Study: Tiger Woods Scandal Cost His Sponsors up to $12 Billion

The study looked at eight of Tiger's sponsors: Accenture (ACN), AT&T (T), EA Sports (Tiger Woods PGA Tour Golf), Procter & Gamble's (PG) Gillette, Nike (NKE), PepsiCo's (PEP) Gatorade, TLC Laser Eye Centers, and Conde Nast's Golf Digest. Knittel and Santiago deduced that the scandal cut the value in these companies roughly 2.3%, which comes out to nearly $12 billion.

Is it possible that the losses are simply related to normal stock market activity? Not according to the researchers, who noted that the "pattern of losses is unlikely to stem from ordinary day-to-day variation in their stock prices." The report shows that the three sports-related companies (EA Sports, PepsiCo, and Nike) were the hardest hit, experiencing a "scandal-generated drop" of 4.3% in stock value (or $6 billion). The other end of the spectrum was demonstrated by Accenture (which has removed Tiger from its ads), which experienced no drop after Tiger's dust up. According to Stango, the "findings speak to a larger question of general interest in the business and academic communities: Does celebrity sponsorship have any impact on a firm's bottom line?" It sure seems that the answer to this question is yes, the evidence definitely appears undeniable.

Overall, the results of the study are fascinating. If you would like to read the entire report, it can be found here. You may think that reading the study is like watching paint dry, but it truly is a fascinating study that shows exactly what sponsorship and the image of the celebrity means to Wall Street heavyweights. Don't discount the fact that this study points out what many companies think when looking for a celebrity endorser; I'm guessing we won't see Lindsay Lohan or Amy Winehouse as celebrity endorsers any time soon.