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How much is Tiger’s knee worth?

2008 June 18
by Skip Sauer

Unless you are a competitor, Tiger Woods’ impending season-ending knee surgery is a major blow to the sport of golf. Reader Shane Lorimer asks: “In your estimation, what is the economic impact that the PGA and all other invested parties will suffer in regards to Tiger Woods being out for the rest of the season?”

Here’s my wild guess: Tiger represents a significant chunk of TV ratings, that is for sure. But most of those contracts are already set. Late sales of ads by networks carrying the Open Championship, PGA, the Tour Championship, & Ryder Cup will require price adjustment. Losses to advertisers that have “overpaid” must also be included.

Tiger earns an estimated $100m a year from endorsements. If what he generates for television itself is about equal to that, then missing 1/2 the season would result in a $50m loss to TV & “non-Tiger” advertisers who benefit from his presence on the course (and our eyes on the tube). The consumer surplus of fans who attend the tournaments will fall appreciably too. That value is also quite large & relevant. So $50m in economic impact might not be enough.

Tiger’s knee could thus be worth a couple hundred million bucks in present value. Doc had better do a good job!

Update: CNBC’s Darren Rovell asks a sports marketing pro the question. The answer focuses on the loss of exposure while out on the course. Nike loses “$65 to $75 million.” Add a few million more from Buick & Gatorade. I wonder how those contracts read?

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