rich parent bank behind them."

De Picciotto said Octagon intentionally chose to grow organically, and not through acquisitions, which he said has served the firm well to date.

"We had the opportunity to play that acquisition game and we consciously decided not to do that because the economics didn't make any sense," de Picciotto said.

Octagon has built a reputation of being a full-service firm for athletes, from negotiating and writing contracts to managing their personal finances. It also assists companies that want to advertise through sports. The firm has created a niche with its Olympic practice and has steadily been growing it.

In 2002, when the firm hired Carlisle, the division represented 25 Olympic athletes. That rose to 40 in 2004. This year, Octagon's stable includes nearly 50 athletes from 20 countries, among them swimmers Katie Hoff and Ryan Lochte, basketball player Chris Paul and tennis star Jelena Jankovic.

Octagon estimates that its Olympics division accounts for about 10 percent of its overall revenue, and margins tend to be higher than those from contracts with athletes in professional sports leagues, according to the company. League rules can cap agents' take on contracts at 3 to 5 percent. With no leagues to limit Olympians, an agent's cut can be as high as 20 percent.

InterPublic does not break out Octagon financial data, but Octagon's president has said that the athletes and personalities division has contributed double-digit growth numbers since 2001 -- net revenue rose 21 percent last year.

Still, it's a tough time to be selling clients, at least in the United States. Blue-chip firms are slashing budgets for advertising and marketing, and many still question how best to maximize the value of the Internet.

Octagon encourages its athletes to have an active hand in promoting their sports -- and themselves. It's not exactly a booming business, but Octagon is partnering with Phelps and other swimmers it represents in a new social networking site, http://swimroom.com. They sell DVDs, T-shirts, posters and other swimming memorabilia on the side, but its primary value so far is in expanding athletes' profiles beyond the Olympics and building interest in the sport. There's even a site that markets swim clinics with the Olympic stars, http://swimwiththestars.com.

At the Beijing Olympics, Carlisle watches Octagon's swimmers race from a perch in the nosebleed section of the Water Cube natatorium. The company's Olympics division has developed a complicated algorithm for valuing their clients' commercial worth. For most of them, it's all about maximizing sponsorships and appearances for athletes who have a 17-day window of play. For Phelps, Octagon's task has been to figure out how to create a sustainable global brand that will give the swimmer long-term commercial value.

Carlisle has firmed up four contracts so far for the Phelps victory tour, but will wait until the end of the games next week to sit down and present other offers. Phelps is already on board with Kellogg's, Speedo, Visa, Omega, Hilton, AT&T and PowerBar. Next week, Phelps and his team will sift through a growing pile of pitches for such products as Michael Phelps commemorative coins, oil paintings, sculptures and action figures. And they'll figure out what stops he'll make on tour.

It's a process that is not unlike one the company goes through as it assesses where to focus its own resources. With the downturn in the economy, de Picciotto said, the company has gotten queries from agents who are out on their own, but are looking for the security of an established company.

"Like an athlete, once an event has been performed, the focus has to be on the next one," de Picciotto said. "We always have to be replenishing the pipeline to remain current."