What Lies Next: Will Tiger Woods’s Rumored $500M Exit Spell the End of Nike Golf?

It is possible that we may have already witnessed Tiger Woods sporting the Swoosh for the last time. Interestingly, the veteran golfer chose a rather defiant tone by refusing to say anything further than he was still wearing their product. Woods and Nike’s partnership has been one-of-a-kind and has been running for 27 years, with reportedly more than $500 million in payments made. However, reports indicate that the partnership is nearing its end soon, and it might not augur well for the megabrand.

Per reports, Nike is planning to let control go over its golf apparel business. Notably, Nike already stopped its equipment manufacturing business in 2016, compelling Tiger Woods, Rory McIlroy, and others to find a different equipment sponsor. This time, too, it seems Woods has to pick a new brand. But an end to the partnership might spell disaster for Nike.

Market experts spell out long-term consequences

Sam Poser, a trade analyst at Williams Trading, has pointed out that Nike Golf’s exit has the potential to snowball into something very big. In fact, Poser’s claim in the note corroborates what the No Laying Up podcast first reported. In the note to investors, the trading analyst wrote that Nike “may be planning to license out its entire golf business,” Foot Wear News reported.

However, Poser also cautioned the investors that Nike’s exit would impact the brand’s overall market performance. “The changes will likely remove Nike’s presence in golf and will do long-term damage to the brand.” In fact, recent reports indicate that the company is going through some major business changes.

Accompanying the leadership changes in the top rung, Nike has also laid off a percentage of their employees as part of raising their profit. Moreover, a recent Guardian report also indicates that the company is mulling over laying off more employees later this month. The earlier layoff happened at the talent and production management teams.

However, the new layoffs might affect a larger portion of the brand. The apparel giant is planning to automate in various areas. Moreover, last week, Nike cut its annual revenue forecast and unveiled a $2 billion cost-saving measure. 

This time too, all signs indicate that a major shuffle is in the offing. Nike is planning to outsource their golf business through an original equipment manufacturer, either Srxion or Cleveland. However, losing out on a star like Tiger Woods is likely to have financial repercussions, as earlier stock movements indicate.

Tiger Woods’s $300 million impact on Nike

Nike signed Tiger Woods as an amateur in 1996. The first deal was reported to be $40 million. Woods, however, proved to be an asset for Phil Knight. Joe Pompliano, in his podcast, revealed the staggering impact the former World No.1 had on the brand.

When Nike signed Tiger Woods, the latter was worth $40 million for five years to the brand. Nike, itself was valued at $30 million in the US market. However, just two years after signing Woods, Nike’s valuation rose to $300 million.

Knight was quick to sketch another deal for the young golfer in 2000, a year before the ongoing deal expired. By that time, the 25-year-old had won 15 PGA Tour titles, including five majors. The $85 million endorsement deal was the highest in sports history.

Nike experiences both profit and loss

The long-running partnership went through thick and thin. In the wake of Tiger Woods’ personal troubles at the end of 2009, his big-money sponsors left him. However, Nike chose to stay with the 15-time Major winner.

The $175.4 billion giant has incurred costs for that decision as well. A University of California, Davis study found that in the wake of the 2009 turmoils, the collective of sponsors for Tiger Woods lost nearly $12 billion just within a month. However, Nike’s decision to stay with Woods paid dividends ten years later when Woods won his first Masters.

The 2019 Masters victory lifted Nike’s stock prices by 2% in the market. As per CBS, Woods’s 15th major pumped $2 billion into Nike’s market valuation. Contrarily, when Woods ditched the Swoosh in favor of Footjoy, Nike’s share witnessed slow growth at less than 1%, while Acushnet, which owns Footjoy, soared 2.5% higher.

Read More: Amid Split Rumors, Reliving the Top 5 Tiger Woods-Nike Moments

So, if Woods decides to cut ties with Nike, the stock price of the entire company is likely to take a hit. That also leaves two questions in its wake. What’s next for Tiger Woods, and what’s next for Nike? The 15-time Major winner is likely to pick up TaylorMade, who is rumored to be foraying into golf apparel manufacturing. On the other hand, Nike might make Rory McIlroy, Brooks Koepka, or Nelly Korda its next-gen faces. But Nike has to stick around in the golf business for that. 

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