Tiger Woods and the Dollar Value of a Reputation

Accenture Drops Tiger Woods From Its Ads

January 16, 2009

Turning to the MARKETPLACE page of this past Thursday's Wall Street Journal (Jan 14, 2010) the first thing that caught my eye was a color picture of an elephant standing upright on its hind legs on a surf board ridding the waves.

This picture was partially covering a color photo which I had seen in ads previously. The partially covered ad was one that Accenture, the global management and consulting firm, had been running featuring Tiger Woods.

The Wall Street Journal article went on to describe that after deciding on December 13, 2009, following Tiger Woods' now famous Thanksgiving weekend car crash to end its six year use of Woods in its advertising.

Tiger Woods on USS George Washington 2004

Public Domain Photo U.S. Navy photo by Photographer's Mate 1st Class Brien Aho  (courtesy of U.S. Navy  http://www.news.navy.mil/view_single.asp?id=12367 )
Public Domain Photo U.S. Navy photo by Photographer's Mate 1st Class Brien Aho (courtesy of U.S. Navy http://www.news.navy.mil/view_single.asp?id=12367 )

Image and People's Perceptions Have Value

Now, instead of using Tiger Woods to convey its message of High Performance, Delivered, the company will use images of animals rising delivering high performance in tough spots.

Accenture is one of the many major corporations to dump Tiger from its ads and this is having a major impact on Tiger's income as will be shown below, his annual income from commercial endorsements is six times that of his record breaking earnings from Pro Golf.

Even if Tiger Woods continues to play and win on the Pro Golf Tour, an activity he has currently suspended for the time being, the hit to his income would be substantial.

Image and other people's perceptions, which are key ingredients in a person's or business's reputation, are important and can have a major effect on income and revenue.

Two homes that are identical in every respect, including the costs of the land, labor and materials that went into building them, but are located in different parts of town will often sell for widely different prices.

A masterpiece by a famous artist can be worth millions while a exact duplicate so exact that only a trained expert can tell the difference, will, once it is known to be a forgery, be lucky if its price exceeds the cost of the paint and canvas used to produce it.

Tiger Woods was a Global Brand

Tiger Woods, in addition to being a great golfer, was also a global brand which was valuable more because of his image than his golf skills.

Sure, without his golf skills, his reputation for hard work and for the intense concentration he brought to his golf game, he wouldn't have been able to achieve the fame needed to create and capitalize on his brand.

The above factors were key ingredients in his getting to where he is now.

But Tiger still has all of these and can probably return to pro golf at any time and make a decent income. However, like the home in the so-so section of town that is identical to the home in the exclusive section, his income will be considerably lower than when his stellar reputation was intact.

In Accounting This is Called Goodwill

In accounting there is the concept of goodwill. Goodwill is the difference between the market value of the company as a whole and the value of its assets. Goodwill is usually used today by companies when they purchase another company for a price higher than the value of the assets of the company being acquired.

Things like a strong brand or loyal customer base bring in good revenue but in and of themselves are not tangible assets despite their often significant contribution to the company's bottom line profit.

However, a good brand or customer loyalty can be easily lost which is why companies go to great lengths to cultivate and protect them. Basically things like a good brand and customer loyalty boil down to reputation and reputation is how the buying public perceives the company.

Photo of Tiger Woods taken by Keith Allison and posted on Flicker

Photo used under terms of Creative Commons License, courtesy of Keith Allison  http://www.flickr.com/photos/27003603@N00/2310256673
Photo used under terms of Creative Commons License, courtesy of Keith Allison http://www.flickr.com/photos/27003603@N00/2310256673

Tiger Woods' Sterling Reputation Did Much to Advance His Career

In Tiger's case, his golf skills, along his hard work and extreme concentration on his game both of which contributed to his meteoric rise in the sport, all combined to make him exceptional. In addition to these Tiger came across as a decent and very nice guy.

Sure he was probably the greatest golfer in history but he let his record speak for itself while he continued to work on his game. He was good, he knew it, the public knew it and he saw no need to brag about it nor allow it to swell his ego.

Tiger was also an extremely private person. Despite the sharp line dividing his public from his private life, he was always courteous and friendly, took time to talk to fans and media and was willing to give back in the form of charitable works without making a big deal about it for publicity reasons. Finally, once outside the public eye he stayed out - unlike many celebrities, he didn't flaunt his private life in public.

Here again, his image helped in maintaining his privacy because he came across as being so normal and decent that there appeared to be nothing for the paparazzi and tabloids to pick up so the left him alone.

People, whether they were interested in golf or not, liked Tiger and what he represented.

Tiger Woods is First Sports Figure to Achieve $1 Billion in Career Income

Tiger Woods was the epitome of middle class virtue and values and during the course of a 13 year career. A mere three months prior to his 34th birthday this public image and reputation made Tiger Woods the world's first sports billionaire.

