What Tiger Woods Is Worth to Golf and its Advertisers

When Tiger is MIA, every golf sponsor suffers not just Nike. In fact, television ratings plummet 30% and some experts estimate the golf industry as a whole takes a $15 billion hit.

Apr 23, 2014 at 10:37AM

Tiger Woods hasn't won a major since he returned to the PGA Tour after resurrecting his career from a personal scandal. However, he has regained the top spot in the world rankings. He's also -- love him or hate him -- a huge money generator for all of golf, not just his sponsors like Nike (NYSE:NKE).

The $15 billion problem
Josh Sens of golf.com pegs the cost of a missing Tiger at 30% of the $68.8 billion golf industry -- or $15 billion. However, it's just a guess based on the impact of Tiger's absence at golf events throughout the years, which usually causes about a 25% to 30% drop in televisions ratings, according to Brad Adgate of Horizon Media.

One thing is certain -- the drop-off is real and it's significant. Online ticket broker Stubhub reported a 20% drop in Masters' ticket prices one day after Woods announced the major was a no-go. Another ticket reseller, TiqIQ, saw an over 60% decline of sales of first-day badges in the secondary market due to Tiger's injury.

Nike wants Tiger back
Marketing research firm Repucom estimated that Nike would lose more than $3 million of "media value" due to Woods' absence at the 2014 Masters. In 2013, he was featured on air for approximately 50 minutes, which translated into $3.8 million in "media value." Without him, Repucom says the sportswear giant will only get about $700,000 of exposure.

The polarizing effect of Tiger
Here's an interesting thing about Woods. Research by Celebrity DBI, Repucom's sports-marketing research division, shows Woods is one of the most recognizable (98% in U.S. and 80% in the world) and least trusted (bottom 5%) celebrity product endorsers. Adam Scott, who won the 2013 Masters, leads the golfing endorsers, winning the trust of nearly 88% of people in the U.S., followed by Phil Mickelson (86%), who did his part to add to this year's Masters' rating woes by missing the cut. Masters' runner-up Jordan Spieth (85%) garnered great exposure for Under Armour (NYSE:UA) and came in ahead of Nike's other golf pitchman, Rory McIlroy (81%), as a trusted endorser. 

Repucom

Source: Repucom

People may not trust Tiger enough to buy a product from him, but they sure like to watch him play the game of golf. Whether he wins or loses, drains a long putt or hooks a drive, pumps his fist or slings an expletive, he's good television and he keeps viewers in front of their sets -- and that's good for all of the companies that advertise with and sponsor golf.

Why every advertiser wants Tiger back
This year the weekend coverage of the "Tiger-less" Masters had its worst showing in 20 years, averaging an audience of 8.6 million viewers in 6.4 million homes. The final round had a 7.8 rating, the lowest since 2004, even with future star Spieth vying for Woods' record as the youngest golfer to win a Masters championship. That's a 24% drop from Sunday's numbers in 2013 (10.2 rating) when Scott won and a 35% drop from 2012 (12.0 rating) when Mickelson put on the green jacket. 

Not all of that was due to Tiger's absence, but hardly anybody would argue it had a huge impact. In a sense, every company that moves its brand through golfers and golf should be paying some kind of royalty to Woods, or at least praying he has a speedy recovery. Woods is the only golfer who can move the needle on ratings and that's good for companies across the board.

A Foolish argument
You may not like Tiger. You may not trust him. But even a fool can't argue the fact that he's great for the business of golf. In fact, all other "trustworthy" endorsers' value increases about 30% when Woods steps on the course, as he attracts and keeps 30% more eyeballs glued to the television set.   

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Chris Brantley has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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