Cited: LiveScience

It is theorized that the extramarital affairs of Tiger Woods could conceivably cost of public money if they have stopped in any one of the companies that sponsor him or a mutual fund that might hold stock in those companies. In fact, a new study that has not yet been published has discovered that the market value loss to companies that sponsored the golfer has already lost at least $12 billion.

The estimate is separate from whatever money Woods himself may lose as a result of his missteps. The golfer was thought to make about $100 million a year in endorsement income.

“Total shareholder losses may exceed several decades’ worth of Tiger Woods’ personal endorsement income,” said Victor Stango, a professor of economics at the University of California, Davis and co-author of the study.

Stango and a colleague looked at stock market returns for the 13 trading days that fell between Nov. 27, the date of the car crash that ignited the Woods’ scandal, and Dec. 17, a week after Woods announced his indefinite leave from the sport. They compared the stocks to the total market and to competing stocks, plus they looked back four years to get a sense of how the stocks have historically done in comparison to the market and to competitors.

The study focused on nine sponsors: Accenture; American Express; AT&T; Tiger Woods PGA Tour Golf (Electronic Arts); Gillette (Proctor and Gamble); Nike; Gatorade (PepsiCo); TLC Laser Eye Centers; and Golf Digest (News Corp.).

Overall, the researchers figure the scandal reduced shareholder value in the sponsor companies by 2.3%, or about $12 billion.

“(This) pattern of losses is unlikely to stem from ordinary day-to-day variation in their stock prices,” the researchers wrote.

Investors in the three sports-related companies (Tiger Woods PGA Tour Golf, Gatorade, and Nike) fared the worst, the study found. They experienced a 4.3-percent scandal-generated drop in stock value, equivalent to about $6 billion.

On the other hand, Accenture, a global management consulting firm, experienced no ill effects following the accident.

“Nike and other premier sports-related sponsors are special for an athlete like Tiger Woods,” said UC Davis economics professor Christopher Knittel. “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.”

“Our findings speak to a larger question of general interest in the business and academic communities: Does celebrity sponsorship have any impact on a firm’s bottom line?” Stango said. “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.

On December 11, when Tiger announced his leave from the sport, the pace of stocks losing money did slow according to Knittel and Stango. However, those losses for shareholders had still not reversed by December 17.

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My Take: You know I think it is absolutely ridiculous that accompany should be affected by the personal life of a sports figure or celebrity the only thing the company did wrong was choose the wrong person to advertise with them. It should not reflect on the company itself or their products. If that was the case with every single business that sponsored a celebrity or sports figure, they would be looking at commercial debt restructuring every time they turn around. Or even worse, a commercial mortgage foreclosure.

Let’s go off the grid here and you something different as an example. Let’s say a celebrity is outed in the newspapers as getting hair grafts. Then, six months later, that celebrity is losing all their hair. That does not mean that a transplant doctor is at fault! It is more likely that the celebrity did something they were not supposed to do the cost of problem. Of course, the doctor could be at fault, but why jump to the conclusion that he is when he may not be?

It seems to me that Tiger Woods is the one having more problems. He will probably be looking at Eagan MN homes for rent because his wife found out. Of course, he will have to apply to property management companies to be eligible to rent any of those homes and that could present problems. So I think he is the one having more problems than the sponsors

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