Tiger Woods' infidelity bombshell in November cost him millions of dollars in company endorsements, but it's a fraction of the estimated $5 billion to $12 billion lost by shareholders of those companies in the weeks following the scandal, according to a University of California, Davis, study.
The study analyzed the performance of companies that Mr. Woods endorsed — Nike Inc., Accenture Corp., AT&T Inc., Gillette Corp., Gatorade Co., TLC Laser Eye Centers, Golf Digest and Electronic Arts Inc. — between his Nov. 27 car crash and Dec. 11, when Mr. Woods announced his indefinite leave from the sport.
The study's authors — UC Davis associate economics professor Christopher R. Knittel and assistant professor for the Graduate School of Management Victor Stango — used a so-called event study method that compared returns to those of similar companies, the overall market and historic return data.
Returns by Dec. 11 were -2.3% for all companies combined and -2.4% for the five largest companies — Accenture, Nike, Gatorade, Gillette and Electronic Arts.
“The upper range of our shareholder loss estimates far exceeds the lifetime income that Mr. Woods could expect if one projects his 2009 endorsement income over the next few decades,” the report states, estimating his annual endorsement income. “The total economic losses to society from these events — the sum of Mr. Woods' losses and the losses to shareholders — could easily exceed several billion dollars.”
Mr. Stango declined to comment on the study, and Mr. Knittel did not respond to requests for an interview. — Timothy Inklebarger
