Why Tiger Woods Stands to Gain From Scandal

Dec. 10, 2009 — -- In the wake of recent revelations about Tiger Woods and his apparent chronic infidelity, there has been a public outcry concerning his lucrative endorsements. Many believe that endorsers will drop Tiger Woods or scale back on their financial commitments to him. Unfortunately, that is not how the business of celebrity endorsements works. Tiger Woods is an extremely talented athlete surrounded by the preeminent sports management organization (IMG) and is likely to continue earning very large paychecks for many, many years. To understand why, you have to understand the business of marketing endorsements.

Sponsorships and endorsements are a vital part of the marketing plans of many large companies. For some companies like Nike, Reebok and some fragrances, it is the most important part. Manufactured brands are inanimate objects; advertising and marketing breathe life into brands. Celebrity endorsers personify brands, helping consumers relate to the personality and attributes that the brands want to identify with. They help marketers reach a wide group of consumers and gain credibility. This translates into sales. Nike alone spends more that $475 million a year paying athletes to endorse its products.

Here is where it gets tricky. The attributes the companies are paying for are clear-cut. In the case of Tiger, he dominates the golf world. When he is on the course, he performs in a way no other golfer before him ever has. He wins almost 30 percent of the times he tees the ball up. In contrast, Jack Nicklaus, widely considered the best golfer of all time, won only 12 percent.

This has made Woods wealthy on the golf course. His golf winnings along with tournament appearance fees put his career golf earnings over $100 million. Companies use him because he personifies winning and as the most widely known athlete that also wins the most, he is the go-to guy to represent this attribute. Tiger has been one of the most recognized athletes in the world; this scandal will make him one of the most recognized people in the world. This only helps him.