First study debunked - Tiger Woods shareholders have actually made $1.5 Billion since his accident

[cbdo2007]

Tiger Woods Actually Made Sponsor Shareholders Almost $1.5 Billion Since Accident

by Ryan Ballengee on Dec 30, 2009 12:02 PM EST 59 comments

As someone who has an undergraduate business degree and took six economics courses on his way to earning a bacehlors and a masters degree, I think I know a poor economic study when I see one. It became immediately apparent to me that the study published by UC Davis econ professors Christopher R. Knittel and Victor Stango was utter crap.

At first, I thought that no one would pay attention to it because it was such shoddy work that it could hardly merit a mention. Then, though, outlets began to run with the story. HuffPo, CNBC, and other outlets published stories about the study, writing headlines to the tune of "Woods costs shareholders $12 billion." Provided that much of the media blindly accepted the study, I figured it might be time to debunk it. (Steph Wei got if off to a great start.)

First, the study said that Woods may have cost shareholders between $5 billion and $14 billion. The only reason that anyone pulled $12 billion out of the air is because Dr. Evil told them to the Wall St. Journal cited that figure.

Second, the billions that that Knittel and Stango essentially guessed were lost by shareholders actually wasn't lost at all. They claimed it was relative to the movement of the market and Woods' sponsors' competitors. That means all losses are unrealized losses (or gains for the competition). Until the stock is sold, the loss is not recorded. Therefore, it's all paper losses - not actual losses.

Third, the stocks that Stango and Knittel consider as having the largest bearing on Woods' success or failure is wrong. They presume that Nike, Gatorade, and Electronic Arts are the most impacted. As Steph Wei points out, Nike Golf represents less than 10% of Nike's total revenue in their last quarterly report. Gatorade - owned by PepsiCo - really is just one part of the conglomerate and Woods' impact is highly mitigated since the Gatorade Tiger line had been scheduled to be phased out many months ago. The only one that they get right is Electronic Arts because Woods is the face of their lone golf game. Even that is a reach, though, because their golf title is not even close to their biggest selling sports titles of Madden NFL Football and FIFA Soccer (the '10 version being the fastest selling sports game ever). If anything, Accenture would be most impacted by Woods because he is their lone public endorser.

http://www.waggleroom.com/2009/12/30/1225193/tiger-woods-actually-made-sponsor

[closeupready]

1. Regardless, he is eventually going to be treated as radioactive, because

sponsors are not going to want to be associated with a celebrity with Woods' scandalousness. Sponsors like 'safe' figures. He is, at a minimum, reckless.

[cbdo2007]

6. I don't think so. I can't think of any other sports figures with infidelity probs

that have been hurt financially.

Look at Kobe Bryant or even Michael Vick wasn't infidelity but everyone thought his career was over and what not and the fans are mostly back and he's getting sponsors again.

The main reason I think the companies are dropping Woods as a sponsor is because no one is really clear about where he's going to be for the next 6-12 months. There's no reason for them to pay him as their sponsor if he's not playing. Look at AT&T - they pay to have their name on his bag. What good will that do them if he isn't on the golf course?

A year from now Tiger will be back winning again and instead of $100 Million a year in sponsors he'll have $80 Million a year.

[closeupready]

8. I disagree.

n/t

[opihimoimoi]

2. People will know him as a normal full blooded man who likes to copulate..hIs Cologne

Line, Apparel, caps, Coffee mugs, calendars will fetch millions....his restaurant with putting greens will add.

This man will earn twice as much now that he is more Famous ....

[closeupready]

3. If promiscuity is all it takes to be a million-dollar sponsor, there is no lack of better-looking

better-hung candidates.

[opihimoimoi]

11. Promiscuity can have its Positive side...as in being a component of the Whole

He does win at times in the game of Golf.,,,just saying facetiously.,...Happy New Year

[Bitwit1234]

4. I have never been a Tiger Woods because I am not a golf fan

and I think all those sports stars with the outrageous salaries, and making money with sponsorships is obscene. But if I bought a product that Woods sponsored and the sponsor dropped him, (even tho he had a disreputable actions) I would be upset that the sponsor was only out to make money. And that he did not think Woods use of the product made it real. Well I'd just have to stick with the sponsors that stayed with him, why, because I would think they were more committed to their product.

[closeupready]

5. Wow, did I, like, wake up overnight a genius or something?

Because when I look at the posts in this thread... ;) Just kidding. :D

Sponsors are ALL about the money, honey. They didn't sign him up as a charity case - they signed him up as an endorser because they thought it would help them make $$$. I can not believe for one single second that you don't understand that concept.

It's like you are saying if a sponsor continued paying a married celebrity, father of two, for his services despite the fact that it became public that he'd had sex on the sly, sometimes condomless, with more than a handful of porn actresses and other hostesses, you would respect that sponsor's commitment to their product??? I mean, that doesn't make any sense. Can you rephrase?

[cbdo2007]

7. This kind of explains why people fall for the original article here about "Tiger Woods sponsors

and shareholders lost $12 Billion"...

People have strange viewpoints on money/sponsorships/stocks/celebrities so they believe any crazy outlandish figures the media throws around.

I agree with you, this person thought sponsors aren't out to make money?? That's exactly what a sponsorship is. As Jerry McGuire said, "It's not show friends, it's show business."

[closeupready]

10. This, I agree with - it's always about the money.

Now, if as you say upthread he can still make his sponsors money, then sure they will continue hiring him. I certainly don't wish ill on anyone, and couldn't frankly care less about Woods' personal life. :hi:

[Egalitariat]

9. In the end, his cheap tricks will end up costing him alot more per "experience" than what Elliot

Spitzer paid to his hooker.