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December 08, 2009

Tiger Woods's Endorsements Are Still Safe - For Now

Posted at 6:04 PM by David Dusek | Categories: Tiger Woods

Tiger-Woods-Nike_450 When Tiger Woods's scandalous saga was nothing more than a traffic accident and a few rumors, his lucrative endorsement deals seemed safe. Tiger wasn't talking, and all we knew for certain was that he hit a fire hydrant and a tree in his SUV.

A week later that image has undeniably been tarnished and Tiger Woods, the brand, has certainly taken a hit. Bloomberg reported on Tuesday that advertisements featuring Woods have "disappeared from prime-time broadcast television and many cable channels." Bloomberg also reported that Woods’s ranking among celebrity endorsers has dropped to 24th from sixth on the Davie Brown Index, a measure used to gauge the power of personalities over shoppers.

But I have spoken with several golf industry executives over the past few days, and their opinions have been almost unanimous:

1. No one I talked with thinks that Nike will sever its ties with Tiger.

2. In the unlikely event that Nike and Tiger do part ways, nearly all the insiders I spoke with said their company would be interested in signing Woods.

3. The real barrier to signing Woods would not be he his image but his price tag: it would be hard to afford him.

It has been widely reported that Tiger's long-term contract with Nike is worth more than $100 million. For that sum, he wears Nike apparel, headwear and footwear. He also uses 13 Nike golf clubs, stars in commercials and makes himself available for a limited number of promotions. But this relationship goes far beyond simply using Nike products. Much of the company's golf brand - from the Tiger Woods clothing collection to the Victory Red club line - is built on Woods.

At a time when numerous golf companies are laying off workers and bracing for another rough year in 2010, finding the money to sign Woods might not be possible for other golf companies. Plus, as one executive told me, "Tiger is so closely associated with Nike that any company that signs him would need to establish a long-term relationship in order to get any benefit from the deal."

Gatorade Tiger Woods Drink It will be tempting for people to point to Gatorade's discontinuation of its Tiger Woods's sports drink as a sign that his appeal is weakening, but as CNBC's Darren Rovell points out, Gatorade announced it was ceasing production of the beverage a few days before Tiger's car accident.

In the short-run,  the marketing departments at companies like Nike, Accenture, AT&T and Tag Heuer seem likely to weather some hard times along with Woods. But if he is able to break Jack Nicklaus's record and win 19 major championships, a relationship with Tiger Woods could still be priceless.

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(Photos: Woods, Robert/Beck/SI; bottle, Gatorade)

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