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SBJ/May 4 - 10, 1998/No Topic Name
Team Tiger’ takes Woods to the top
Published May 4, 1998
The Estimated Value of Tiger Woods’ Endorsements
Nike: 5 years, $40 million
Titleist: 5 years, $20 million
American Express: 5 years, $15 million
All Star Café: $3 million (included ownership stake)
Rolex: $2 million per year
Electronic Arts Inc: PGA Tour golf video game, $2 million per year
Executive Jet Inc: $2 million per year
Asahi: $2 million per year (Japan only)
General Mills: $2 million per year
Ground zero of Tiger Inc lies inside International Management Group’s matter-of-fact Cleveland headquarters, a place seemingly styled by IMG’s high-octane clients, "See, we don’t take your money and spend it on furniture."
Unlike other sports marketing companies, there are no poster-sized pictures of treasured memorabilia form any of IMG’s powerhouse client list that at one time included the pope. The only hint of celebrity in IMG’s lobby comes in a dog-eared copy of Current Biography lying on a coffee table.
But down the hall in the comfortably cluttered office of IMG veteran Hughes Norton, there is little doubt that this is where the multimillion-dollar business of selling Tiger Woods begins.
The signs of success – and profit – are strewn all over Norton’s corner office. There’s a glossy poster of Woods in all his American Express glory, a pile of Woods-endorsed Titleist golf balls littering the carpet and a picture of Woods and Norton, arms around each other with smiles a fairway wide.
And why not?
Woods and IMG are halfway into a five year plan that aims to bring the 22 year old superstar $150 million in endorsement income, form which IMG takes an undisclosed cut, though 20 percent is typical in golf.
"The concept was that with a handful of endorsements Tiger would be set for life and wouldn’t have to chase endorsements," Norton said.
Norton, 50, began courting Woods in 1989. Putting Woods’ father, Earl, on the IMG payroll as a talent scout a year later helped seal the deal. Now Norton is the point man of a five-person IMG platoon assigned to Team Tiger.
Here’s IMG’s carefully spun Team Tiger strategy: Sign a select but lucrative number of deals to maximize Woods’ current stranglehold on golf, yet keep distractions to a minimum to allow Woods to handle the pressures of t6he PGA Tour.
The windfall came early after Woods left Stanford University and joined the Tour in August 1996. Just after Woods turned professional, Nike signed Tiger to a monstrous five year, $40 million deal, the biggest one-shot deal Nike has ever given an athlete. The deal also made history in another way: It’s guaranteed. No matter what happens to Woods, no matter if he never makes another tournament cut, he will get paid.
"That’s was a moment that only comes once," Norton said, acknowledging the unique structure of the Nike deal but refusing to confirm the numbers. "Those were protracted negotiations over a short period of time."
Just after the Nike contract came an estimated five year, $20 million deal with Titleist and an estimated $3 million deal with All Star Café, a restaurant chain fronted by a host of other sports superstars.
Then Woods launched golf – and his own marketability – into another orbit by winning the 1997 Masters, becoming the first member of a minority group to wear the green jacket.
Now each month Norton and staff wade through hundreds of requests ranging from appearances at church bingo nights to endorsement proposals form Fortune 100 companies. After the vetting process, only the opportunities with the right cachet – and money – are brought to Woods and his father for consideration.
The Masters victory did more than put a healthy dent into golf’s lily-white image. It made Tiger Woods a household name across a wide swath of America and sent corporate America scrambling for a piece of the action.
Woods was on the cover of Sports Illustrated four times in a span of 15 months and appeared on the cover of both Fortune and Business Week in the same week. It didn’t take long for Tiger Woods to become known simply by his first name, the true measure of superstardom.
The appeal is obvious. Woods is young, multiracial and a bold winner willing to take chances. Madison Avenue couldn’t dream up a better marketing cocktail.
"There are a lot of great golfers who nobody’s heard of, but Tiger’s the whole package," Norton said. "Because he’s a mix of races, blacks feel he’s black and Asians feel he Asian."
And corporate America thinks he’s golden.
According to IEG Inc, a Chicago-based company that tracks sports sponsorships, American Express is paying Woods $15 million over five years to attract young customers. Roles are paying him $2 million a year to sell its lower-priced Tudor watch brand. And, most recently, General Mills is paying Woods an estimated $2 million a year to put his face on Wheaties cereal boxes.
Other Woods’s endorsements include Asahi, a Japanese canned coffee distributor; Executive Jet Inc; and Electronic Arts Inc, a company that makes a PGA Video game. Each deal is estimated to be $2 million a year. Add in Titleist and Nike, and Woods’ annual endorsement income is estimated to be about $28 million.
"It puts him right at the top, second only to Michael Jordan, who’s about $40 million a year," said Jim Andrews, IEG vice president. "There are people with more endorsements but with much less in dollar value."
Though Woods is now associated with nine companies, Norton insists that IMG isn’t overexposing or exploiting its hottest property.
"Michael Jordan has about 17 commercial associations, but there’s a limit to [Tiger’s] time and space," said Norton, adding that Woods’ commercial shoots are limited to two five-hour time slots.
What are companies getting in return?
Norton whips out statistics showing how Nike’s golf shoe and apparel sales rose to $60 million, up 105 percent the year after signing Woods. (Nike’s stock dropped 33 percent to about $44 a share in the year since reaching $69 a share on March 30,1997, but that decline was attributed to other factors.)
Sales at Titleist, Norton added, have increased 30 percent.
"We’ve tried to measure it, but it’s hard to quantify the effect of Tiger Woods," said Brad Cohen, a Nike stock analyst for Sands Bros. & Co a New York- based investment company. "But there’s definitely been a positive impact. Tiger has brought Nike a whole new customer base and allowed them to go into the golf apparel business, where they weren’t before."
Woods also is partly responsible for boosting golf’s television ratings and subsequently helped the PGA Tour double its four-year TV deal to $400 million.
"The Tour has acknowledged that if it wasn’t for Tiger Woods, the [television deal] wouldn’t be what it is," Norton said.
But even though Woods’ star power has proved profitable to companies betting millions on his image, there is some risk. Golfers, unlike NFL or NBA stars, are on television only if they make the cut. Exposure is based purely on performance. If Woods falls out of form and continually misses the cut, his star power will diminish.
"In golf, you’ve got to keep winning," Norton said. "It’s a relentless what-have-you-done-for-me-lately sport."