By JARED SHELLY, senior editor / web editor of Risk & Insurance®
For years, the American public knew Tiger Woods as one of the best golfers of all time -- letting out his signature fist pump while winning golf tournament after golf tournament.
But after a car accident led to numerous claims of infidelity, that Tiger seemed like a distant memory. He apologized on TV, went through a very public divorce, checked himself into sex-addiction rehab and saw his golf game plummet because of injury. In the process he lost all of his valuable endorsements -- from Buick to Tag Heuer.
So how can he convince companies that he's no longer a reputational risk? His win at the Chevron World Challenge in early December can certainly help. The victory comes 749 days since his last win. On the golf course, it remains to be seen if he can get back to an elite level, but if he can mainstream lucrative endorsements may be right around the corner.
He already has some; he signed a deal in November with Fuse Science Inc., a Florida-based sports nutrition company, to endorse his golf bag. A month earlier, Rolex signed him to become its endorsement ambassador.
"America likes winners. When he starts winning again, he'll regain some of his value," said Alex Fairly, executive vice president and leader of the sports and entertainment practice, for Willis Global Sports Services.
To be sure, some companies will never touch Woods again, but others will be much more forgiving.
"Companies in the endorsement business have all different appetites and cultures," Fairly said. "Some will never hire Tiger again, but some will do it the first minute they think he's valuable."
In sports, the old adage of "just win baby" has led to a lot of forgiveness from fans, the general public and companies looking for players to endorse their products.
NBA star Kobe Bryant lost millions in endorsements when he was charged with rape in 2003, but after the charge was thrown out -- and his Lakers won back-to-back championships in 2009 and 2010 ? now he has deals with Nike, Turkish Airlines and Smart Car worth around $25 million.
Ben Roethlisberger, quarterback of the Pittsburgh Steelers, faced sexual assault charges in 2009 (they were later dropped) but the Steelers made the Super Bowl last season and appear to be primed for another deep playoff run. Michael Vick went to jail for dog fighting, but three seasons as the Philadelphia Eagles quarterback has garnered him attention for football again. Both lost big money in endorsements but have recouped some small deals. If they continue to win, more endorsements could come.
The lessons in reputational risk are vast, said Laurie Fraser, global markets leisure practice leader at Willis Limited in London. How can a company insure that an athlete or celebrity won't go from golden boy to public mockery?
"It's very tricky for an insurer to measure that," Fraser said.
Instead, she said, companies include a clause in the contract that the endorsement deal can be terminated from bad behavior. But some sponsors may be desperate to sign someone, especially someone with widespread public appeal (think Michael Jordan in the 1990s) so they may forgo such a clause.
But, Fraser said, such a sponsor would be taking a huge risk.
December 13, 2011
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