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July 08, 2010

Tiger Woods and Google: Did he get in early and make another fortune?

Posted at 2:14 PM by Mike Walker | Categories: Elin Nordegren, Elin Woods, Tiger Woods

Amid speculation about a possible divorce settlement between Tiger Woods and Elin Nordegren, some media outlets have tried to establish Woods's net worth.

Kurt Badenhausen of Forbes Sports Monthly writes that Woods is likely worth around $600 million after adding his winnings on the course, sponsorship deals and business ventures.

We've been tracking Tiger's earnings since he turned pro in 1996. Last year he became the first athlete to earn a cumulative $1 billion through his income from prize money, appearance fees, endorsements and his golf course design business. ...

Yet those earnings are before the tax man and his agents at IMG took their cut. And if you think Tiger made a killing in the stock market, think again. The S&P 500 is at the same level it was at 12 years ago. By our count Woods is worth $600 million and any divorce settlement is likely to be worth a fraction of current reports.

However, this estimate of Woods's fortune doesn't take into account his investment in Google. While Woods is tight-lipped about his finances, he did acknowledge in a 2008 interview with CNBC that he owned Google stock, but he denied being an investor from "way back when." (The Google talk starts at the 2:40 mark.)

But Woods was an early, pre-IPO investor in Google, according to this April 25, 2004, article in The New York Times.

Tiger Woods has his small stake. So do Shaquille O'Neal, Henry A. Kissinger and Arnold Schwarzenegger. All can be counted among that small club of people lucky enough to own a sliver of Google, one of the hottest companies in Silicon Valley and what could be the hottest deal on Wall Street this year.

According to The Times, Woods and other famous names invested in Google through a venture fund called Angel Investors. The venture fund made two separate investments in Google, in 1998 and 1999. If Woods was an "Angel 1" investor in Google, he could have bought in at 50 cents a share. Since Google today trades at around $439 a share, a $200,000 investment -- assuming a 1:1 conversion -- would have netted Woods $175.6 million today. The later, "Angel 2" investors had the opportunity to purchase Google shares at $2.34. At that price, a $200,000 investment would be worth $37.5 million today.

This doesn't mean Woods is sitting on a massive Internet fortune in addition to his vast golf-related wealth. A "small stake" in Google was likely just that, and who knows how the rest of his portfolio has performed? But it does show that media speculation on Woods's or any celebrity's wealth is just a guessing game, and not a well-informed one.

Incidentally, Woods attended Stanford from 1994-1996, which is when Google founders Sergey Brin and Larry Page started creating their search engine as Stanford graduate students.

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