As marketer, Woods no longer sure thing
Monday, January 25, 2010
In the aftermath of Tiger Woods’ scandal, the golf world collectively braced for the jarring repercussions it might deliver. Pundits speculated ad nauseam about the possible fallout for the PGA Tour, TV networks and corporate sponsors.
But the “transgressions” committed by Woods are bound to hit him the hardest, and the damage extends far beyond his shattered personal life.
As the game’s transcendent star, Woods was a one-man corporate juggernaut, the likes of which had not been seen in sports. “Tiger Inc.” still may be salvageable, but its core components – a promising course-design business, his TW-branded products from apparel to video games, and his endorsement portfolio – lie stagnant, and their futures are uncertain amid the chaos that has become Woods’ life.
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Flash back to Oct. 3, 2009.
That’s when Woods made his last publicized visit to his inaugural U.S. course-design project, High Carolina, outside Asheville, N.C. The massive development with 1,200 planned home sites was promoted as a residential nirvana by Woods himself.
In a promotional spot videotaped that day, he says: “With a wife and two kids, your perspective on life changes. I want to have my kids experience something like this. I want to be able to bring them up here and feel safe, feel secure and enjoy running the trails and being a part of nature like this. Because your priorities start changing and evolving once you have family, and I want to be able to come up here as often as I can.”
The words ring empty now. So, too, does his development.
Even before Woods’ life unraveled with an admission of infidelity, the battered economy made sales at High Carolina negligible: As of September, 29 lots had been sold for $29.2 million.
High Carolina officials didn’t respond to repeated interview requests from Golfweek, but all indications are that the project has stalled. Executives at The Cliffs Communities, which owns the development, haven’t announced how, or if, they’ll change their marketing strategy. But any route they take could be challenging, considering what has been an almost singular reliance on Woods.
Indeed, the day The Cliffs Communities unveiled the project more than two years ago, the company bused in hundreds of its employees to Furman University in Greenville, S.C., for a private motivational session led by Woods. Later that morning, Woods met the media and shared the dais with Jim Anthony, founder and president of The Cliffs Communities. Together, they touted plans for the family-oriented golf and recreational community on 3,200 acres. Later in the week, full-page color ads for High Carolina started running in The Wall Street Journal – at a cost of $70,800 apiece. More recent ads, since discontinued, featured the distinct profile of Woods casting a large shadow across a mountainous site.
From the outset, Tiger Woods Design made clear that it would take on only select projects. Then again, with Woods commanding a minimum fee of $10 million per design, the supply of prospective clients was limited. In addition to High Carolina, his firm has two other projects: Punta Brava, near Ensenada, Mexico, and a major development in Dubai, United Arab Emirates.
Bryon Bell, president of Tiger Woods Design, neither would discuss whether Woods plans to adjust his fees nor provide an update on current projects and future prospects. His only comment: “We support Tiger’s decision to focus on personal healing and remain confident in his dedication to golf course design.”
Like High Carolina, Woods’ project in Dubai also is at a standstill. Tiger Woods Dubai – Al Ruwaya is a sprawling desert complex planned with palatial homes and a luxury hotel sitting 30 miles south of downtown Dubai. A dramatic slowdown in the Dubai economy derailed it, and while Woods visited the site as recently as November, his golf course sits half-completed. (He reportedly received more than $20 million for this project, including his fee and a percentage of real-estate sales.)
But Brady Oman, a principal of The Flagship Group, remains confident that demand for a Tiger Woods-signature layout will return in time. He’s the driving force behind Punta Brava, a Woods-designed, high-end oceanfront real-estate retreat 65 miles south of San Diego. Plans call for a golf course along Todos Santos Bay, with part of the 450-acre property devoted to private estates.
Oman said the Woods scandal hasn’t had an opportunity yet to affect his venture; the project still is negotiating environmental permitting and sales haven’t commenced. Construction isn’t expected to begin until the third quarter of this year.
With time, Oman predicts Woods will distance himself from his problems and regain his cachet as a golf maestro – which should help Oman sell lots.
“It hasn’t really changed any of our plans,” Oman said. “We look forward to working with him.”
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Golf retailers, who have endured a brutal two years, likely were counting on Woods to help jump-start sales in 2010. But there’s plenty of anecdotal evidence to suggest he’ll be more of a liability than an asset.
That could mean more woes for Woods and his business partners – most notably Nike Golf – which makes Tiger Woods-branded products.
At the beginning of the year, Games People Play sent an e-mail blast to its shoppers, promoting an array of Nike Golf merchandise. That’s when the retailer received indications of a backlash to Woods and the brands he endorses.
“A male customer wrote back (saying) that as long as Nike supports Tiger Woods, he won’t buy its products,” said Austin Williams, the retailer’s vice president of U.S. and global sales.
Such a response might represent an extreme – and minority – opinion, but it certainly raises potential issues that Nike Golf may need to address. No other company is more closely linked to the world’s No. 1 player, nor has benefited more from his support.
