Woods’ scandal costs sponsors $5 to $12 billion

Sponsors of golf superstar Tiger Woods have lost around $5 to $12 billion since reports of his extramarital affairs broke out, a new survey has said. The new study by the University of California, Davis (UC Davis) examined stock market returns for the 13 trading days that fell between November 27, the date of Woods’ car crash and December 17, a week after the sports champion announced his indefinite leave from the golf. Two UC Davis economics professors, Victor Stango and Christopher Knittel looked at eight of his sponsors – 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).

“Total shareholder losses may exceed several decades’ worth of Tiger Woods’ personal endorsement income,” said Stango, noting that these are separate and much larger than the golfer’s own earnings, who before the scandal got about $100 million a year in endorsement income, more than any other athlete. “This pattern of losses is unlikely to stem from ordinary day-to-day variation in their stock prices,” the researchers said, based on conclusions that the scandal reduced shareholder value in the sponsor companies by 2.3 per cent, or about $12 billion.

The study also finds that three sports-related companies – PGA Tour Golf, Gatorade and Nike – have been worst hit, experiencing a 4.3% drop in stock value, equivalent to about $6 billion. “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 sustainable too.

The scandal exploded following an accident on November 27 when Woods crashed his SUV outside his Florida mansion sustaining minor injuries. His wife Elin had to use a golf club to break the back window of the SUV to rescue him. The accident may have occurred following a fight with Elin accusing her husband of having an extramarital affair. Since then, ten women have claimed to have been involved with Woods, out of which eight have been named. Since the day of the accident, Woods has not been seen in public and US tabloids are reporting that this may be due to cosmetic surgery to repair a broken tooth following a fight with his wife who chanced upon a text message from one of theĀ  woman he was having an affair.

You might also be interested in

The 3 Week Diet