Friday, September 15, 2000
Is Tiger worth that much money?
By DOUG FERGUSON
AP Golf Writer
Tiger Woods formally signed a new five-year
endorsement contract with Nike on Friday as industry analysts
tried to answer the $100 million question.
Is a golfer worth that much money?
“Part of that answer rests with what
Nike's ultimate goals really are,” said Bob Williams of Chicago-based
Burns Sports Celebrity Service, which matches athletes with corporate
sponsors.
“The good news is they found Michael
Jordan's replacement as the most marketable athlete in the world,
and the best athlete in the world.”
The downside, Williams said, is that golf
is a niche sport that doesn't reach the masses and doesn't have
the television ratings the NBA pulled in during the Jordan era.
“How much growth is there in golf?”
Williams said. “And how much can Nike capitalize?”
The deal is worth an estimated $100 million
over five years, according to a source close to the negotiations
who spoke on condition of anonymity. It is believed to be the
richest endorsement contract in sports, depending on how that
is defined.
Williams said Jordan made as much as $25
million a year, depending on sales. Former heavyweight champion
George Foreman recently sold his likeness to Salton Inc., which
makes barbecue grills, for $137.5 million in cash and stocks.
But that was a lifetime deal. Woods' new
contract expires in 2006 when he will be 30 and just hitting the
prime of his career.
“The value Nike received on the first
contract caused me to come to my conclusion that it would be chump
change,” his father, Earl Woods, said of the five-year, $40
million deal that raised eyebrows in 1996.
“And this contract will be chump change
compared to the next one, because Tiger is only going to get bigger
and better.”
While not discussing specifics of the contract,
Nike Golf president Bob Wood said money was not the best way to
measure Woods' worth.
“We don't even look at it like that
that,” he said. “When the first one came out, everyone
said, 'What the hell did you do that for?' His representation
is enough to reinforce everything we say about ourselves —
competitiveness, excellence and a desire to be better.”
Trying to measure Woods' value goes beyond
Nike.
One of the sticking points in the negotiations
was IMG trying to get back some of the interactive and Internet
rights that used to belong to Nike. IMG has a special team exploring
how to market those rights, which could be worth millions more.
And while agent Mark Steinberg finally has
the Nike contract out of the way, he said Friday he is working
on contract extensions with other companies Woods endorses, such
as American Express and EA Sports.
“This deal raises the ante for everyone
else who wants Tiger,” Williams said.
Steinberg said that won't necessarily be
the case, and while he said negotiations on other contracts have
been successful to date, “They will compensate Tiger fairly
for what he does for each of them.”
Nike is in a different league. Woods is
a walking swoosh from the top of his hat to the heel of his shoe.
“He's the most photographed athlete
— and maybe the most photographed entertainer,” Steinberg
said. “Nike is the only brand you can see on this person.
That's why it makes it a more all-encompassing endorsement.”
Nike first introduced Woods with its “Hello,
World” advertisement when he turned pro in 1996, followed
by a series of ads that touched on everything from Woods' ethnicity
to his unmatched charisma.
One of the most famous ads was Woods bouncing
a ball off his wedge — behind his back, between his legs,
even catching it on the clubface — and then whacking in into
the horizon while the ball was still in the air.
“Nike obviously thinks he's worth this
money,” said Alistair Johnston, head of worldwide golf operations
for IMG. “They not fools. They're a company with great experience
and fiscal responsibility that understands the value of branding
more than any company in the world, with the exception of maybe
Ford and Coca-Cola.
“That gives them vast areas of business
that can't even be contemplated now,” said Johnston, who
has been involved in sports marketing for 30 years. “What
appears to be on the surface an extraordinary amount of money
in five years might not be.”
One area that appears to be on the horizon
is golf clubs. Woods is under contract to use the Nike golf ball,
and the company is exploring a move into putters, wedges and perhaps
a full line of clubs.
“It they decided to go into the club
business, having Tiger will not do them any harm,” Johnston
said.
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