3 Companies Betting Big on Tiger Woods This Week
Tiger Woods used to be a sure bet in the marketing world. But in late 2009, when his personal life became tabloid fodder, his sponsors left him in droves. AT&T, Gatorade, Gillette, and Accenture were among the companies to cut ties with the world's best golfer. Three years of mediocre golf followed, and few sponsors came knocking on Tiger's door with big money deals.
In 2013, he's beginning to be the hot brand that he once was, after the hot start to his professional career. This week at the U.S. Open, there are three companies making big bets on a strong week for Tiger.
No company has made a bigger bet on him than Nike . The company signed him to a five-year, $40 million deal when he turned pro in 1996 and has reportedly paid him as much as $40 million annually over the past five years.
For Nike, a sponsorship with Tiger is more than its typical sponsorship. He almost singlehandedly made Nike Golf relevant when he signed on with the company and has made it one of the preeminent brands in golf. Rory McIlroy is Nike's second biggest golf sponsor, but his career is just getting started, and he's not nearly the figure Tiger is.
There's also the matter of a new contract Tiger and Nike have to worry about. Their current contract runs out soon, and Tiger reportedly wants $40 million again to re-up with Nike. That's a lot of coin for one athlete, but when he makes your brand relevant in golf, it might be worth it.
Without Tiger Woods, golf video games are virtually nonexistent. On the other hand, even with Tiger, golf games aren't flying off the shelves.
According to video-game tracker vgchartz.com, Tiger Woods PGA Tour 14 has sold just 100,000 units each for the PS3 and Xbox 360. That's a far cry from 2003, when the game sold 1.64 million units on the PS2. There's been a falloff in game sales recently, and one of the drivers is Tiger's performance in majors. This week, he has a chance to win the U.S. Open, and Electronic Arts has a lot to gain if he does.
Wait: I'm following Nike and EA with Fuse Science? Who the heck is this?
Fuse Science makes energy and electrolyte "drops" and a roll-on that's supposed to protect against fatigue (see the website here). I tried these products over the past few weeks on the golf course and didn't feel any effects, although I didn't fall asleep during the round I took the energy shots. Maybe there's a greater impact to athletes with a higher skill level than Yours Truly?
The company has managed to sign up athletes such as Tiger Woods, Arian Foster, Paul Pierce, and Paul Rodriguez as sponsors but hasn't made much of a splash in the financial markets. Only $56,622 of product was sold in the first three months of the year, although that's more than double a year ago. Tiger is the centerpiece of the company's growth strategy.
Fuse Science's logo will be on Tiger's bag this week, and the CEO says there are several big announcements coming from the company. For Tiger and Fuse Science, I hope he's right, because this is one of the strangest sponsorships I've seen from a big-name athlete. The golf bag is prime real estate for golfers, and Fuse Science hasn't turned more than a year on Tiger's bag into many sales.
This may be the biggest bet made on Tiger, because Fuse Science is at a make-or-break point in its history.
Foolish bottom line
Endorsements are a key revenue source for athletes, but they're huge bets for companies as well. If Tiger performs well this week, it will make Nike golf equipment and apparel more appealing, it will probably boost sales of Tiger Woods PGA Tour 14, and it may even get a few people to try Fuse's energy drops. All three companies are making big bets on Tiger Woods' performance this week.
Buying stocks just because they're sponsored by Tiger Woods isn't wise, so The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.
The article 3 Companies Betting Big on Tiger Woods This Week originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.