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The Business of Sports

Can Tiger Climb Back Up From Down Under?

Every sport on the planet admittedly has good guys and bad guys, saints and sinners, playboys and family stalwarts.

Two years ago and counting, the stodgy world of professional golf was rocked by the serial philandering of Tiger Woods. The scandal began when Woods drove his SUV into a shrub on Thanksgiving night and it lingers today. The golfer has lost his wife, caddy, multimillion dollar endorsements, and his reserved parking spot on leaderboards around the world.

Woods’s actions, and the near-constant antics of fellow golfer John Daly (who walked off the Australian Open course on Thursday after hitting six balls into the water), are just a bad day on the course when compared to this week’s horrific drama at Penn State University, where octogenarian head football coach Joe Paterno, university President Graham Spanier, and other officials have been fired in the wake of criminal charges against former defensive coordinator Jerry Sandusky for alleged acts of child molestation on campus and elsewhere—despicable acts which didn’t spur the officials—family men all—to pick up the phone and call the police on one of their own.

While the Penn State drama will keep Woods out of the sports-scandal sheets for the time being, the only thing that will return the disgraced golfer to the headlines in a good way is winning. Woods didn’t fall so far from golf fans’ grace that he can’t find redemption in a charge up the leaderboard on any given Sunday. He’s hoping to do just that in Australia—where he’s attempting his latest comeback this week at Sydney’s Australian Open—and next at the prestigious Presidents Cup match-play competition between America’s best and an international squad comprising all stars from the Pacific Rim.

As we set the stage for 2012, the climb back up begins Down Under.

Presidents Cup Runneth Over

During Thursday’s opening round coverage of the Australian Open (which aired on Wednesday night in the States), a Golf Channel commentator observed that the Thursday crowds around the Lakes in Sydney rivaled a normal Sunday throng and that it looked as if half the city had called in sick to come out to watch Woods in his first tournament in Sydney in 15 years. (Woods shot his first bogey-free round of the year on Thursday, which put him in the hunt and bodes well for record crowds Friday and into the weekend.)

Across the country in Melbourne, largely because of the presence of Woods—a late season Captains Pick for the team by Captain Fred Couples—organizers at Royal Melbourne Golf Club are expecting record crowds as well.

The Presidents Cup, being played in 2011 for the ninth time , was developed to give the world’s best non-European players a chance to compete in international team match-play competition.

A biennial event held in non-Ryder Cup years, the first Presidents Cup was played in September 1994 at Robert Trent Jones Golf Club in Virginia. The U.S. Team, captained by Hale Irwin, defeated the International Team, captained by David Graham, 20-12.

In 2009, the Presidents Cup was held at San Francisco’s Harding Park Golf Course, where the squads were captained by two of the most dominant players on the PGA Tour during the 1980s and 1990s, American Fred Couples and Aussie Greg Norman. As first-time captains, Couples and Norman led strong teams as they competed in front of record crowds. The U.S. Team retained the Cup, winning by a score of 19-14.

This year, the International Team wants its revenge.

As the event has grown, so has its prestige among international companies. The 2011 Presidents Cup claims Citi (C) (C) and Rolex as its global partners, with a strong regional presence from BMW (BMW:GR), Crown Lager, Quantas (QAN:AU), Schweppes, and Greg Norman Wine Estates. Despite the great distances between venues, the Presidents Cup has also become a popular event for corporate hospitality (and a lucrative revenue stream for its backers) with Trophy Club packages this year starting at $7,000 Australian for a single day and the 120-person Presidential Suite costing $240,000 for the week. Daily tickets for spectators start at $60.00.

The 2013 Presidents Cup will be back in the U.S., at Ohio’s Muirfield Village. Created by golfing legend Jack Nicklaus, the venue—at which the Memorial Tournament presented by Morgan Stanley has been held annually since 1976—has hosted several national championships and international team competitions, including the 1986 U.S. Junior Amateur, 1987 Ryder Cup, 1992 U.S. Amateur, and the 1998 Solheim Cup. The location of the 2015 event has not yet been decided, but PGA Tour Commissioner Tim Finchem dropped a strong hint earlier this week.

