Tiger Woods is a money machine, and, while many fans might think he earns most of his money by winning golf tournaments, it’s his outside commercial endorsements and ventures that bring in 90 percent of his money.
He’s made an estimated $1 billion in endorsements in his 13-year career, the most of any athlete ever, far eclipsing Michael Jordan’s athlete-as-mega-business model of the 1990s. Sports Illustrated estimates he’s now bringing in almost $100 million a year pitching products.
What this means: Woods is not dealing just with medical recovery, marital strife and legal headaches following his car crash last Friday morning. Enormous financial issues are at stake.
Woods has become the $100 million-a-year man not only by consistently winning major championship titles,
but also by translating that into a winning image off the course. He was one of the most recognised faces on the planet, without a whiff of scandal in his wake. No steroid accusations, tabloid pictures of late-night partying, strippers filing paternity suits, police reports, or any of the other issues that have turned many famous athletes into endorsement pariahs.
Long term damage
The worst thing that’s been said about him is that he needs to better control his often-petulant temper on the golf course - a trait that his boosters have pointed to as part and parcel of being supremely competitive.
I have talked to some experts on sports endorsements and the value of celebrity-hood - none who wanted to be seen jumping on Woods at a vulnerable moment by being quoted by name - and the consensus is that only some of Woods’ commercial money-makers are at current risk. But some damage has already been done to his long-term brand.
Let’s break down the numbers.
Unless the story turns out to be far more sordid than what is hinted at now, it appears Woods is safe on his deals with Accenture, a global management, consulting and technology-services firm that sponsors him. Ditto for his arrangement with the EA video-game series, “Tiger Woods PGA Tour.” It’s a top seller, and buyers are unlikely to be swayed by whether or not he was cheating on his wife.
The same is true for Tiger Woods Design, which Forbes estimates contributes about $10 million annually to his income. In this company, Woods lends his name to far-flung projects - general golf-course developments - under construction from Dubai to North Carolina. A course in Mexico is expected to begin construction in a few months.
However, some of his largest endorsements - brands with more mainstream images - could be threatened if Woods dithers and the personal story gains a tawdry steam. With a large pool of athletes to choose from, large companies are extremely reticent to tie their products to anything with the whiff of scandal.
His biggest money-maker is Nike. Woods wears Nike clothing from head to toe, and with the exception of his putter, uses only Nike clubs and balls. Sales of golf equipment to wannabe Tiger duffers is an enormous business for Nike. Woods signed a new multiyear deal with Nike in December 2006, and, though the terms were not released, his five-year deal in 2001 was widely reported to be worth $100 million.
Another company susceptible to changing public opinions about a celebrity endorser is Gatorade. In March 2008, Gatorade introduced Gatorade Tiger, Woods’ first licensing agreement and his first deal with any beverage company. Golfweek reported that the deal was for five years and could pay Woods as much as $100 million. Woods even picked out the flavours himself: cherry blend, citrus blend and grape.
Another potential problem for Woods is Gillette. In 2007, along with soccer star Thierry Henry and tennis player Roger Federer, Woods signed with Gillette as part of their “Champions” campaign. The deal was estimated to be worth upward of $20 million. And when GM ended its $7 million deal with Woods earlier this year, which earned them a spot on his golf bag, the empty place was picked up by AT&T for an undisclosed amount, but rumoured to be nearly $10 million a year.
A lot of money
Some damage has already been done, and when you’re dealing with stratospheric numbers like those for Tiger Woods, that’s a lot of money. Even if Woods takes a 10 percent hit on his endorsement income going forward, that’s $10 million a year, or $100 million over the next decade. A very expensive domestic incident.
The next few days will be critical in seeing if it gets worse. Where was he going at 2:25 a.m.? Why couldn’t he drive his SUV around the same fire hydrant and tree he’s avoided hundreds of times during the years he’s lived in that Florida compound? Did his wife, Elin Nordegren, smash the rear window of his Escalade in a frenzied effort to get her husband out of the wreck, or was she chasing him with the club and smashed the window in a furious rage over published reports of an extramarital affair? Was Woods taking prescription drugs? (Depending on the type of medication, under Florida law, Woods could be exposed to charges under the state’s DUI statute, which outlaws driving while impaired by not only prescription medications, but even some over-the-counter meds.) If so, which prescription pills was he on? Any psychotropic drugs could be a body blow for the superstar whose charm is in large part his easy, all-American, trouble-free persona.
The longer Woods waits to explain what happened, the more the tabloid fodder will grow. When Kobe Bryant was charged with sexual assault in 2003, he quickly held a press conference in which he admitted his infidelity. It was a key moment in which Bryant levelled with his fans and his sponsors. Woods has to make the same decision, and fast.
His statement posted late Sunday on tigerwoods.com only scratched the surface.
While admitting the accident was “embarrassing” and saying “I’m human and I’m not perfect,” he also summarily dismissed the many rumours as “false, unfounded, and malicious.”
Woods wasn’t more forthcoming, instead saying: “I deserve some privacy.”
His corporate sponsors might not agree. Honesty, although painful, is the only option to ensure his trademark stays strong.
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