Financial Impact of Golf without Tiger
Without the so-called Tiger Effect, pro golf could be staring at the Tiger Recession.
The Tiger-less Tour begins in earnest today at the Farmers Insurance Open at Torrey Pines near San Diego. The former Buick Invitational is viewed as the de facto start of the season since it’s typically Woods’ first tournament and the first to attract broadcast TV coverage.
Woods’ vanishing act is taking a toll on tournament sales. Ticket and sponsorship sales are down 15%-20% at Torrey Pines from the last time Woods played in 2008, tournament director Tom Wilson said. But Wilson says sales are about even with 2009, when Woods missed the tournament while recovering from knee surgery. Woods, who has won the tournament six times, would have been the favorite to collect the $954,000 first prize at one of his favorite courses.
After apologizing in a statement for his “infidelity” to wife Elin Nordegren, Woods announced Dec. 11 that he would take an indefinite break from pro golf. Madison Avenue’s richest, most prolific endorser hasn’t been seen in public since crashing his SUV, and reputation, into a tree outside his Florida home Nov. 27, triggering a frenzy over his extramarital affairs. Woods has become the Elvis of sports, with unconfirmed sightings everywhere.
The biggest money-loser from the Woods sex scandal appears to be Woods. Corporate sponsors Accenture and AT&T dumped him as an endorser. That will cost him a combined $18 million to $25 million a year, estimates Robert Tuchman of Premiere Global Sports. Woods’ favorability rating with the American public plummeted 52 points to 33% in December’s USA TODAY/Gallup Poll from 85% in June 2005.
But Woods won’t be the only one hit in the wallet. The line of players that could be affected financially forms to his right. The Woods mess won’t help an industry struggling to overcome declining participation and equipment sales amid the U.S. recession.
The Tour “absolutely” misses Woods, fellow player Rocco Mediate said Tuesday at Torrey Pines. “You always want your best guy. … We’re the best at what we do, period, in the entire world. But when you don’t have the best guy there, it’s not as good of a field.”
Woods’ absence also is being felt in the galleries.
“It’s not the same without Tiger,” said accountant Jack Rollins, 34, of San Diego. “He’s the biggest reason I watch golf. So I really haven’t watched much golf on TV this year. I couldn’t give my tickets away today, so I decided to come. … It would just be a lot better if Tiger was here.”
Tickets and TV take a hit
Woods already has cost one of his tournaments money. He skipped the Chevron World Challenge, the tournament he hosts that benefits the Tiger Woods Foundation, in December. The tournament is refunding $20,000 in ticket sales to fans who expected to watch him while offering a 20% discount on 2010 orders. Still, the refunds amount to less than 1% of the total revenue generated, foundation President Greg McLaughlin said in a statement.
How much of a financial hit pro golf takes from Woods’ absence depends on several factors: how soon the 34-year-old megastar returns; whether he’s the same dominant force who won 14 major championships; and if he’s the same crossover star who can attract casual sports viewers to golf telecasts — and move the ratings needle like no athlete since Michael Jordan.
Tournaments Woods normally plays will have a harder time selling tickets and attracting sponsors. If recent history is a guide, TV ratings will be sliced in half for those events.
The stakes are high. In its 2008-09 annual report, the Tour said it expected TV to generate $268.1 million of its total revenue of $496.8 million in 2009.
“There’s going to be a significant loss in attendance and ticket sales for those tournaments Tiger traditionally competed in,” says Joe Beditz, president of the National Golf Foundation (NGF), which provides golf business research and consulting services. “TV viewership will be off. When viewership is off, ad revenues are off, because ad rates are based on projected audience sizes.”
For example, having a crimson-clad Woods in contention on Sunday during one of golf’s four major championships makes a big difference. The final-round average TV viewership for Woods’ second-place finish in the 2009 PGA Championship rose 150% (10.1 million from 4 million) from the final round in 2008, when Woods missed the tournament because of injury, according to Nielsen.
The PGA Tour doesn’t keep total attendance figures. But executive vice president Ty Votaw says the Tour survived Woods’ injury layoff through the second half of 2008 and early 2009. Woods’ sabbatical won’t affect the Tour’s total prize money for 2010, which will be “slightly more” than last year’s $275 million, he says.
“There’s no question we’d rather have him back. But if the past is any indication, we’ve come through previous absences in as strong if not stronger position than we did going in,” Votaw says. The financial issues affecting the Tour in 2010 “will probably have more to do with the economy than it would with any one player’s presence or absence.”
