00:00 Hi everyone, I'm Rose Marie Miller here with Brett Knight, a senior editor here at Forbes,
00:08 here to discuss Tiger Woods ending his longstanding Nike partnership.
00:13 Thank you so much for joining me today, Brett.
00:15 Thanks for having me.
00:17 Absolutely.
00:18 So, Brett, how much money did Tiger Woods make with Nike over the course of their partnership?
00:23 So this was a partnership that Tiger signed with Nike in 1996, immediately after he turned pro.
00:30 He was only 20 years old then.
00:32 So in the more than 27 years since that partnership was signed, we estimate that he made more than $500 million
00:39 before accounting for taxes and agents fees and everything else that gets netted out of that.
00:44 But more than $500 million in total earnings at the peak of that contract, that was over $30 million annually for Tiger,
00:55 which was a big step up from the initial deal that he signed, which was widely reported at $40 million over five years.
01:05 That's a deal that a couple of years after he signed it, Tiger's dad Earl called it "chump change."
01:13 So in hindsight, it looks pretty crushing.
01:15 But it's important to remember that at the time that he signed that, it was already one of the most lucrative endorsement deals
01:20 in sports history to that point.
01:22 And it just went up from there.
01:24 So more than $500 million total across more than 27 years, an incredible endorsement deal.
01:29 So how did Tiger Woods help build Nike's golf division, and what's the status of that division now?
01:36 So as much as Tiger profited from this partnership, it was just as beneficial for Nike.
01:41 Their golf division, when they signed Tiger in 1996, was virtually non-existent.
01:47 And in just a matter of a couple years, it reportedly grew tenfold to $300 million in sales.
01:55 In the early 2000s, that division started making golf balls and golf clubs, as well as apparel and shoes.
02:04 And that division ended up growing to almost $800 million in sales at the height.
02:11 So this was a deal where Tiger wore Nike everywhere.
02:19 He was a tremendous pitchman for that division, for those products.
02:23 Even in ads that he was filming for other brands, he would still often be wearing Nike apparel.
02:30 So we did a story at Forbes many years ago where we talked to a Buick executive when Tiger was filming Buick ads.
02:40 And Tiger was wearing Nike hats in those ads.
02:44 And even these other companies that were hiring him to pitch their products, they didn't see any problem with that.
02:49 They just thought it was, you know, Tiger is Nike.
02:52 It's natural that he wears Nike products in any public appearance.
02:56 You know, Nike wasn't necessarily contractually requiring him to wear Nike products in all those divisions,
03:02 but they certainly were encouraging it and they certainly benefited from it.
03:05 There's a story of Phil Knight, the Nike co-founder, at a shareholder meeting in 2000.
03:11 There was a question that was maybe challenging him a bit, whether Nike could maybe find some better ways to spend $20 million a year than giving it to Tiger Woods.
03:21 He had a very simple answer.
03:23 No, he was, you know, Tiger was just tremendously valuable to this company.
03:30 In the years since, Nike has been pulling back in its golf efforts.
03:36 They stopped making equipment like the golf balls and golf clubs in 2016.
03:41 Now there have recently been some rumblings that Nike might pull out of golf entirely, even stop making the golf apparel.
03:50 You know, one factor there is that, you know, even though Nike is one of the big golf apparel manufacturers,
03:57 it's a tiny slice of that company when you compare it to everything else it has going on.
04:02 This is a company that does, you know, $50 billion or more in annual revenue.
04:06 So golf, very, very small piece.
04:09 And the company has additionally said that it wants to bring down costs by up to $2 billion over the next three years and that there's going to be some layoffs across the company.
04:18 So, you know, some rumblings about what might be the future of Nike, Nike golf without Tiger.
04:26 You know, there's some other movement in the sponsorship world that is sort of fueling that speculation as well.
04:33 A high profile golfer, Jason Day, recently left Nike for a new endorsement deal with Malvern.
04:39 There's some speculation that other high profile ambassadors could leave, too.
04:43 So a little bit of uncertainty on what lies ahead for Nike golf, but certainly these last 27 years, they have, you know, extracted tremendous value from this, this endorsement deal with Tiger.
04:56 So what brands could Tiger possibly partner with in the future?
05:02 So there's a lot of options here for Tiger going ahead as he thinks about, you know, what companies he might want to work with.
05:08 So it's a bit hard to handicap exactly where he might go.
