Tiger Woods’s one-shot victory over Zach Johnson this weekend at the Chevron World Challenge was a pivotal moment on two fronts. For one, it marked the first win in more than two years’ time for the PGA’s struggling star, who has fought a tarnished image and slumping play ever since 2009, when his extramarital affairs came to light.
But it also marked the point at which Chevron (NYSE:CVX) threw caution to the wind by parting ways with El Tigre and ending its sponsorship of the event, which Woods has hosted since 1999.
Chevron clearly didn’t do its homework.
Anyone can tell you that Tiger Woods is one of the greatest golfers of all time. He’s won 71 PGA tour events, and he’s second to only legendary Jack Nicklaus in major tournament wins, with 14 to the Golden Bear’s 18.
Anyone can tell you that Tiger Woods isn’t just rich — he’s absurdly rich. As of September 2010, Woods had a net worth of $500 million. As a matter of scale, that would make him worth more than companies like Kodak (NYSE:EK, $299 million market cap) and Caribou Coffee (NASDAQ:CBOU, $271 million).
But what you might not know (and what Chevron certainly doesn’t) is that Tiger Woods is more than absurdly rich. He’s an economy unto himself. He’s a market force — and for most of the companies that have shunned him, he’s a headwind.
On Nov. 27, 2009, Tiger Woods crashed his Cadillac Escalade into a tree, ultimately sparking the public revelation that he had engaged in years of infidelity. On Dec. 11, amid mounting pressure in the press, Woods released a statement admitting to the affair and announcing his break from golf.
A day later, some of the world’s most recognizable publicly traded companies began a timeline of Tiger-centric decisions that ultimately would change their market paths. And as was the case for gamblers who took sides on golf outcomes for most of the past decade, the companies that bet against Woods mostly lost. . .
Dec. 12, 2009: Gillette, the personal care brand of Procter & Gamble (NYSE:PG), suspended Woods from its marketing and advertising campaigns (and would drop him completely as a sponsor almost a year later). In about two years, Procter & Gamble stock is up 4%, a modest gain — in a bubble. However, the S&P 500 gained nearly 14% in the same time frame.
Dec. 13, 2009: Accenture (NASDAQ:ACN) sets itself apart as the lone company to shun Woods and prosper, with ACN shares gaining 41% in the past two years to far outperform the market. The company never fully could shake Woods as a sponsor of the World Golf Championships, including the Accenture Match Play Championship. You could say Accenture actually reversed the Tiger curse, as Woods has failed to win a WGC event since August 2009.
Jan. 1, 2010: AT&T (NYSE:T) cements its place in giant telecom mediocrity and ensures itself no chance of retaking its U.S. telecom lead from Verizon (NYSE:VZ) by cutting ties with Woods. AT&T stock has risen just 4% compared to almost 12% by the S&P 500, and for the past two years, AT&T has lagged the other top U.S. telecoms in Consumer Reports’ Annual Cell Service Provider Survey.
Jan. 13, 2010: The greatest casualty of Woods’s deserters. General Motors (NYSE:GM), which had mostly separated from Woods in 2008 when Buick ended its sponsorship, axed a deal that allowed Tiger to continue borrowing cars for free. GM then went into a 32% nosedive.
Feb. 27, 2010: Gatorade quits on Woods, making PepsiCo (NYSE:PEP) the last member of the publicly traded exodus. PEP shares have since greatly underperformed the market, gaining 3.5% to the S&P 500’s 13.5%. And earlier this year, the parent company suffered a grand disgrace when Diet Coke overtook Pepsi as the nation’s No. 2 soda.
But lest you think Tiger Woods is a cruel market overlord, a few faithful companies reaped the benefits of their allegiance. Since that fateful mid-December announcement. . .
Nike (NYSE:NKE) continued to let its famous swoosh grace Tiger every weekend, and NKE shares have blown up by an astounding 50%!
Electronic Arts (NASDAQ:ERTS), maker of the Tiger Woods PGA Tour series, affirmed its partnership with Woods, then sat back and watched ERTS stock make a rapid 36% ascent.
And even Chevron, which wasn’t a personal Tiger Woods sponsor, continued to back the tournament at Sherwood Country Club and was repaid in kind with a 30% climb through Friday — its last full trading day with Woods by its side.
CVX shareholders should heed this cautionary tale. Chevron has slightly outperformed the markets the past couple days, but Tiger’s Curse has been plainly laid out.
And corporate bigwigs should keep this in mind: The next time your stud athlete hits a snag in his personal life, think twice before cutting bait — your company’s future might depend on it.
As of this writing, Kyle Woodley did not hold a position in any of the aforementioned stocks. Nor would he buy or sell a stock based on the whims of a golfer.