The Tiger Woods scandal may be nearing an end as he is fixing his problems at home and getting ready to return to golf, but this scandal’s impact on the sports business world will be everlasting. Recently, too often has an athlete endorser’s decision caused trouble for the companies they endorse, causing companies to rethink their relationships with the athletes that are endorsing them. These athlete endorsers are faces of the company, so making bad decision can put a permanent black eye on the company. Because of this, the impact of athlete endorsers making bad decisions can be enormous. This impact is apparent in the recent Tiger Woods scandal. Seven companies that Woods has or had sponsorship deals with lost an estimated $12 Billionin market value after the first month of this scandal. Companies are sick of investing so much money in these athletes who make bad decisions that end up hurting the company, so the contracts between endorsers and companies from hear on out are likely to be extremely different. Future contractswill likely consist of significantly tougher moral clauses including the right to terminate the contract after basically anything that could possibly damage the companies’ image. This is very different than most current moral clauses in which the company can only terminate the contract if the endorser is convicted of a felony. Because of the irresponsibility of some athlete endorsers, the risk of hiring an athlete endorser has been increased resulting in the price of insurance to increase, which ultimately results in that athlete endorsers being paid less. The Tiger Woods scandal has caused companies to rethink the monstrous contracts they are giving athlete endorsers, which will most likely result in athletes no longer being paid massive amounts of money to endorse companies.
I think that it is about time that these companies look at these contracts again. Just over the past couple years, multiple superstar athletes have made bad decisions that have tarnished their reputations, making the companies they endorse look bad. Other than Tiger Woods, major endorser athletes such as Michael Vick and Gilbert Arenas have gotten in trouble, resulting in their inability to participate in the sport that they play. Gilbert Arenas may be the first superstar athlete to be suffering from the "Tiger Woods Effect." In January, it was made public that Gilbert Arenas had brought guns into the Washington Wizards locker room, resulting in the suspension of Arenas from the NBA. Arenas has not been convicted of anything yet, but corporate sponsors are no longer afraid to bring down the hammer fearing that their endorser will have the same effect on them that Woods had on his. Adidas, Arenas' major corporate sponsor, announced that they would cut ties with Arenas, a move that shows just how careful companies are going to be with athletes that represent them.
It makes a lot of sense for these companies to rethink the contracts they offer the athletes who represent them. When choosing an endorser, the company looks for someone who consumers want to feel connected too. Everyone wants to wear the same shoes as Michael Jordan. Athletes who make bad decisions are breaking this bond between the consumer and the company, and it is severely damaging the companies. I think that because the endorser is so essential to the company's success, the penalties for making bad decisions should be harsher than the expected ones. I think that the athlete should have to pay back a portion of their contract to the company, to cover some of the damages that the company would suffer from. I also believe that the company should have the right to terminate the contract at any time that they want, which would force the athletes to represent the company to the best of their ability. I think that it is an honor to be asked to be the face of a corporation, and it is time that athlete endorsers begin treating it like one.
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