Study: Standing by Tiger Helped Nike's Bottom Line

CHICAGO (AdAge.com) -- Nike's decision to stick with Tiger Woods through his messy sex scandal may have paid off -- at least in terms of golf-ball sales, university researchers have concluded. Nike lost 105,000 golf-ball customers in the six months after the golfer's philandering went public. But the losses would have been even greater had they ditched him and would have cost the company $1.6 million in profits, according to the study released Thursday by Carnegie Mellon University's Tepper School of Business. The scandal hurt Wood's ability to attract customers, but "it wasn't so bad it eroded all his endorsement effect," said Timothy Derdenger, assistant professor of economics and strategy and a study co-author. "So they did make the correct decision to stand by Tiger," he said. But the study also illuminates how the downfall of one endorser can drag down an entire industry. Some people simply stopped playing golf in reaction to the scandal, leading to a loss of $7.5 million in profits for all golf-ball companies, researchers concluded. The study -- which used advance techniques to isolate Tiger's endorsement effect on consumer behavior -- found that Nike gained 4.5 million golf ball customers and $60 million in profit since 2000, when Woods first endorsed the golf balls. Researchers did not look at Nike's other Tiger-endorsed products, but concluded that if Nike got similar returns across product lines, the company has more than recouped the estimated $200 million in endorsement fees it has paid the golfer in the past 10 years. Still, golf ball sales trends -- used partly because data was readily available -- are not necessarily a good measuring stick for the Wood's many endorsement deals, many of which ended in the wake of the scandal. Woods brought value to golf equipment because his game is highly respected, even post scandal -- although his on-course struggles of late might dampen even that effect. By contrast, other non-golf brands were "using the goodwill of association and positive image associated with Tiger to sell products that Tiger really had no role in developing," said Marc Ganis, president of SportsCorp, a Chicago-based sports business consulting firm. That goodwill, of course, faded after Tiger's affairs came to light, and endorsers were "better off [moving on to] positive-imaged athletes," Mr. Ganis said. The companies dropping Woods include Gatorade, AT&T and Accenture, costing the golfer an estimated $22 million.

Study: Standing by Tiger Helped Nike's Bottom Line

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