Woods Signs Blockbuster Deal with Nike

ByDoug Ferguson

Sept. 15, 2000 -- Tiger Woods formally signed a new five-year endorsement contractwith Nike today as industry analysts tried to answer the $100million question.

Is a golfer worth that much money?

“Part of that answer rests with what Nike’s ultimate goalsreally are,” said Bob Williams of Chicago-based Burns SportsCelebrity Service, which matches athletes with corporate sponsors.

“The good news is they found Michael Jordan’s replacement asthe most marketable athlete in the world, and the best athlete inthe world.”

‘Air’ Apparent?

The downside, Williams said, is that golf is a niche sport thatdoesn’t reach the masses and doesn’t have the television ratingsthe NBA pulled in during the Jordan era.

“How much growth is there in golf?” Williams said. “And howmuch can Nike capitalize?”

The deal is worth an estimated $100 million over five years,according to a source close to the negotiations who spoke oncondition of anonymity. It is believed to be the richestendorsement 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 Foremanrecently sold his likeness to Salton Inc., which makes barbecuegrills, for $137.5 million in cash and stocks.

But that was a lifetime deal. Woods’ new contract expires in2006, when he will be 30 and just hitting the prime of his career.

“The value Nike received on the first contract caused me tocome to my conclusion that it would be chump change,” his father,Earl Woods, said of the five-year, $40 million deal that raisedeyebrows in 1996.

“And this contract will be chump change compared to the nextone, because Tiger is only going to get bigger and better.”

Measuring Woods’ Worth

While not discussing specifics of the contract, Nike GolfPresident Bob Wood said money was not the best way to measureWoods’ worth.

“We don’t even look at it like that that,” he said. “When thefirst one came out, everyone said, ‘What the hell did you do thatfor?’ His representation is enough to reinforce everything we sayabout ourselves — competitiveness, excellence and a desire to bebetter.”

Trying to measure Woods’ value goes beyond Nike.

One of the sticking points in the negotiations was IMG trying toget back some of the interactive and Internet rights that used tobelong to Nike. IMG has a special team exploring how to marketthose rights, which could be worth millions more.

And while agent Mark Steinberg finally has the Nike contract outof the way, he said today he is working on contract extensionswith other companies Woods endorses, such as American Express andEA 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 hesaid negotiations on other contracts have been successful to date,“They will compensate Tiger fairly for what he does for each ofthem.”

Nike is in a different league. Woods is a walking swoosh fromthe top of his hat to the heel of his shoe.

“He’s the most photographed athlete — and maybe the mostphotographed entertainer,” Steinberg said. “Nike is the onlybrand you can see on this person. That’s why it makes it a moreall-encompassing endorsement.”

‘Hello, World’

Nike first introduced Woods with its “Hello, World”advertisement when he turned pro in 1996, followed by a series ofads that touched on everything from Woods’ ethnicity to hisunmatched charisma.

One of the most famous ads was Woods bouncing a ball off hiswedge — behind his back, between his legs, even catching it on theclubface — and then whacking in into the horizon while the ball wasstill in the air.

“Nike obviously thinks he’s worth this money,” said AlistairJohnston, head of worldwide golf operations for IMG. “They notfools. They’re a company with great experience and fiscalresponsibility that understands the value of branding more than anycompany in the world, with the exception of maybe Ford andCoca-Cola.

“That gives them vast areas of business that can’t even becontemplated now,” said Johnston, who has been involved in sportsmarketing for 30 years. “What appears to be on the surface anextraordinary amount of money in five years might not be.”

One area that appears to be on the horizon is golf clubs. Woodsis under contract to use the Nike golf ball, and the company isexploring a move into putters, wedges and perhaps a full line ofclubs.

“It they decided to go into the club business, having Tigerwill not do them any harm,” Johnston said.

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