Woods Is Driving for Big Dough

Before Tiger Woods had hit a golf shot as a professional, he signed a $40-million contract with Nike. Now he has swooshed well past that figure.

Woods appears set to sign a five-year extension with Nike, and the Associated Press cites “a source close to the negotiations” as saying it is for $100 million. That would make it the largest in sports marketing history.

Nike Golf President Bob Wood said the only formality left in the yearlong negotiation process is receiving the signed contract in his office. He said he expects to receive it this morning.

“The negotiating has been done for several weeks now,” Wood said. “The only thing left is the logistics of physically having the contract here.”

Mark Steinberg, Woods’ agent at IMG, said the contract has not yet been signed, but said the negotiations are complete and the signature is a mere formality.

“All of the deal points are in place,” Steinberg said. “There are very few times in a player or an endorser’s life that both truly feel they got what they deserved. But in this case they do. I would venture to say that Tiger is very happy.”

The deal, which calls for Woods to continue wearing Nike clothes and using Nike balls, is comparable in length to any deal Michael Jordan had while he was an active player, Wood said.

Jordan’s endorsement contract terms were never made public, but Wood hinted that Woods’ is worth more than anything Jordan made while active.

Earl Woods, Tiger’s father, said he did not know the financial details of the contract, but said if the $100-million speculation is correct, it’s worth it.

“It doesn’t surprise me at all,” Earl Woods said. “He’s worth every bit of it. And when the next contract comes around, this one will look like chump change and peanuts compared to that one.”

Earl Woods said the same thing in 1996, when Tiger raised eyebrows by signing a reported five-year, $40-million deal with Nike. That deal would have expired in September 2001.

Since then, Tiger, now 24, has won 24 PGA Tour events and has won all four major championships. He holds the scoring record in the Masters, the U.S. Open and the British Open and shares the mark in the PGA Championship.

This season alone he has won nine times, including six times with a Nike ball, and three major championships.

His success, combined with his smile, handsome good looks and multi-ethnic ancestry, gives him worldwide appeal and makes him the most marketable athlete since Jordan. A Forbes magazine report in 1999 estimated that Jordan generated $2.6 billion in sales for Nike.

“Tiger is a young man that excels to a degree that no one has excelled before,” Earl Woods said. “That in itself warrants appropriate compensation. Throw in his intelligence, his good looks and his ethnicity and that throws it off the chart.”

Asked how big of an endorsement deal Tiger should command, Earl Woods said the sky is the limit.

“Whatever the market will bear,” he said. “He is very unique. There is no hard, fast dollar amount because nobody can do what Tiger is doing. Not even Michael [Jordan].”

Earlier this year, Woods signed an endorsement deal with Buick worth $30 million over five years and carries its logo on his bag.

Nike’s deal with Woods will be structured to reduce the athlete’s tax burden. Woods, who will earn an estimated $10 million this year from tournament winnings alone, will lose about half of that to taxes. Rather than cutting a $100-million check for Woods, Nike will work with his financial advisors to structure a compensation package that’s less painful from a tax perspective.

“One of the most important things for people like Tiger Woods, who are in a high-income tax bracket, is to create capital-gains treatment for the financial reward that’s coming to them,” said Leonard Armato, an agent who represents Shaquille O’Neal and Oscar De La Hoya. “There might be a way for Tiger to receive an equity position in Nike--or a company that ultimately would create capital-gains treatment.”

Nike is expected to donate a larger amount of money to the Tiger Woods Foundation, which serves Woods’ desire to give back to the community, as well as polish Nike’s image as a caring corporation.

Woods also is the right athlete in the right place at the right time. “There are only a handful of people in the Tiger Woods, Shaquille O’Neal category who have the juice or power to command the types of creative relationships that can turn ordinary income into capital gains,” Armato said.

Endorsement opportunities at Nike and other companies have shrunk for most athletes, but sports marketers are still willing to pay a premium for the services “of those few who have brand power on a global basis,” Armato said.

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Staff writer Greg Johnson and the Associated Press contributed to this story.

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