Why the Tiger is a fat cat

Tiger Woods is more than a golfer, he is a business. Indeed, recent reports suggest that the world number one is ready to sign new endorsement contracts with his two main sponsors - Nike and Titleist - and the money involved means he need never play again, if he were that way inclined. Which he's not, of course.

While Nike is reportedly offering Woods between $80$90 million over a five-year period, Titleist is actually believed to be lowering its financial commitment to Woods.

Nike and Acushnet, which owns Titleist each have good reasons for striking new deals with the player. The motivations centre on brand marketing. Nike owns Woods's apparel, from head to toe (except a Titleist glove) and his visibility makes good business sense for Nike to part with so much money.

The clothing company's mantra has always been to get as much exposure for the Nike Swoosh (and now Woods clothing too) as possible. And, in Woods, it found its man.

But why would Titleist seek to reduce its financial commitment? It seems that there was some unhappiness in Titleist with Nike's commercials that show Woods using Titleist balls and club. Acushnet chairman Wally Uihlein has gone on record to remark that he doesn't like to have his brand taken advantage of and, in his eyes, that's what Nike did in its advertisement.

"Uihlein is reported to have said: "What I do know is that I am continuing to pay out dollars to watch Nike use Tiger to sell their golf."

Despite the ad controversy, Uihlein's decision to offer Woods a lesser contract (if true) still comes as a surprise. Acushnet stresses brand awareness and golf clubs and balls simply aren't very visible from the gallery or the television, even if the player has the brand on his or her golf bag. You can bet that the average golf fan knows what hat or shirt Woods wears, but he isn't as clued in about his equipment. That's just the way it is.

If Acushnet manage to lock up Woods for less than its first $20 million five-year contract, then they will have done well.

Each side, in its own way, has the other over a barrel. Woods would be foolish to give up clubs and balls he has used to reach the top ranking in the world and go somewhere else simply for the money. Acushnet would be equally foolish to let Woods get away.

The contracts should be tied up shortly, but expect Nike to be the main benefactors to Tiger's bank balance.