According to a report from University of California, Davis, shareholders of Nike, Gatorade, and other Tiger Woods sponsors have lost a collective sum of up to $12 billion as a result of the professional golfer’s scandal and infidelities.
This reported sum is separate from, and noted as potentially much larger than any damage done to Wood’s own earnings from the sponsors. These assessments were made by economists comparing returns for Woods’ sponsors during this period to those of both the total stock market and of each sponsor’s closest competitor.
A professor of economics at the University said, “Total shareholder losses may exceed several decades’ worth of Tiger Woods’ person endorsement income.” Overall, the study concluded that everything surrounding Woods’ current situation in the media and in professional golf has reduced shareholder value in the sponsor companies by 2.3 percent, which equals approximately $12 billion.
The three sports-related companies (Tiger Woods PGA Tour Golf, Gatorade, and Nike) fared the worst out of the bunch, according to the study, “experiencing a 4.3 percent scandal-generated drop in stock value, equivalent to approximately $6 billion”, or half of the total.
The study looked at eight sponsors for which stock prices are available: Accenture; AT&T; Tiger Woods PGA Tour Golf (Electronic Arts); Gillette (Proctor and Gamble); Nike; Gatorade (PepsiCo); TLC Laser Eye Centers; and Golf Digest (Conde Nast).
The researchers note, “Nike and other premier sports-related sponsors are special for an athlete like Tiger Woods. They are themselves powerful brands that add value to Tiger’s brand and create other financial opportunities for him. This gives a premier sports sponsor the bargaining power to capture some of the profits generated by an endorsement deal with Woods – so that if the Tiger brand is tarnished, those profits may decline. Our study measures that decline.”
Fortunately for one sponsor, Accenture, which is a global management consulting firm, no ill effects were detected prior to the car accident and subsequent media storm.
To conclude, the researchers suggest, “Our analysis makes clear that while having a celebrity of Tiger Woods’ stature as an endorser has undeniable upside, the downside risk is substantial too.”
The ripple effect of Woods’ actions is beginning to surface in places many of us did not even think of when the allegations surfaced. It’s likely there is much more to come.