Tiger Woods's $13.6b 'infidelity bill' (celebrity sponsorship risky for shareholders)

[depakid]

Two US professors have pinned the loss to shareholders from Tiger Woods's marital infidelity at up to $US12 billion. The University of California, Davis, researchers said the new study speaks to the question of whether celebrity sponsorship has an impact on a firm's bottom line.

"Our analysis makes clear that while having a celebrity of Tiger Woods's stature as an endorser has undeniable upside, the downside risk is substantial, too," said Victor Stango, professor of economics. Stango and fellow economics professor Christopher Knittel studied the stock market for 13 days after Woods crashed his car outside his Florida home on November 27. Since then, several women have said they had romantic affairs with Woods. Woods eventually confessed to infidelity and lost major sponsorships.

The UCD economists compared returns for Woods's sponsors to those of the total stock market and of each sponsor's closest competitor, a UC Davis news release states. The study focused on nine sponsors: Accenture, American Express, AT&T, Tiger Woods PGA Tour Golf (Electronic Arts), Gillette, Nike, Gatorade, TLC Laser Eye Centres and Golf Digest.

Shareholder value fell 2.3 per cent - or about $US12 billion. The pattern of losses is unlikely to stem from ordinary variation of stock prices, the researchers stated in their study. Investors in three sports-related companies - Tiger Woods PGA Tour Golf, Gatorade and Nike - fared the worst, experiencing a 4.3 per cent loss, or about $US6 billion.

More: http://www.smh.com.au/sport/golf/tiger-woodss-136b-infidelity-bill-20091229-lhj6.html

It'll be interesting to see how this plays out over time. I'm inclined to buy Mark Morford's take on the matter- nothing Americans like more than to watch their celebrity demigods crash and burn, go though a period of repentance and rise from the ashes redeemed.

[Submariner]

1. Although I do not watch golf, I will probably be suckered into watching

Tiger's 1st comeback tournament, just to watch the cat calls from the crowd when he makes his swing, and the reactions of the crowds. Something tells me the quiet decorum of golf will be launched into Happy Gilmore territory when Tiger returns.

[undeterred]

2. Missing his 10 month old son's first Christmas:

priceless

[depakid]

3. I always find these deals interesting

probably because celebrity endorsements have never influenced me one way or another- so it's curious to consider how companies manage to get a return on their substantial investments.

It's one thing for example if a successful individual in one field or another uses certain "gear," etc. that we can see contributing to their success- but I mean, Accenture?

How easily some can be manipulated by shallow associations- and how those can also come back to bite companies in the ass.