Wise Move or Historical Mistake? Evaluating the Present and Future of Tiger Woods’s $500M Nike Exit

Tiger Woods, after dallying, teasing, and bluntly refusing, finally confirmed the rumors. A joint farewell note from Nike and the 48-year-old golfer sent shockwaves through the sports world. Although Woods still teased fans by claiming that there will certainly be another chapter, it will be a new chapter with the same protagonist and a different supporting cast.

It was baffling that any party would want to end the partnership that benefited them both for 27 years. Nike might be retracing its footprint from golf, as the latest reports suggest. And who better than Woods to read the tea leaves? Apparently, the 15-time Major winner was not satisfied with what Nike deemed his worth. But Tiger Woods is 48, in the twilight of his career. Can he find a new sponsor? Does he move the needle like he used to?

Tiger Woods left his dollar mark

After Woods left Nike, news started floating around that the veteran golfer would sign a contract with On Running, following in the footsteps of Roger Federer. Although the spokesperson for the brand denied it later, the stock price went up by 6.13%. It should not be too difficult to gauge the ripples a Woods announcement creates in the sports business world.

The PIP bonus—controversial as it may be for its jaw-dropping ‘rewards’ —further evinces that. In four of the six indexes, Woods posed a better score than Rory McIlroy, who pipped him this time to the number one spot. Furthermore, despite playing in only four events, Woods was still the most searched golfer in Google searches.

However, the same indices also paint a concerning picture. Courtesy of playing in only two tournaments, Woods lagged way behind in TV sponsor exposure. The veteran golfer has admitted that, realistically, he can play one tournament each month. With his limited screen presence, will brands be willing to hedge a bet on him?

TGL might become a savior here. It was set to kick off in ESPN prime time to capitalize on the prime audience. Moreover, the 82-time PGA Tour winner is an owner and a player in the Jupiter Links GC. So, that means more screen time. And the way Woods impacted Nike’s sales and valuation for over two decades only evinces that.

Woods and Nike’s partnership was unique in many ways

The fact that Nike left a tribute to Woods after his departure speaks volumes about his influence and how special the partnership was to both parties. If measured in tangible terms, Nike made Tiger Woods the second American athlete to reach billionaire status.

On the other hand, Nike, when they signed Woods, was worth $30 million, Joe Pompliano reported. The 20-year-old Tiger Woods was still a relatively unknown young golfer. But here is what Phil Knight said at that time: “The world has not seen anything like what he’s going to do for the sport. It’s almost art. I wasn’t alive to see Claude Monet paint, but I am alive to see Tiger play, and that’s pretty great.”

Five years and 24 trophies later, Nike’s valuation rose to over $300 million. Knight, seemingly vindicated, sketched a $105 million contract a year before the first one expired. The extension would obviously go on until 2013, when the Oregon-based company signed a 10-year contract with the 15-time Major winner for a reported fee of $200 million.

At that time, when many wrote off Woods for pro golf, it was seen as rather reckless and sentimental by others. Six years later, as Woods stomped the grounds of Augusta, chasing down one after another, before donning the green jacket for the fifth time in his career, Nike’s stock prices rose 2%, pumping in $2 billion in market valuation. Phil Knight, who owns 20% of the megabrand, raked in $254 million. The question now is: who will be the next to latch onto this?

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TaylorMade, his equipment sponsor, might jump on the opportunity. Greyson Clothiers, on the other hand, reportedly signed Charlie Woods. Greyson has expanded its golf portfolio in recent years, which includes Justin Thomas, a close friend of the Woods family. Moreover, the brand also offers equity in exchange for endorsements. Roger Federer, who joined On Running after leaving the $157 billion brand, capitalized on his 3% equity share to make more than $300 million in the past five years. Tiger Woods, one of the most recognizable faces in the sports world, might be spoiled for choice.

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