Nike Inc. (NKE:US)’s golf division added a rising star and gave a contract extension to its highest-profile endorser. Those $100 million moves haven’t budged its list of major championships.
Tiger Woods, a Nike endorser since turning pro in 1996, won his 14th and most recent major in June 2008. Rory McIlroy captured his two before signing this year with the Beaverton, Oregon-based company that is the world’s largest sporting-goods manufacturer.
Charl Schwartzel’s victory at the 2011 Masters Tournament is the last time a member of Nike’s 33-player male golf endorsement stable took one of the sport’s four most prestigious trophies. As McIlroy defends his title at the PGA Championship at Oak Hill in Rochester, New York, which began today, in a so-far winless season, the drought is affecting the company’s image in the sport, industry analyst Casey Alexander said. Woods, the bookmakers’ favorite to win the tournament, started his round with a par.
“They can’t have the former No. 1 player in the world embarrassing them with their equipment,” said Alexander, research director of New York-based Gilford Securities. “Every time he plays poorly, the first words out of everybody’s mouth is, ‘Rory changed equipment.’”
Cindy Davis, president of Nike’s golf division, declined to be interviewed, spokeswoman Beth Gast said in an e-mail.
Woods won his fifth tournament of the season last week at the Bridgestone Invitational in Akron, Ohio, matching a career low with a 61 in the second round and beating the field by seven shots. He is 4-for-19 in majors the week after a victory, and hasn’t won in his past 17 Grand Slam tournament appearances.
Woods, 37, is a 4-1 favorite to win this week, according to LVH Super Book assistant manager Jeff Sherman. McIlroy is listed as the sixth choice at 30-1, mean a winning $1 bet would return $30 plus the original stake.
McIlroy, a 24-year-old Northern Irishman, finished 2012 as the No. 1 player in the Official World Golf Ranking, using Acushnet Inc.’s Titleist clubs. He won two U.S. PGA Tour playoff events and was Player of the Year on the U.S. and European tours. Since switching to Nike, he has dropped to No. 3 in the ranking, behind Woods and Phil Mickelson.
After an opening-round 8-over-par 79 at last month’s British Open, McIlroy called himself “brain dead.” He shot 75 a day later and missed the cut for weekend play by four shots. Mickelson, a Callaway Golf Co. (ELY:US) endorser, won the tournament, his fifth major title.
McIlroy withdrew from the Honda Classic in May, when he was 7-over par after a triple-bogey on the 16th hole in the second round. He said he was in a “bad place mentally” when he left the Florida course and later blamed tooth pain for his withdrawal.
At the Masters, the first of golf’s four annual major tournaments, McIlroy finished 25th and was 41st at the U.S. Open, where he failed to break 70 in any round at Merion Golf Club near Philadelphia.
“It’s been up and down,” McIlroy said before last week’s Bridgestone Invitational, where he finished 27th. “My highs have been incredibly high and my lows have been pretty low. It’s just about trying to stabilize everything and try and make it a little more on an even keel.”
McIlroy said yesterday that linking his play to the new equipment “could have been a valid point in maybe January, February, but I don’t think it is now.”
“Of course there’s going to be a transition period where you’ve got to get used to a few different things, but now, I mean, I don’t think that should be -- I don’t think it’s a valid argument at all,” he said at a news conference. “I’m really happy with everything that I’ve got in my bag, and I’ve had the best part of eight or nine months to play with it.”
Six-time major winner Nick Faldo and two-time U.S. Open champion Johnny Miller are among those who have offered McIlroy advice on everything from his golf equipment to his love life.
Faldo was against McIlroy leaving Titleist, calling the change “dangerous.” Miller was quoted in the San Francisco Chronicle in June as saying that McIlroy’s relationship with professional tennis player Caroline Wozniacki was “distracting.”
Nike Golf sales still rose 9 percent to $791 million in the year through May 31, following an increase of 10 percent the previous fiscal year.
The unit’s gains exceeded companywide growth of 8.5 percent to $25.3 billion in sales. Golf accounts for 3.1 percent of Nike’s total revenue, compared with running, which has $4.3 billion in sales.
“At the end of the day, it’s a rounding error for Nike,” Alexander said.
Nike didn’t disclose terms of McIlroy’s contract. The New York Times, citing people it didn’t identify, reported McIlroy’s pact to be worth $100 million over five years.
Since Schwartzel’s win at the Masters 10 majors ago, Ping, Titleist, Adidas AG (ADS) Taylor Made, Cleveland and Callaway have had players win Grand Slam tournament titles.
While Woods and McIlroy are Nike’s most-recognized golf endorsers, their ability to win impacts its image more than sales, said Tom Stine, co-founder of Golf Datatech, a Kissimmee, Florida-based company that tracks the industry.
“How Rory plays with them, how Tiger plays with them, doesn’t really affect the overall sales,” Stine said in a telephone interview. “What affect they have is on brand recognition and brand assurance.”
McIlroy’s last win came at the DP World Tour Championship in Dubai in November. Woods, the PGA Tour’s leader with five wins this season, has gone 17 major tournaments without a victory, dating back to the 2008 U.S. Open. Nike signed Woods to a long-term contract last month, his fourth with the company since 1996. Woods’s 2001 contract extension with Nike was for the same amount as McIlroy’s current pact, according to a variety of media reports.
When Woods admitted to serial infidelity in 2009, Nike stood by him, even as he fell to No. 58 in the world ranking. Now, it’s McIlroy testing his sponsor’s faith.
“Those Nike folks, they are exceedingly patient people,” Alexander said. “They rode the Tiger pony and stood by him through what is without question far more embarrassing than this. Eventually he’ll figure it out, but it won’t be this year.”
To contact the reporter on this story: Michael Buteau in Atlanta at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Sillup at email@example.comTiger Woods of the U.S. smiles during a practice round prior to the start of the 95th PGA Championship at Oak Hill Country Club in Rochester, New York on Aug. 7, 2013. Photographer: Stuart Franklin/Getty Images Rory McIlroy watches his shot during a practice round prior to the start of the 95th PGA Championship at Oak Hill in Rochester, New York. Photographer: Stuart Franklin/Getty Images