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Tiger’s Infidelity Is Impacting Many, Costing Billions

{ Posted on Jul 22 2010 by Marcus Alston }

Ever since Tiger Woods was forced to come clean and admit his marital infidelity on December 11, 2009, I have been wondering how much we would all suffer financially.

First, his image and reputation took a huge hit. He was no longer Tiger the superhuman or robot, with an unparalleled focus and discipline. He was now human, with a weakness, and an embarrassing problem that would later cause him to enter therapy for a “sex addiction”.

Second, he took an indefinite leave from golf which lasted 20 weeks to focus on his marriage which caused him to miss some tournaments, visibility and paydays.  He even missed his own charity golf tournament, the Chevron World Challenge. Golf suffered as well because the tour missed it biggest cash cow. As great as Phil Mickelson can be, he is not Tiger Woods.

Third, Tiger lost key sponsors although not all of them left him. However, he also lost potential new endorsements and his air of invincibility, discipline and integrity.

Fourth, he lost our trust. We can’t trust Tiger any more on any issue. In addition to his infidelity, some are wondering if his ability and chiseled physique are all natural. Did he take steroids? Most would have never thought to question Tiger on this, but now? And his treatment by Anthony Galea, a Canadian sports doctor under investigation by the FBI for allegedly providing the drug Actovegin and human growth hormone to athletes does not help either.

Accomplishments.  Among other things, at 34 years of age, Tiger has won 14 professional major golf championships, which is good for the second highest total of any male player (Jack Nicklaus leads with 18). Tiger has 71 PGA Tour events which is third all time. Tiger has more career major wins and career PGA Tour wins than any other active golfer. He is the youngest player to achieve the career Grand Slam, and the youngest and fastest to win 50 tournaments on tour.

Tiger returned from his layoff for the 2010 Masters on April 8, 2010. Experts speculated that as soon as Tiger hit his stride and played like “Robotic Tiger,” fans and sponsors would fall in love with him again. Well his return has been un-Tiger like and sad so far.  Folks are questioning whether he can ever achieve his pre-scandal form.

Sponsors Take Cover and are Hurt. Major sponsors PepsiCo (Gatorade), Gillette, Accenture, and AT&T dropped their sponsorship of Tiger. TAG Heuer and Electronic Arts have stuck with Tiger. Tiger’s estimated endorsements for 2010 are down $22 million compared to 2009 according to Sports Illustrated’s annual analysis of the highest-earning American athletes.

According to a study by Christopher R. Knittel and Victor Stango, economics professors at the University of California at Davis, in the first 2 weeks of the scandal alone, his top sponsors (Accenture, Nike, Gillette, Electronic Arts and Gatorade) lost 2-3 percent of their aggregate market value. Electronic Arts, Nike and PepsiCo (Gatorade) lost over 4 percent during this period. This represents an estimated $5 billion to $12 billion loss in wealth for shareholders of these companies.

Everyone Impacted. Tiger’s infidelity and poor play upon his return has delivered a big blow to the fans, PGA Tour, TV networks, corporate sponsors, restaurants, bars, sporting goods stores, and other businesses that rely on Tiger to help generate revenue. Some have called it the “Tiger Recession”.

TV ratings and Fans Suffer. Tiger brought great interest to golf and attracts the non-golf fan. When Tiger has been out on injury and during his indefinite leave, the Nielsen ratings suffered.  Also, when he plays poorly and is not in contention, the ratings suffer and many fans are disinterested—including me. Unfortunately with fewer eyeballs on the television watching Tiger and golf, the lower the advertising revenue.

Divorce Settlement. Tiger has reportedly earned $1 Billion (the first athlete to do so), but factoring in taxes that were taken out of his earnings, is only worth $600 million. How much his wife Elin Nordegren (pictured below) will get in a divorce settlement is to be determined.

Pictured, Elin Nordegren, Tiger’s Wife:

Financial Advice to Tiger. Tiger, you destroyed your brand and image so badly that unless you can recreate yourself, I do not think you can expect to recover from the financial damage you have caused yourself.  You also have to play better and return to your old form if you have any chance of restoring your image as possibly the best golfer to ever play the sport.  Learn from your mistakes and do not repeat them.  If you are not ready to commit to one person, then do not commit and do not cheat.  Be up front.  Control your debt and act more frugal too because even with $600 million, a good portion is going to your wife and kids (which it should in this case, especially since you messed up), and your lifestyle is quite costly (multiple houses, cars, a huge $20 million, 6,500 square foot yacht that includes a master suite, six staterooms, a theater, gym, and Jacuzzi).  Don’t become another broke athlete like Antoine Walker or Allen Iverson or overspend a lot of your earnings like Shaq.

Do you think Tiger can bounce back?  Will Tiger end up broke?  Write me a comment below.

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5 Responses to “Tiger’s Infidelity Is Impacting Many, Costing Billions”

  1. nice post. thanks.

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