Even Injured, Tiger Still Sells
What's the economic impact of the world's best golfer missing the rest of the season? Minimal.
Tiger Woods' season-ending injury has some in the sports business world very, very worried. Reports of a "Tiger effect"—the fear that people, in droves, will stop watching golf or buying products associated with Woods—have set off a mild panic. Buick has canceled one of its promotions, and several fans have called the Western Golf Association, which runs the BMW Championship (scheduled for Sept. 7), and asked for ticket refunds.
But unless you're a marketer for the PGA Tour—and readying a campaign to convince people that they should get excited over Anthony Kim and Ryuji Imada—it's time to take a deep breath, and maybe an Ambien. Despite Woods' absence, Nike is still going to continue making golf apparel and equipment. Gatorade hasn't asked its Gatorade "Tiger" drinks to be pulled off the shelves; and Electronic Arts isn't changing the late-August release date of Tiger Woods' PGA Tour '09.
Yes, Tiger Woods is out. But the notion that he'll cripple the companies with which he has sponsorships is complete bunk. Tiger makes more than $100 million in endorsements based on the thought that he can help lower the average age of the Buick owner, help differentiate Accenture from the rest of the consulting world, and give the Gillette Fusion an edge over the Schick Quattro. Maybe he does or doesn't, but Tiger's temporary absence doesn't mean sales will plummet.
Nike will be the hardest hit, since its golf division is the only business that wouldn't have existed without the Amazin' "Cablinasian" (the term Tiger coined to refer to his racial makeup of being Caucasian, Black, American-Indian, and Asian).Shirts that the company brass had already laid out for Tiger to play in for the British Open and PGA Championship now will have to hit stores without the four-day advertisement that comes with Tiger playing (and often winning). Assuming a perfectly healthy Tiger would have played in nine more tournaments and, conservatively, won four of them, about $70 million worth of exposure for its swoosh logo will also be lost in equivalent advertising time, according to sponsorship evaluation firm Joyce Julius & Associates.
But this is the world's largest shoe and apparel company; the impact will be as small as a dimple on a golf ball. The Nike golf business is worth $700 million—less than 5 percent of Nike's entire worldwide business of $16 billion. Figure Nike golf has done half its business for the year already. I'm down to 2.5 percent. Now figure that 50 percent of sales are because of Tiger and that 25 percent of people now won't buy something because they didn't see Tiger using it. What's my projected impact to Nike on Tiger not playing? A $43 million sales loss and a $70 million exposure loss.
Then we have Buick. A golf clinic scheduled for Tuesday at Comerica Park as part of next week's Buick Open has been canceled in light of Woods' announcement. The complete price of the clinic ticket will be refunded. But to assume a huge impact here is to assume that this endorsement ever worked—which, for the most part, it has not. Although General Motors officials might point to the fact that specific Buicks have been purchased by younger people, the average age of the buyer is still relatively the same. It's not Tiger's fault. He always arrives at the course in a Buick. And it's not really Buick's fault. I've found that the most expensive item people will buy from a sports endorsement is typically a shoe. So the only loss I can calculate here is an exposure, rather than a bottom-line, loss.
Gatorade should feel a slight pinch from Tiger's absence. In February, the PepsiCo brand launched Gatorade "Tiger," a subline of three flavors inspired by Woods and engineered to his specifications (it has slightly more sodium and potassium than everyday Gatorade). In a CNBC.com poll upon the announcement of the deal, 79 percent of respondents said they would try the drink. But with cryptically named varieties (Quiet Storm, Red Drive, and Cool Fusion) and not-so-unique flavors, the brand's long-term success will rely more on the actual product placement of Tiger drinking it on the course. I once projected that Gatorade Tiger would do $150 million in gross sales this year. Let's say sales will be down 25 percent from now on. That's a loss of about $19 million in gross sales. Since it's a licensing deal, a projected loss of $1.2 million to Woods. Again, statistically insignificant numbers to both PepsiCo and the man who is on target to become the first billion-dollar athlete.
Neither is Procter & Gamble reeling today because one of their three spokesmen—Tiger, Roger Federer, and Thierry Henry—for Gillette Fusion razors has gone down for a few months. Does affinity for Woods really sell razor blades, anyway, when compared with, say, the number of blades you choose or whether you go for the vibrating option? (Suggestion to Gillette: Install a viewable webcam in Tiger's bathroom, proving that his injury hasn't stopped him from shaving.)
And how about Accenture, the consulting company that has made Tiger Woods a staple of almost every airport wall? Again, it's hard to imagine any tangible benefits from this deal in the first place. Aside from advertising in the Wall Street Journal, I'm lost as to why it's important to establish the Tiger-Accenture relationship. How many clients will leave because Tiger went down? I'd guess none.
As for Electronic Arts, maybe they should delay the release of the latest Tiger game. That will just build the audience for when he returns.