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Tiger Cost His Sponsors Up To $12 Billion!
Posted on Wed Dec 30, 2009 03:00 PM PDT
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Tiger Woods' sex scandal has cost shareholders of his main sponsors up to $12 billion, according to a new study at UC Davis.
And get this...the losses are separate from (and possibly even greater than) the damage to Tiger's own earnings! Before the accident, Tiger earned approximately $100 million a year in endorsement income, so you can bet that he's trying to salvage his bank account along with his tarnished reputation.
Victor Stango, a professor of economics at the UC Davis Graduate School of Management and co-author of the study says, “Total shareholder losses may exceed several decades’ worth of Tiger Woods’ personal endorsement income."
The study examined eight sponsors for which stock prices were available: Accenture; AT&T; Tiger Woods PGA Tour Golf (Electronic Arts); Gillette (Proctor and Gamble); Nike; Gatorade (PepsiCo); TLC Laser Eye Centers; and Golf Digest (Conde Nast). Stango and fellow UC Davis economics professor Christopher Knittel studied stock market returns for the 13 trading days that fell between November 27 and December 17.
To assess shareholder losses, Stango and Knittel reviewed returns for Tiger's sponsors during this period to those of both the total stock market and of each sponsor’s closest competitor. The economists also looked at returns for four years before the scandal broke to determine how each company's market performance typically correlates with that of the total market and of competing firms.
Knittel and Stango concluded that the scandal reduced shareholder value in the sponsor companies by 2.3 percent, or about $12 billion. “(This) pattern of losses is unlikely to stem from ordinary day-to-day variation in their stock prices,” the researchers added. Way to go, Tiger!
How much do you think Tiger's own income will suffer?
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