Tiger Woods=? Golf Economy

Tiger Woods’ scandal and his retreat might have impact on America's annual $75 billion golf economy.

 

Neal Pilson, former president of CBS Sports and now a sports broadcast consultant, says that Tiger's indefinite leave from competition is affecting TV advertising purchases for 2010 PGA Tour events. Because of the soft economy, advertising inventory for the first half of 2010 wasn't sold out before the Woods scandal erupted on Thanksgiving. Now that Tiger has decided to sit out indefinitely, companies are likely to "wait and see what happens" before making commitments, according to Pilson. "But once Tiger returns, normal golf sponsors will step up."

 

Pilson also says that in 2010 networks could end up making financial adjustments to advertisers who purchased spots for events where Woods was expected to play. "We went through the same thing last year with Tiger's knee surgery," says Pilson. "If ratings come in well below what was expected, adjustments might happen."

 

But Woods's scandal isn't all doom and gloom for TV, even at Golf Channel. The cable network, which just completed the third year of a 15-year deal with the PGA Tour, claims to have been unaffected by Woods's scandal. "We have not seen any impact on advertising sales," says Page Thompson, president of the network. "In fact, we're starting to see improvement on ad sales. We've been signing at a good pace for 2010."

 

Thompson acknowledged that Woods could have a modest negative impact in 2010 depending on how long he stays out of action. "We broadcast 47 Tour events, and Tiger plays in about one third of them," says Thompson. "But long-term, we don't anticipate any impact."

 

While we're sure to see short-term effects for broadcasters, any attempt to measure the long-term impact of the scandal is pure speculation, according to Pilson. The Tour's current TV contract doesn't expire until the end of 2011, and negotiations for the new contract "would be deferred until we know what Woods's plans will be."

 

Tournament organizers are also sure to feel the effect at the gate. When Woods missed half of the 2008 season and the beginning of the 2009 season while recovering from knee surgery, crowds were noticeably smaller at PGA Tour stops that had previously featured Woods. For instance, attendance at the 2009 Buick Invitational, played at Torrey Pines in February without Woods, was down 30 percent compared to 2008, according to Tom Wilson, the tournament director.

 

But will Woods's absence cast an economic pall over the entire golf industry? Will 26-handicappers stop taking lessons and going on golf vacations? Will country clubs curtail operations and have layoffs? After speaking with several industry leaders, it seems like the broader golf industry won't live or die with Woods. "The game is bigger than Tiger, regardless of what people might think," said Mike Adams, the director of instruction at Hamilton Farm Golf Club in Gladstone, N.J., and a Golf Magazine Top 100 Teacher.

 
 

 

Nobody I spoke with, including Adams, believed that Woods would be away from the game for too long. The consensus was that, barring an unforeseen circumstance, Woods should be back by the Masters in mid-April. Any industry-wide economic ramifications of Woods's hiatus, then, may well be limited to the first part of the year. And, the economy has a much larger influence on golf as a whole than Woods. "The real problem at the club and course level is the economy," Adams said. "We have courses closing all over the place, and it's kind of scary."

 

Despite Woods's unmatched popularity, participation rates in the game have actually been trending down since he turned pro in 1996. According to the latest figures from the National Golf Foundation, rounds played have decreased by six percent over the last decade, dropping to 489 million in 2008 from 518 million in 2000.

 

"Tiger doesn't affect rounds played," says Tom Stine, a co-founder of Golf Datatech, a market research firm. "The average player doesn't care if Tiger's playing. They'll play golf no matter what." To support his point, Stine explains that rounds played in the U.S. were virtually the same for the first 10 months in 2008, when Woods missed months of tournament golf due to knee problems, as they were in the first 10 months of 2009, when Woods played nearly the entire season.

 

Stine, whose company provides research to most equipment makers, also predicted that Tiger's absence won't have a major impact on the golf equipment industry as a whole. "People don't give up an obsession because of one person. If Derek Jeter stopped playing baseball, would kids stop signing up for Little League?"

 

Most industry experts interviewed for this article agreed that the economic impact will not be a long-term issue. They expected Woods to be back on Tour and winning sooner rather than later. As soon as that happens, especially at the majors, things should return to normal.

 

"Every sport has black eyes," Adams said. "When Tiger gets close to Nicklaus's record, everybody will be back to watching Tiger. Then, everything happening now will be a moot point."

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