During his 13-year pro career, Woods has played in about one-third of Tour events, usually playing in 15 to 20 of the 46 to 47 annual tournaments. Many Woods-less tournaments did fine, Votaw says. Take the Waste Management Open in Scottsdale, Ariz. (previously the FBR Open). Woods hasn’t played it in years, but the tournament annually draws the year’s biggest crowd at 500,000 spectators.
Votaw expects the Tour to start negotiations with CBS and NBC on schedule in late 2011 for broadcast rights deals succeeding the current six-year contracts that expire after 2012.
Rob Correa, executive vice president of CBS Sports, which carries The Masters, declined to comment on those negotiations. But he said networks were bracing for smaller ratings this year without their biggest TV draw.
Finally, there’s the U.S. golf industry. Equipment sales were expected to remain flat at $2.7 billion for 2009 after falling 9.4% in 2008, according to Mike May of the Sporting Goods Manufacturers Association.
Where and when Woods returns is anybody’s guess. PGA Tour pro-turned-Golf Channel analyst Brandel Chamblee thinks Woods will launch his comeback at The Masters, where he has won four green jackets and the members of the private, male-only Augusta National Golf Club tightly control media access.
“At The Masters, you can control the environment better than any other tournament on the planet,” Chamblee says. “Tiger can have his mea culpa in a relatively hospitable environment. And then say, ‘Going forward, I’m not going to address this.’ “
Americans love a comeback, Chamblee notes. “He needs to come back, show his face, sound contrite, answer the most obvious questions he’s obligated to answer — and then go back in between the ropes and start beating people’s brains out. Because that’s what he will do.”
With Woods on hiatus, follow the lost money
Possible financial fallout for Tiger Woods, the PGA Tour and TV:
•Lost endorsements. Woods made $103 million on and off the course in 2009, earning first place in Bloomberg BusinessWeek’s 2010 Power 100 ranking of the most powerful athletes in sports. But his double life has battered his once-gold-plated image on Madison Avenue. AT&T and Accenture dumped Woods, and Procter & Gamble’s Gillette and Swiss watchmaker Tag Heuer have suspended their marketing campaigns. PepsiCo‘s Gatorade dropped its Tiger-focused line of sports drinks.
Six sponsors have stood by him: Nike, EA Sports, Upper Deck, NetJets, TLC (which filed for bankruptcy protection Dec. 21) and the planned Tiger Woods Dubai resort in the United Arab Emirates. None of these sponsors has run a prime-time TV commercial starring Woods since Nov. 29, Aaron Lewis of Nielsen says.
•Big-bucks divorce?Elin Nordegren, 30, who has been photographed without her wedding ring, could seek a substantial amount of the money Woods earned during their five-year marriage if she pursues a divorce. Woods made $550 million during their marriage, Forbes senior editor Kurt Badenhausen estimates. That’s more than half of his $1 billion in career earnings. “Even with his injury, the last five have been his peak earning years,” Badenhausen says. The couple wed in Barbados on Oct. 5, 2004, and have two children: daughter Sam Alexis, 2, and son Charlie Axel, 11 months.
•TV ratings and advertising dollars. The numbers are simple for TV networks, according to market research firms Nielsen and TNS Media Intelligence. When Woods plays, networks get higher TV ratings and more advertising dollars. When he doesn’t, ratings slump and they get fewer ad dollars.
When Woods was out with a knee injury, ratings for the third and fourth rounds of events he normally played in dropped 47%, according to Nielsen. The only other athlete to wield such a TV influence is Michael Jordan, says Stephen Master, vice president of Nielsen Sports. The same dynamics are at play on ad prices, according to TNS Media Intelligence. Networks could charge 30% more for tournaments Woods played in during 2009 compared with those he didn’t. PGA Tour executive VP Ty Votaw counters that most commercial time goes to title sponsors. So lower ad rates only apply to 25%-35% of inventory that networks sell to other advertisers.
•”Free” advertising. Then there are so-called “make-goods.” Networks determine ad rates based on projected TV ratings and audience. If they don’t deliver, they have to “make good” to advertisers with free commercials. The first tournament Woods plays will attract a huge TV audience, says Jason Maltby, head of national broadcasting buying for Mindshare. But that won’t make up for the “lost eyeballs,” or viewers, from tournaments he missed.