"Tigger" and the Cost of Infidelity

Since the calendar just flipped over to 2010, we are all now afforded the special opportunity to break our New Year's resolutions in record time. On this first day of the year, then, I'm taking aim at one that I made publicly on December 14^th. On that day I resolved not to write about Tiger Woods and his woes anymore, but now that those woes have touched others financially, it's rather easy to say, the hell with that.

As was observed yesterday several times by CNBC and others, Woods has now lost his sponsorship deal with AT&T, which actually seems a good thing from a sporting perspective. I mean, what's with a golf bag that reads "AT&T" anyway? A golf bag should read "Arnold Palmer," or "Slammin' Sammy," or at least involve the logo of a company that actually sells golf equipment. But that's to concentrate on the superficial, right? Woods won't be hosting the AT&T National anymore, but his Tiger Woods Foundation will benefit from that event, as per a contract that runs through 2014, according to the AP. However, AT&T has now joined Gillette and Accenture as commercial firms that have decided within the last month that it would be better to put Woods at more than an arm's length. Tag Heuer, the upscale Swiss watchmaker, is apparently putting him only at arm's length, indicating that they will "downscale" their identification with the golfer for the near future.

This is not a good thing from Woods perspective, of course, but what can he actually say? A record-holding philanderer really isn't in much of a position to say, "Hey guys, don'tcha think I'd be the perfect guy to pitch your product?"

As good as he is with the sticks, Woods has for years made far more money from endorsement and sponsorship deals, but that may not be the case very much longer. While Nike is standing by their man, even they may start to rethink that decision. Sure, it'll be a while before the public can actually picture the Tiger without a swoosh cap on his head, but according to a study done by economists at Cal-Davis, the sooner Nike starts the process of taking that cap off, the better.

According to Victor Stango and Christopher Knittel, who tracked stock market returns for the thirteen trading days between Woods' famous car crash and his announcement that he's taking some time off from golf to mend his family, companies that sponsored Woods lost between $5 and $12 billion dollars. The profs looked at those thirteen days and compared them to the previous four years of returns for the nine companies tied to Woods for which stock prices are available, including Nike. The results indicated a 2.3% decline in shareholder value, which translates to $12 billion. (The wide range of value lost presented in the final study reflects the fact that some of Woods' sponsors are owned by larger entities, and so other factors need to be taken into account. Gillette, for example, is owned by Proctor and Gamble. Nonetheless, even $5 billion is nothing to sneeze at.)

I mentioned all this by e-mail to a friend who is not particularly interested in sports. I try to bring all the Woods news I can to this friend, however, because he has dubbed Eldrick "the Tigger," which seems perfect. Tigger, we will all recall, was one of Winnie the Poo's buddies, specifically the buddy who bounced around randomly on his tail, usually upsetting the peace of the forest...much as Woods bounced around from Jamie to Jaimee to Cori, upsetting the peace of Elin, and - now - the peace-loving stockholders of at least nine companies. My friend responded: "Regarding 'the Tigger,' I suppose his mistake was in being an adulterer. Had he been a mere swindler, he may have come off better!"

I replied: "Hmm...that seems like some sort of trick question without a question mark. Isn't he arguably both? First, there's the nature of the endorsement swindle as such - no real work is done (aside, perhaps, from a few minutes worth of acting), albeit the swindlee usually agrees to the deal anyway. Second, isn't an endorsement more firmly a swindle if you aren't living up to the 'role-modeling' implicit (or written down) in the deal? Considering Cal-Davis' findings, wouldn't you sue this SOB if he had been endorsing your product?"

You see, if you're really rich and really famous, there's a lot more money involved in serial adultery than those hotel room charges. As the calendar page turns, Woods has a lot more to worry about than the wrath of Elin. He may also have several stockholder revolts on his hands come trading time Monday. For those stockholders' reference, the Cal-Davis study is available on-line at http://faculty.gsm.ucdavis.edu/~vstango.

Sources:

Svensson, Peter. "AT&T is latest to end Tiger Woods sponsorship." finance.yahoo.com 31 December 2009.

"Tigger from Winnie the Poo." just-poo.com. 1 January 2010.

"University of California, Davis study shows Woods' sponsors lost between $5B and $12B." thereporter.com [Vacaville, CA] 30 December 2009.