Nike Golf officials repeatedly have said Woods legitimized the company as an authentic golf brand, considering Nike still was in its infancy in the sport when the two paired in 1996. Woods began using the company’s clubs several years later, and his switch to a solid-core Nike golf ball in 2000 not only gave Nike traction in that product category, but it also led to the demise of wound golf balls, which then dominated the marketplace. But fully aware that such dependence on Woods would have drawbacks, Nike diligently diversified its tour staff that now includes major champions Stewart Cink, Lucas Glover and Justin Leonard.
Cindy Davis, president of Nike Golf, declined to answer questions about how the company would cope with Woods’ absence – or quantify its impact.
But in an e-mail, she said, “The growth Nike Golf has enjoyed in recent years has been the result of a long-term and focused strategy. . . . You’re going to see a continuation of that approach as we launch new and more innovative products and marketing to support them in the coming months.”
At least temporarily, that means promoting the rest of Nike’s tour staff and less of Woods. According to several retailers, new in-store displays don’t feature Nike’s biggest star. “It’s Anthony Kim, Trevor Immelman and some other guys,” Games People Play’s Williams said.
Another retailer, who requested anonymity because of the business he does with Nike, said sales declines of Tiger Woods-branded product was “noticeable.” In the two weeks after Woods’ Nov. 27 car crash, the retailer accepted several Internet-sales returns accompanied with hand-written notes expressing disapproval of Woods’ actions.
Some retailers also said they would reduce orders of Nike’s Tiger Woods merchandise, especially his apparel line because its success has hinged on the exposure Woods gives it during the majors. Nike carefully “scripts” his outfits for such events.
“If he’s not going to play, I’m not going to buy those shirts,” Williams said.
Meanwhile, EA Sports plans to launch this month an online version of its popular PGA Tour Tiger Woods video game – regardless of whether Woods returns to action in real life.
EA officials would not discuss whether Tiger Woods’ video game suffered a sales hit. Instead, they expressed only optimism for their new product, which has been in development for the past year. Tiger Woods PGA Tour Online already has engaged more than 75,000 participants during closed beta-testing, according to the company. Open beta-testing begins this month.
Publicly, Peter Moore, president of EA Sports, has suggested the quality of Woods’ performance on the course – and its replication in EA’s games – are the only factors that matter to the company and its consumers.
In a company blog dated Jan. 4, Moore says: “We didn’t form a relationship with him so that he could act as an arm’s length endorser. Far from it. . . . But regardless of what’s happening in (Woods’) personal life, and regardless of his decision to take a personal leave from the sport, Tiger Woods is still one of the greatest athletes in history. At EA Sports, we make authentic sports simulations. When we say “It’s in the Game,” it is not just a tag line but a statement about the quality and authenticity of the game experience. Tiger Woods PGA Tour Online is truly representative of that rallying cry, and a game that all of us at EA Sports are proud to be delivering this month to sports fans around the globe.”
There are signs, however, that privately EA officials are concerned about the future of its Tiger Woods franchise. Several recent reports say the company commissioned a survey of consumers, polling their attitudes toward Woods and their interest in buying his games. (EA officials wouldn’t confirm whether such a study had been conducted.)
Online comments from EA fans, who responded to Moore’s blog, reflect a wide range of opinions regarding Woods.
“Well said, Peter. People make mistakes. Can’t wait for TW 11, 12. . .,” wrote one consumer.
But another replied: “So why are you floating around an online survey to determine the viability of the brand?. . . . Your insistence for player recognition to sell your brand causes conflicts and headaches like this. . . . Your games are your strength, you don’t NEED Tiger Woods to promote a quality golf title.”
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So, then, who does need Woods to sell products and services?
It’s a virtually unanswerable question at the moment, stumping marketing experts who concede they’ve never witnessed a spokesman of Woods’ caliber fall to such unfathomable depths. At the onset of Woods’ revelations, as shocking as they were, a consensus existed in the marketing community that Woods would escape with his endorsement portfolio relatively intact. Indeed, several of his longtime partners, including Nike, Gatorade and EA, stood by him.
But in the subsequent weeks, allegations against Woods continued to mount. Public ridicule intensified. And his absence lengthened; he has yet to be seen publicly since the accident. Now, blue-chip corporations such as AT&T and Accenture have dumped him, prompting a re-evaluation of Woods’ future endorsement clout. Many still insist that as long as he returns to his winning ways, Woods will continue to be an effective endorser of products, especially those linked to his on-course skills.
The scope of his marketing effectiveness, however, likely has been narrowed. It’s difficult to imagine, for instance, a company ever using Woods again the way Accenture did. The business consulting firm marketed Woods to personify what it stood for: corporate excellence and integrity.
Ultimately, the value of Woods’ stock as an endorser will depend on clients’ willingness to gamble.
“He is such an anomaly. I don’t know if anybody could truly predict what may happen to him,” said Chris Higgs, director of golf for sports management firm Octagon, which helps companies select athletes for marketing initiatives. “It will depend on two things: the culture of the company that wants to do business with Tiger, and what he decides to do when he finally chooses to return.
“So much of what he says, and how he says it, will have an immediate effect on how he is viewed in the next phase of his career.”
– Adam Schupak contributed