05:11 You know, he's in this sort of free agent status as a pitch man right now, you know, relative to some other segments in the sports apparel and sports equipment world, like, say, basketball sneakers, where you mainly have just two or maybe three brands.
05:26 Golf is a lot more fractured.
05:28 You have a lot of smaller brands that have, you know, one or more of prominent golfers that they work with as ambassadors.
05:36 So, you know, one option would be Tiger to go with a relatively established brand that wants to expand.
05:43 One example would be TaylorMade.
05:45 He already uses TaylorMade equipment.
05:47 They have a small apparel section or apparel offering within the company.
05:51 So if they wanted to expand their apparel business, maybe they look to Tiger.
05:57 You could also go with one of these, you know, sort of new upstarts.
06:01 Anyone who wants Tiger, even though, you know, he's winding down his career, anyone who wants Tiger is going to have to pay up.
06:07 So if it is one of these smaller brands that doesn't have the marketing budget to, you know, pay him many, many millions in cash, he could do more of an equity deal, take a stake in the company as opposed to taking the cash.
06:19 You know, a sort of example of that would maybe be if you think about Roger Federer, late in his career, started working with On sneakers.
06:30 He invested some of his his own money in that, took a pretty significant stake.
06:34 And, you know, in the wake of their IPO and their continued growth, that stakes now, you know, worth a couple hundred million dollars.
06:43 So Federer has done very well going that way.
06:46 One name that's coming up a lot as people start to speculate on this with Tiger is Grayson Clothiers.
06:52 They're fast growing.
06:54 They have, you know, 20 or so prominent ambassadors already, including both pro golfers and athletes from from some other sports like hockey and baseball and tennis.
07:05 John Justin Thomas is their biggest golfer on their roster.
07:09 He's he's a friend of Tiger's. So there's a connection there.
07:12 But the real reason that people keep coming back to Grayson in the last couple of days is that, you know, last month, Larry Fitzgerald, the former NFL receiver, had this Instagram story where he seemed to indicate that Tiger's son, Charlie, his 14 year old son, who's who's a up and coming golfer.
07:33 You know, Larry Fitzgerald seemed to indicate that Charlie Woods had signed with Grayson.
07:37 People also noticed that Charlie was wearing Grayson products at this tournament in December, the PNC championship where fathers and sons golf together.
07:49 So, you know, there's there's some loose connection maybe there with with Tiger already.
07:57 You can actually some of these offshore sports books are allowing you to place bets on where Tiger ends up with his with his sponsorship deal.
08:07 And so for what it's worth right now, TaylorMade is the favorite. Grayson is next up.
08:12 So could be one of those two. There's other options.
08:15 Skechers, Under Armour, Adidas, Uniqlo.
08:18 Those are among some of the other prominent brands in the mix, at least according to odds makers.
08:23 So hard to say right now, but he certainly has a bunch of options where he could end up.
08:29 Well, Brett, what does Tiger's endorsement career look like going forward?
08:35 So Tiger doesn't play a ton of golf anymore between injuries and age.
08:40 He's, you know, he's really scaled back where he's able to play.
08:45 But in golf, you can have a long endorsement career off the course in retirement, even after you stop playing.
08:51 So, you know, if you think back to Arnold Palmer, he won his last PGA Tour event in 1973.
08:59 But at the time of his death in 2016, we estimated he was still making, you know, 40 million dollars a year.
09:06 So that would have been more than all that a handful of active athletes even today make off the field.
09:13 So other other prominent golfers like Jack Nicklaus and Gary Player and Greg Norman have also been very successful since retiring from competition.
09:24 So, you know, regardless of how long Tiger keeps playing on tour, you know, he's he's indicated he's going to be playing in L.A. in February.
09:32 But regardless of what the future holds after that, even even whether or not he decides to play on the senior tour after he turns 50,
09:40 there's still plenty you can do on the marketing side, both with his apparel sponsorship and and otherwise.
09:47 And he also has a bunch of businesses already to occupy his time.
09:51 So he has a golf course design business.
09:55 There's a golf league he's founding with Rory McIlroy that's scheduled to start play next year.
09:59 So certainly no shortage of things that the Tiger can keep doing as he transitions out of being a competitive golfer and into retirement.
10:07 Well, this has been great. Thank you so much for joining me today, Brett.
10:11 Yeah, great speaking with you.
10:12 Great speaking with you.
10:13 Thank you.
10:14 Thank you.
10:15 Thank you.
10:17 Thank you.
10:19 Thank you.
10:20 [BLANK_AUDIO]
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