“When you look at the Olympic date sitting there in 2016, and everybody is gearing toward that, you’ve sort of got to draw some conclusions as to where we’ll be in 2015,” Finchem told golf media on Tuesday, alluding to the 2015 Cup’s South American staging.

Tiger: Out of the Sponsorship Woods?

Last month, Woods announced his first major endorsement deal since his downfall two years ago, an agreement with Rolex to become one of its ambassadors, along with Gary Player, Phil Mickelson, Luke Donald, Tom Watson, Arnold Palmer, Rickie Fowler, Annika Sorenstam, and other notable golfers. Woods previously had a watch deal with Tag Heuer, which dropped him midsummer; he returns to the Rolex fold that sponsored him early in his pro career. Terms of the deal, believed to be a five-year agreement, were not disclosed.

Woods’s agent, Excel Sports Management’s Mark Steinberg, said at the time that Rolex would be “the first of a ‘couple of announcements’ related to endorsements, including a deal for Woods’s golf bag.” Steinberg said that a “bag deal was likely to be announced as early as six weeks.” Industry speculation points to a deal with electronics retailer Fry’s, which hosted Woods in its Open last month and is said to be in ongoing negotiations with Steinberg about a larger deal.

Woods has had his Tiger Woods Foundation logo on his bag since AT&T (T) dropped him in December 2009.

Some marketing experts expressed surprise that Woods was able to land such a high-profile luxury brand as Rolex without another win under his belt. Still, as ESPN’s Jay Crawford put it, “the first rule of business, any business, is you want to buy low,” and went on to surmise that Rolex ”got him on the cheap, compared to what he was making.” Another plus for Woods as he and Steinberg look to rebuild his portfolio: Wins or no wins, as we’re seeing this week in Australia, Woods moves the dial like no other. And when it comes to eyeballs on their products, Corporate America has a notoriously short memory for bad behavior.

“We’re on a nice upswing right now,” Steinberg said in an interview with GolfWeek magazine. “Now it’s finding the right partners, the interesting deals, deals that will enhance him and his brand … I’m open to categories that aren’t currently occupied—meaning he’s not conflicted in that space—whether it’s cellular, whether it’s consumer electronics, whether it’s automotive … the business end is actually quite strong.”

Sharing Woods’s Spotlight

Woods may not be out, but in some realms he’s been forced to share. For the first time since it launched its Tiger Woods PGA Tour video game franchise—and right in line with the current contests in Australia—EA Sports (ERTS) is putting the images of additional golfers alongside Woods on the cover of its Tiger Woods PGA Tour 13 game, one of them American and one International. The sports gaming leader held an online contest to allow fans to vote on which golfers should share the cover with Woods.

Fan engagement has always been a key component to the success of the Tiger Woods franchise. Following the positive fan reaction to recent Madden NFL 12 and NCAA Football 12 cover vote campaigns, EA Sports decided to give the power to the fans.

The winners?

On Oct. 24, EA Sports announced that Rickie Fowler and Rory McIlroy had been selected by fans to join Woods on the video game cover in the North American and European markets, respectively. The company reported that over 250,000 fans from more than 35 countries cast votes from Oct. 3-23. In the final week of voting, Fowler defeated Bubba Watson by a final margin of 52 percent to 48 percent to win the American side of the bracket, while McIlroy defeated Luke Donald by a final margin of 54 percent to 46 percent to capture the European side.

“Appearing on the cover of Tiger Woods PGA TOUR 11 was an amazing experience and helped introduce me to a whole new fan base around the world,” McIlroy said. “But this year holds special meaning because it was the fans who decided to put me on the cover once again.”

Cover art of Tiger Woods PGA Tour 13 will be released later this month; the product will launch in March. We’ll see if Woods is able to win once again by then–Down Under, or elsewhere.

Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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