Tiger Woods is still worth tens of millions of dollars in endorsement deals
But, Tiger's success has steadily declined over the past few years, and this season his performance has been downright abysmal. This has led some critics to question whether he's still worth the money he's receiving from endorsement deals.
Tiger's share of a billion dollar industry
The professional athlete endorsement industry spends approximately $1.1 billion annually on contracts with the biggest names in sports. Last year, Tiger Woods was the top-ranked endorser, raking in $65 million from a host of sponsors. This year, his endorsement deals are slightly less at $55 million, according to Forbes.
However, with Tiger's checkered past and poor performance on the golf course, it's no shock that his value to sponsors comes under fire. Despite breaking countless records -- like holding the No. 1 pro golfer title for the most consecutive weeks, being awarded PGA Player of the Year 11 times, and having more major wins than any other golfer -- Tiger's game has taken a rather significant turn for the worse.
Last weekend, Tiger failed to make the cut at Valhalla, finishing his last round with a score of 74. That marked "his fourth early exit in 66 major starts as a pro." He blamed his poor performance on lower back pain stemming from his fall into a sand trap during the Bridgestone Invitational tournament the week prior. The injury came just four-and-a-half months after he underwent surgery to relieve a pinched nerve in his back. On the advice of his physicians, Tiger announced earlier this month his withdrawal from the Ryder Cup, and that he would not be returning to the golf course until December.
Some advertisers have lost faith in Tiger
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| Source: ESPN |
Over the past seven years, Tiger has had a number of relatively serious injuries including a ruptured ACL, torn Achilles tendon, fractured tibia, inflamed neck joint, and a strained Achilles tendon (not the same one that was torn). Because of his injuries, and his highly publicized extramarital activities and subsequent divorce proceedings, Tiger's career has been nothing short of a roller coaster ride.
The question, though, is whether Tiger Woods is still worth the money advertisers are paying him. Apparently, some companies don't think so. When Tiger's infidelity scandal became front page news in 2009, his endorsement deals with AT&T (NYSE:T), Accenture (NYSE:ACN), Gatorade, and Tag Heuer were cancelled, losing him an estimated $20 million per year.
Electronic Arts (NASDAQ:EA) ended its relationship with Tiger at the end of last year, and it's been speculated that the loss of that endorsement deal is primarily responsible for the $10 million decrease in his earnings. After over a dozen video games bearing the pro golfer's name, which generated something in the range of $800 million for EA, the video game developer announced the termination of the arrangement, stating that it was a mutual decision.
Endorsing Tiger's future
Since the dust has settled on Tiger Woods' extracurricular activities and his covert bedroom hijinks are old news, several companies now endorse the athlete. Tiger's website lists his official sponsors, which include big names like Rolex, NetJets, and Nike (NYSE:NKE), among others.
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| Source: Rolex |
Rolex inked a deal with Tiger just months after he was dropped by competitor Tag Heuer. The company branded the deal "a partnership for a new challenge" and apparently had little concern about the media firestorm surrounding the golfer's indiscretions. In its official statement following the announcement of the endorsement deal, Rolex stated,"This association pays tribute to the exceptional stature of Tiger Woods and the leading role he plays in forging the sport's global appeal. It also constitutes a joint commitment to the future." Clearly, Rolex has confidence in Tiger's ability to continue successfully representing the brand and generating revenue.
NetJets, which offers fractional ownership arrangements of private jets to the affluent, is a subsidiary of Berkshire Hathaway (NYSE:BRK.A) and has sponsored Tiger Woods since before his divorce scandal. In his annual letter to shareholders, Warren Buffett stated that NetJets revenue and profit increased 7.5%, or $288 million, in 2013. Like Rolex, NetJets focuses on an affluent demographic and highlights the finer points of a wealthy lifestyle. The brand remains unaffected by scandals, and Buffett seems to have faith in the future of Tiger's career.
Perhaps the most notable company to continue endorsing Tiger Woods is Nike. Since the start of his pro career in 1996, Nike has maintained a mutually successful, unbroken relationship with Tiger. Last year, Tiger's agent stated that, "He expected the next contract to keep the 14-time major tournament winner with the company for the rest of his career and leave him as Nike's highest-paid golf endorser." Forbes reported that Nike's golf division, which was built entirely around Tiger Woods, brought in $791 million in sales during the company's fiscal year 2013.
Final thoughts
Clearly, Tiger Woods -- as a spokesperson -- still holds tremendous value. His golfing career, despite currently being at its lowest point, is not over. Furthermore, Tiger's future performance on the golf course, no matter how many tournaments he wins or loses, will not change what he has accomplished or otherwise diminish the numerous records he has broken. The public has a short memory when it comes to scandals, and in this case Tiger's whirlwind rise to young golf legend carries more weight with the public -- and more importantly, with advertisers -- than the trending tabloid headlines.
Article originally appeared on Seeking Alpha (08/20/14)
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