Tiger Woods moved from amateur to professional status in August 1996 at the age of 20 and, as of September 2009 at the age of 34 (Tiger was born December 30, 1975 so he wouldn't turn 35 for another 3 months) Forbes.com calculated that the $10 Million bonus he had just received from winning the FedEx Cup pushed his career earnings just over the $1 Billion mark.

I mentioned above that Tiger's endorsement earnings have dwarfed his golf winnings. This is most clearly shown in a February 2008 article by Ron Sirak entitled The rich get Richer:... which includes a table showing Tiger Woods' golf and endorsement earnings for each year from his start in 1996 through 2007.

Tiger's Annual Endorsement Earnings Were Five to Ten Times His Golf Earnings

According to the table in Sirak's article, in this first year, 1996, as a pro Tiger earned $894,060 in golf winnings. Not bad for a 20 year old just beginning his professional career. However, this was dwarfed by his $12,250,000 endorsement earnings that same year. Reputation pays and has paid big for Tiger Woods.

Reading down the table in Sirak's article, one sees that in each of the following years, especially the early ones, Tiger's endorsement earnings ranged from five to nine or ten times his golf earnings. For the twelve year period that the table covered as a whole, Tiger earned a total of $100,890,709 in golf winnings and a whopping $668,550,000 in endorsement earnings.

However, the sex scandal that emerged in the wake of his November 27, 2009 early morning car crash. In the matter of days the squeaky clean reputation he had protected for years vanished and, with it, hundreds of millions of dollars worth of endorsement contracts. More than 50% of his earnings potential vanished.

Tiger Woods is Living Example of the Economic Value of a Reputation

Reputation is important and, in the case of Tiger Woods, it is possible to put a fairly accurate dollar value on his reputation. Tiger, whose reputation has generated as much as $100,000,000 in income in recent years, is an exception in terms of the magnitude of earnings it generated, can still serve as an example of the importance of reputation for all of us.

While most of us don't have reputations with the earnings potential of Tiger's, our reputations can still have an impact on our earnings potential. Increasing numbers of employers now routinely check applicants out on the Internet as a part of their hiring process. And there have been instances of people not getting a job or even losing an existing one because of damaging material these people have posted on the Internet.

However, making decisions to hire or not hire a person, or to do business or not do business with a person or firm based upon reputation is nothing new and has probably been used ever since people began interacting with each other. In this the Internet, like previous improvements in communication and data management, has only added a new dimension to the process.

Tiger Woods is Young and Could Rebuild His Reputation

If nothing else, Tiger Woods has provided us with a very clear dollars and cents example of the value of a reputation and the cost of losing it.

On a more positive note, Tiger Woods just turned 34 and has time to try to repair his reputation.

This, plus his demonstrated capacity for hard work and his ability to focus intently could be of help in this if he chooses to turn his life around.

So, while he is currently a good example of the cost of losing a good reputation, he also has the potential to show us how to regain a once lost reputation.

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Comments 21 comments

Freeway Flyer profile image

Freeway Flyer 6 years ago

I don't see him reaching those same heights ever again, but he could get some of that reputation back. It's hard to feel sympathetic. He got rich from his carefully crafted image, so he should lose money now that it is tarnished. That's the cost of being in the image business.


Pollyannalana profile image

Pollyannalana 6 years ago from US

If it had been a fling, or maybe even two. That wife is nuts if she don't wipe him out and say goodbye forever. Yea, Tiger is the Jimmy Swaggart type, he will never be what he could have been but he will fool enough claiming change to get through life getting all he wants, just more carefully.


 6 years ago

People always say I look like Tiger woods, back then it was a joy. Now, i rarely get that comment anymore. I do believe that he will be back roaring like a tiger once again:)

http://hubpages.com/@epiphany99


Michael Shane profile image

Michael Shane 6 years ago from Gadsden, Alabama

Great article! I will still enjoying watching Tiger play the game of golf. Unfortunately, we all make mistakes and bad decisions, its a part of life...He will recover!


Nicks 6 years ago

The chances are that Woods will earn far more in the future precisely because of all of this - they say, do they not, that there is no such thing as bad publicity (at least over the long term)?


stephensaldana profile image

stephensaldana 6 years ago from Chicago

Good analysis indeed!!!!! The first billionaire in sports arena, Tiger Woods. His reputation tarnished when he came in the grip of sex scandal. He will regain his lost image very soon. It seems that his earning through endorsement will increase in times to come.


