Tiger Woods Affair Economic Impact

How Did the Tiger Woods Scandal Affect the Economy?

Tiger Woods (Photo:Scott Halleran/Getty Images).

Golf legend Tiger Woods made news the day before Thanksgiving in 2009 when he crashed his car. Turned out this was a result of an affair. Then it turned out it was the result of many affairs. How did this impact the economy? According to research by two economics professors, it cost Tiger Woods' corporate sponsors $12 billion in lost stock value. Between November 25 and December 13, companies such as Gatorade, Nike, and Electronic Arts stock prices fell 2.3%, costing shareholders $12 billion.

Professors Victor Stango and Christopher Knittel measured how the stock market responded to Tiger's affair. Between November 25 and December 13, the stock value of Tiger's sponsors fell 2.3%, or $12 billion. Tiger announced on December 11 he would take a leave from golf, which helped the stock prices a bit. But it could hurt advertising revenue for the upcoming season. Nielson ratings show viewership is 50% higher when Tiger is playing a tour.

Another impact could be lower viewership once the affair made Tiger decide to sit out that season. Nielson ratings showed that viewership is 50% higher when Tiger is playing a tournament.It is difficult to estimate the total impact this would have on the $75 billion golf industry.

Tiger earned close to $100 million a year from his winnings and his endorsements. One possible reason Tiger has done so well financially could be because he was an economics major at Stanford University.