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SAN FRANCISCO (Reuters) - Kellogg Co became the first major consumer firm to terminate an endorsement relationship with Michael Phelps, as a media storm over a picture of the Olympic champion apparently smoking marijuana begins to eat into his lucrative endorsement deals.
The world's largest cereal maker said on Thursday it would not extend a contract with Phelps, who charmed audiences in Beijing last year with a record-breaking, eight-gold medal haul, saying the photo of the swimmer was inconsistent with its public image.
Phelps, estimated to make millions of dollars annually from marketing deals, issued an apology this week after a British newspaper published a photograph purportedly showing him smoking marijuana during a student party at the University of South Carolina in November.
Advertising experts said the news had tarnished Phelps' image and would cost him marketing dollars.
"Michael's most recent behavior is not consistent with the image of Kellogg. His contract expires at the end of February and we have made a decision not to extend his contract," spokeswoman Susanne Norwitz said in a statement.
Norwitz said the deal with Phelps was originally intended to "support our association with the US Olympic team. We did not renew our relationship with the US Olympic Team, which expired in December 2008."
Phelps, winner of 14 Olympic medals, became the nation's darling after he won eight gold medals at the Summer Games in China's capital, edging out previous record-holder Mark Spitz for most golds garnered at a single Olympics.
The photograph at the center of the media frenzy was published by Britain's News of the World last week. It showed the 23-year-old Phelps inhaling from a glass pipe.
The smiling face of the popular U.S. athlete has appeared on Kellogg's Frosted Flakes and Kellogg's Corn Flakes cereal boxes. Kellogg's, which markets its food to families, is the first major brand to drop Phelps, citing the incident.
Phelps has signed several endorsement deals worth millions of dollars with brands including Speedo swimwear, Omega watches, Visa Inc, Subway sandwiches and Hilton Hotels Corp.
Last August, Phelps reportedly was earning about $5 million a year from endorsements, but his agency has not commented on that figure.
After the photograph surfaced, sponsors Speedo and Omega stood by the athlete, saying they had no plans to pull Phelps from campaigns.
Endorsement deals often include clauses that allow sponsors to terminate deals early if they feel an athlete has behaved poorly in public, hurting the sponsor's brand image.
Editing by Edwin Chan, Leslie Gevirtz