A couple of economics geeks pimped the spotlight this week by announcing the results of a “study” they conducted, which concluded that the Tiger Woods saga may have cost shareholders of the companies he endorses (or endorsed: See Accenture and now AT&T, which has a “map” issue more than a Tiger issue.) “up to” $12 billion.
I presume researchers Victor Stango and Christopher Knittel of the University of California, Davis, did all of this with a straight face while chuckling “gotcha” at the flurry of coverage the findings received. The low side of their estimate was $5 billion (a figure conspicuously omitted from most stories and headlines). And they did acknowledge their study – which looked at the companies’ stock prices in the 13 days after Woods crashed his car outside his home – had a “particularly large” margin of error.
But two major flaws should be noted:
First, relative to the combined revenues of the companies, $12 billion is akin to Woods losing his wallet at a mall. (The researchers acknowledge their totals represent only a 2.3 percent drop.) Losing the cash hurts but he’d still be able to eat.
Also, to ascribe the totality of the losses in stock price solely to the saga neglects all the other factors that affect stock price – such as revenue, etc. Sure, much of a stock’s value is based on the perception of its future value but perception does not account for 100 percent of any change in value (after all, while one person is selling, another is buying.)
All that said, Woods’ “stock” (his value in the marketplace of public appeal) clearly has taken a Lawrence Taylor-type hit. If he were a stock listed on the NYSE, you might be thinking Enron – toxic beyond salvaging.
So do you sell? Buy? Or hold?
History may provide a clue. Starting with Martha Stewart. On the day in 2004 when the CEO of Martha Stewart Omnimedia was found guilty of obstruction of justice and lying to the government about her sale of another stock, the price of MSO fell 22 percent to $10.86. Less than a year later, it had surpassed $35.
What about in sports?
Perhaps the biggest collapses of late have involved baseball and steroids. Three names come to mind: Roger Clemens, Barry Bonds and Alex Rodriguez. Of the three, only A-Rod’s “stock” has rebounded. Why? Because he a) did the public mea culpa and requisite apology (whether you believed him or not) and b) performed extremely well this season, helping to lead the Yankees to a World Series title.
Clemens and Bonds have done neither. If you didn’t sell their “stock,” you’re stuck with dogs.
Throughout sports history the “stocks” of Ben Johnson, Tonya Harding and Pete Rose took precipitous drops. Johnson and Harding have all but been liquidated, while Rose holders are probably hanging on for sentimental value (and some thin hope that he will still someday wind up rightfully in the Hall of Fame).
The summer of 2003 saw the stock of one of the NBA’s biggest young stars fall to the brink of bankruptcy. Kobe Bryant was accused of sexual assault by a 19-year-old Colorado hotel employee and endured a trial of OJ-like proportions. (OJ’s “stock”? Hard to believe it was ever high at all.) Like Tiger, some companies abandoned him while other’s chose to “hold.” Now (the case was eventually dismissed), Kobe is a global icon whose marketplace value has never been higher.
In golf, John Daly’s “stock” suffered several rock-like drops as he battled alcohol and marital problems, and never reached the level it once achieved.
So what are prospects for Tiger’s “stock?” I’d say definite “hold” (if you’re already in the fold) or “buy.” (If you’re Verizon or another AT&T competitor.)
America loves a comeback. And like A-Rod and Bryant, Woods has an opportunity to revive his “stock.” First by following their lead and stepping into the light of scrutiny and telling us what is in his heart rather than pinging us through his website. And secondly by winning golf tournaments again, by re-engaging his assault on Jack Nicklaus’ record for major victories.
In fact, Woods should make his “indefinite” hiatus from golf definite and announce he will return in time to play in the Masters. (That would require him playing in perhaps two tournaments prior.) He should purge himself before the cameras, then head directly to the first tee.
It might become the most watched moment in Masters history. And should he be in contention on Masters Sunday, well, “Tiger” shareholders will be seeing green again.
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