Behind Liu Xiang’s Withdrawal

By staff reporters Yang Binbin, Ming Shuliang, Zhang Boling and intern reporter Liang Dongmei

When Liu Xiang, China’s defending Olympic hurdles champion, limped out of the Beijing Games on August 18, a collective cry of shock rang out in China, where hundreds of millions had set their hearts on his next gold medal. His surprise withdrawal also stunned his global advertisers, who had huge sums at stake in his success.

But was everyone surprised? Although Liu was largely out of the public eye over the summer, officially because of his rigorous training schedule for the Games, rumors persisted that an old injury had worsened. Up until the last moment, state sports officials contended that Liu was fit to compete. Some suspect, however, that they had a strong incentive to keep things under wraps and hope for the best. After all, to the state sports system and his commercial sponsors, Liu was a golden property. He was a 100-million-yuan per year money machine who was selling everything from finance to athletic gear -- and helping pay for the sports system.

If money was the motivation for the apparent secrecy, the officials’ caution was well-founded. Within hours of Liu’s withdrawal, his commercial value was plummeting. Many sponsors issued quick statements of support, even as they were scaling back their advertising and, in some cases, calculating how soon they could drop Liu.

Moment of Decision

On the morning of August 18, the former world record holder appeared in the last heat of the first round of qualifying races for the Olympic 110-meter hurdles. He limped out of the block at the starting gun, took a few halting steps, and then pulled up when the second gun sounded to signal a false start. Liu Xiang didn’t take his mark again but left the field in intense pain from a tendon injury.

“We made plans for both a win and a loss. But we never expected him to withdraw,” said a public relations manager from one advertiser.

Confident that Liu was headed for a triumph would build their brands’ images, 12 sponsors paid 6 million yuan to 15 million yuan each for his endorsements. The 25-year-old Liu has been China’s most celebrated athlete since winning the country’s first men’s Olympic championship at the 2004 Athens Games. His gold medal made him a bankable sports star for advertisers wanting to expand in China’s fast-growing consumer market. It paid off for him, too: Liu’s annual income from endorsements reached 100 million yuan. Half that money would have gone to the sports system.

Yet almost as quickly as Liu exited the Games, advertisers were reviewing their strategies. Most said they wouldn’t cancel current contracts, but it’s less clear what will happen when those deals come up for renewal. For most advertisers, the decision will reflect their expectations of whether and when he will be a winner again.

“Not the Worst Outcome”

“We were stunned,” said Li Liandong, the public relations manager of Nike China.

Almost immediately, Nike and other sponsors -- including Coca-Cola, Yili, Visa and Amway -- offered public understanding and support. Some advertisers told that Liu’s withdrawal was not the worst possible outcome, from a marketing aspect.

The public relations director of one advertiser told that it might actually be better that Liu quit rather than lose. An advertising manager from another company said that Liu’s exit would have only limited impact on the company’s brand image.

However, Liu’s market value quickly took a hit. Ji Ning, director of the Beijing Olympic Economy Research Association, told that “the value of an athlete’s endorsement is [directly connected to] their championship.”

Within hours after Liu abandoned the Olympics, Nike had revised its print ad program in China. The ad still featured Liu, but the caption read: “Love sport, even if it breaks your heart.” That same day, Nike replaced Liu’s television commercial with a boy watching basketball game.

By the next day, Liu’s commercial for diary producer Yili had been removed from CCTV.

Those actions might have been just the start. Tao Jingzhou, a lawyer from U.S. law firm Jones Day, told that the withdrawal might affect Liu’s current endorsement contracts and advertisers’ decision on whether to whether to extend those deals.

A dozen advertisers signed contracts with Liu for endorsements in 2008, including Nike, Coca-Cola, Yili, Visa, Amway Nutrilite and Lenovo. Tao said he didn’t expect advertisers would terminate their current contracts, which might cause a public backlash, but some might not renew their deals.

A source from Liu’s commercial development team told that several advertisers, including Lenovo, have already indicated they will not extend their contracts, while others such as Yili and Coca-Cola are still studying the issue. But the same source said that Nike will definitely continue its relationship with Liu. In an effort to keep as many advertisers as possible on board, Liu’s agent team and his personal coach, Sun Haiping, cut his endorsement fee.

Before the Beijing games, the cost of using Liu’s name stood at millions of yuan. The total spent by his 12 advertisers was 100 million yuan, and it had been widely anticipated that another gold medal would drive the value of his endorsement even higher.

Worst-kept secret?

Many questions hang over Liu’s withdrawal: what kind of injury could have forced the hurdler to give up at the last second? If it was an old injury, as his coach claimed, why didn’t he pull out earlier? 

Within half an hour after Liu’s exit, Feng Shuyong, the head coach of the Chinese team, and Liu’s personal coach, Sun, held a press conference in the “Bird’s Nest” -- the Olympics Stadium -- where they told reporters that Liu had an “old injury” where the Achilles tendon attaches to the right foot, and the problem suddenly intensified during training on August 16.

