Career Suicide for Dopey Behavior By Phelps?

This is a rush transcript from "On the Record ," February 2, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Olympic gold medalist swimmer Michael Phelps has been caught on camera smoking pot. Now, take a look at this shot. That's Phelps last November, smoking marijuana out of a bong at a college party in Columbia, South Carolina. About the picture -- Phelps has released a statement saying, "I engaged in behavior which was regrettable and demonstrated bad judgment. I'm 23 years old, and despite the successes I've had in the pool, I acted in a youthful and inappropriate way, not in a manner that people have come to expect from me. For this, I am sorry. I promise my fans and the public it will not happen again."

Joining us live is Michael McCarthy, sports business reporter for USA Today. Mike, what's going on in this young man's life?

MICHAEL MCCARTHY, USA TODAY: Well, like you said it, What was he thinking, Greta? I mean, getting caught up in drugs is one thing, but then to smoke pot in public, where anybody could take a picture of you at a party, is just crazy behavior.

VAN SUSTEREN: Well, he's had other sort of crazy behavior. After the Olympics in 2004 in Athens, he got picked up for a driving drinking infraction.

MCCARTHY: That's right, this is strike two for Michael Phelps. And he's got to be very careful there isn't a strike three. Not only has this hurt his image with fans who love him, but potentially, he could be throwing away $100 million endorsement career here. I mean, when he came back from Beijing, while he was still in Beijing, his agent couldn't even take all the phone calls of people who wanted to hire him. And now a couple of months later, we have this.

Thankfully, he did the right thing from a PR standpoint, which is immediately say you're sorry and promise that you're never, ever going to do it again. I think that was a smart move on his part.

VAN SUSTEREN: And 23 really is young. I realize there are a lot of people who have families by that age or are fighting in Iraq or anything else, but you know, for most of us, 23 is pretty young.

MCCARTHY: Right. You could make the argument that he's blowing off some steam here. Here's a guy, you know, who trained and lived like a monk for so long. And you know, here, this picture was taken at a time when it was down time, he wasn't in training. He wasn't in competition. He was at a party having a good time. Did he go too far? Absolutely. But you know, I think he's a type of kid who's smart enough that he'll learn from this, and hopefully, won't do it again.

VAN SUSTEREN: And of course, it is breaking the law, which is a whole 'nother issue. All right. Endorsements -- what endorsements does he have? And are any at risk from this?

MCCARTHY: Well, so far, the endorsers are backing him, but there's only been a couple that have publicly supported him. Speedo, which is his main endorser, which paid him a $1 million bonus this year, is supporting him. And Omega has come out in support.

But Greta, the day is still young. A lot of these sponsors, such as Kellogg's in Battle Creek, Michigan, which signed him to front Frosted Flakes and Corn Flakes, hasn't been heard from yet, and a couple of others haven't been heard from. So marketers tend to move very slowly. They test the wind and see how the public is reacting before they decide what they're going to do.

VAN SUSTEREN: You know what? I would be suspicious, though. I assume there's a morals clause in every single one of his contracts (INAUDIBLE) endorsements. In light of the economy being as it is, it might give someone who maybe over-invested in him last summer a chance to pull out of because, you know, you have -- you know, you have a morals clause in the contract. So if you can't afford it now, here's your out.

MCCARTHY: That's a great point. I mean, all bets are off in this economy. If you have a company that's not doing well and they've got millions of dollars tied up in Michael Phelps through the 2012 Olympics, this might be a chance for them to say, You know what? You have a morals clause, you violated it, we're out.

Watch Greta's interview

VAN SUSTEREN: What does he do all day now?

MCCARTHY: Well, he's back in training, according to his coach, which -- you know, a lot of athletes, they need that kind of regimen. They need that familiarity, the familiar schedule. And maybe that was one of the things that got him in trouble. He was out. He was out in Vegas. If you believe the reports, he was partying, you know, all over. So you know, getting back on his training schedule I think will be very good for him.

VAN SUSTEREN: What about that girlfriend that he had for a while that made the news? Is she still in the picture?

MCCARTHY: You know, I can't even keep track with his supposed girlfriends. I mean, I think half of them are figments of the press's imagination. Supposedly, one of the reasons why he was down at the University of Southern (ph) Carolina is because he was dating a young woman who was going to the school, which led to these pictures.

VAN SUSTEREN: You know, you sort of wonder, like, you know, what's his future? I mean, you know, peaking at -- I don't know if he peaked at 23, but it's sort of hard to think he can go beyond what he achieved in Beijing. You know, it's sort of -- you know, it's peaking awfully early in your life.

MCCARTHY: He's -- he peaked awfully early. But you know, he has built up such an incredible reservoir of good will. I mean, so many people love him. So many people admire him. He became like Tiger Woods there for a while. And I think he's going to be able to cash that in at a tough moment like this. People have so many good feelings toward him, he should be able to ride this out.

VAN SUSTEREN: I don't know. You know, I -- I think that what he did was stupid, but I hope everyone gives him a pass on this one, even though he's got that other -- he's 23 and he's given so much excitement in the pool that -- he's admitted he's wrong -- that I'd say we should all drop it. What do you think?

MCCARTHY: I think that is right. I mean, I think you give the guy another chance. And like I said, he's got two strikes against him. Hold him to his word. He says this will never, ever happen again. Well, if it happens again, then it's a different story.

VAN SUSTEREN: Indeed. Michael, thank you very much.

MCCARTHY: Thank you, Greta.

Content and Programming Copyright 2009 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.