Fresh_Flower profile image

Fresh_Flower 6 years ago from London

I'm sure Woods will be back one day, maybe not as golfer but who knows. Great hub, impressive how you've put all information together, thanks!


maven101 profile image

maven101 6 years ago from Northern Arizona

"Tiger Woods is Living Example of the Economic Value of a Reputation". Perhaps that should read " "Tiger Woods is Living Example of the Economic Value of Redemption "...Larry


The Rope profile image

The Rope 6 years ago from SE US

The definitive statement "Tiger Woods is Living Example of the Economic Value of a Reputation". Hope all of your students get the message.


theirishobserver. profile image

theirishobserver. 6 years ago from Ireland

Nice one Chuck, hope your doing well


ecoggins profile image

ecoggins 6 years ago from Corona, California

This is a very perceptive hub. Tiger's self-imposed ordeal is an example of the value of reputation.


Paradise7 profile image

Paradise7 6 years ago from Upstate New York

Good hub, he can recover, I'm sure he's young enough and that he's learned an important lesson. He might not desperately need the money now, anyway, if he's already grossed a billion.


Papa Sez profile image

Papa Sez 6 years ago from The Philippines to Canada

Hey Chuck, excellent hub as usual!

Tiger's story can be viewed in so many aspects as you can see from the above comments. But one thing pretty clear about this is when one attains much reputation (=money, power & influence) as Tiger Woods did, society still expects more from him/her. Therefore, being all these is double-edged and if not careful, it can all be gone.

I agree though that he is young and can still recover...but probably not as high as his reputation has been. Great hub!


Springboard profile image

Springboard 6 years ago from Wisconsin

It's probably one of the saddest stories of the last decade as it closed out. The fact that Tiger is being jettisoned from sponsorship roles is a bit warming, though, in that it points to the idea that there are still SOME standards left in this country. So often that gets called into question, so when you see something like this its refreshing.


Darlene Sabella profile image

Darlene Sabella 6 years ago from Hello, my name is Toast and Jam, I live in the forest with my dog named Sam ...

I agree with the business end of your article. But, all my life, I have had more married men hit on me the single men. All men that I have met, do this, he was just at the wrong place at the wrong time. Men and women have been going through this since the cave man days. I'm not accepting what he did, I just thing the PRESS went after him, and let every man or women stand up and cast the first stone if they are so pure.


Chuck profile image

Chuck 6 years ago from Tucson, Arizona Author

Thanks to all of you for your comments.

I agree that Tiger can make a comeback. Historically, most people are not only willing to forgive when a person does change their life but people also tend, as time goes on, to focus on a person's current actions and reputation.

That being said, it may take Tiger a while to accomplish this. One of the big unknowns in this at the moment is whether or not he will be able to save his marriage. The support of his wife would do much to speed up this process.

Also, just as a bad reputation can tarnish reputations of others associated with you (which is why corporations are dropping Tiger) so too can having the support of someone with a good reputation help to improve the the reputation of one with a tarnished reputation. It can work both ways.\

However, even if Tiger is able to restore his reputation, things won't necessarily go back to the status quo ante in his life.

First of all, any future endorsement contracts will more than likely contain a morals clause (Tiger's current ones may or may not have such a clause) and these clauses will probably be more stringent than any he has had in the past.

Second, we don't know if Tiger and Elin have a prenuptial agreement. However, given the fact that, at the time of their marriage, he was a multi-millionaire and while she was of relative modest means financially, it is likely that such a prenup is enforce (and such an agreement may be a factor in her decision to stay or leave the marriage). However, if she stays she should have sufficient leverage to force some changes in the agreement or drop it entirely as a condition of staying with him.

Finally, Tiger will probably no longer be able to enjoy the degree of privacy he and his family had in the past as the tabloids and paparazzi will probably keep close tabs on him in hopes of another big scoop.

Thanks again.

Chuck


breakfastpop profile image

breakfastpop 6 years ago

Tiger will survive all of this. The public has a short attention span.


Laura in Denver profile image

Laura in Denver 6 years ago from Aurora

Great article! Tiger blew it. We will see if his marriage survives. The online jokes are as bad as the OJ Simpson ones, gag!


Pamela99 profile image

Pamela99 6 years ago from United States

Very good article. I think Tiger will be back on the greens and memories fade but I don't think he'll regain all the respect he enjoyed previously. If it was just a one time fling and he immediately apologized it would have passed quickly. It will just take time to know his future in my opinion.


Sandyspider profile image

Sandyspider 6 years ago from Wisconsin, USA

I think Tiger Woods will bounce back. Too bad he couldn't keep his pants zipped.


William F. Torpey profile image

William F. Torpey 6 years ago from South Valley Stream, N.Y.

Excellent analysis, Chuck. Big business likes to tap into the reputation of others, but this time they dropped the ball (or should I say they hit one out-of-bounds.) If Tiger runs low on funds, we perhaps we can chip in and lend a few bucks.

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