A member of Liu’s medical team told that experts examined Liu’s injury on the night of August 16 and determined that it was “not very serious”. Tian Dexiang, an expert from the medical team, said Liu might have done something during the warm-up before the race that suddenly exacerbated the injury.

However, a senior manager from a sponsor of the Beijing Games told that he had heard about Liu’s injury more than a month earlier. In mid-July, some sports reporters also heard that an  injury might affect Liu’s performance in the Games.

A call room referee at the stadium told he was quite worried when he first saw Liu in the room. “When he came in, I felt there was something wrong.”

One hour before Liu’s exit, French TV station Channel+ published an item on its website, saying:  “Liu Xiang may quit the Olympic 110-meter hurdles due to a recent injury”. The report said that Liu confirmed his injury with a French athlete during the warm-up.

Chen Shuxun, the director of the media operations department of the Beijing Olympic Games Organizing Committee, on August 29 confirmed to that about one hour before the event, their team had learned from an “authoritative source” that Liu might not be able to participate in the race.

And some suspect that China’s Athletics Administrative Center took a daring and perhaps cynical gamble that it could keep Liu’s injury under wraps in the interests of national glory -- and business. During the lead-up to the Games, the Center refused to disclose the full extent of Liu’s injury and continued to promote the dream that he would defend his status in the Olympics.

A Summer Out Of Sight

After the May “Good Luck Beijing” Games, Liu virtually disappeared from the competitive arena, officially because he was preparing for the Olympics. During that period, the director of the Athletics Administrative Center, Luo Chaoyi, repeatedly assured the public that Liu had no injury and was in good condition for the Games.

Still, there were hints that not all was well.

On August 12, ten days before the final race of the 100-meter hurdle on August 21, Liu’s personal coach Sun made an entry to his blog in which he said he had been quite worried about Liu’s old foot injury, but that the athlete’s general condition was normal. And a domestic newspaper Oriental Sports Daily, in an August 18 report, quoted Sun as saying that Liu’s pain worsened after training on August 16.

But only on August 18, when Liu quit in agony as a global audience watched, did the real extent of his injury finally become evident to the public.

Nike and Liu Xiang

After Liu’s withdrawal, internet rumors flew that the last-second timing of his exit had been manipulated by sponsor Nike. Nike issued a hasty denial, saying “the company will report the issue to government department for investigation.” However, the company hasn’t disclosed further information about the case by August 29, when contacted the company. And Fen Shuyong, vice director of the Athletics Administrative Center, also rejected the claim.

Wang Dawei, an official from the center who is in charge of Liu’s commercial activities, told the withdrawal was a “personal decision” by Liu and he hadn’t discussed it ahead of time with his sponsors.

Liu has become Nike’s most important brand spokesperson in China since the company entered the market in 1980. The company signed its first contract with Liu, then 19, in 2002, after he won his first world championship in the World University Games. Nike has designed shoes for Liu and established a 20-person team working for him.

“If reporters wanted to interview Liu, they had to go through Nike,” said Yan Bei, a reporter at the China United Business News. “From what to wear to whose interview request to accept, Nike involves in everything,” said the reporter. Clearly, Nike was a key decision-maker in Liu’s life and career.

Who Owns Liu?

In just four years, Liu’s endorsement fee had jumped 50 times. His ranking in the “Forbes Chinese Celebrity List” also jumped, to second in 2007 from 71st place in 2003, just behind basketball star Yao Ming.

Liu’s star power was of immense commercial value to the Athletics Administrative Center, with two vice directors assigned full-time to supervise his training and commercial activities.

Under the current sports system in China, the General Administration of Sports and local sports bureaus take charge of almost every aspect of star athletes’ lives, and the system spends huge amounts on developing these competitors. Media reports have estimated the price tag of each gold medal is at anywhere between 60 million yuan and 700 million yuan. In return, athletes have to share their financial windfall from prizes and commercial activities with the state.

Under the regulations of the General Administration of Sports, the profits from Liu’s commercial activities are allocated among several parties: 50 percent to Liu, 15 percent to his coach, 15 percent to the Athletics Administrative Center and 20 percent to the Shanghai Sports Bureau.

With annual endorsement fees of some 100 million yuan, he was clearly a rain-maker. So the Athletics Administrative Center and Liu’s coach, Sun, naturally had a strong vested interest in making decisions on everything involving his life, from training to advertising.

Liu wrote in his autobiography “I am Liu Xiang” that “every day, there are numerous advertisers coming to me, but I just let my coach Sun Haiping deal with them.”

Clearly, Liu’s activities were strongly influenced by tough administrative regulations on the one hand and on the other, lucrative commercial interests. The two came into increasing conflict as Liu’s fame and value soared.

A source close to Liu’s team told that administrative regulations concerning Liu’s activities had on many occasions hurt the business interests of his sponsors. “You can not imagine that the U.S. Olympics Committee would order swimmer Michael Phelps not to attend a Visa banquet after he won his medals,” said the source.

Liu’s 55-year-old mother, Ji Fenhua, often said that her son was no longer all hers: “Now, he is the son of our country.” For the young hurdler, perhaps it was only at that fateful instant on the track, as the world watched, that he could decide for himself whether to take that first step.