Tiger Woods has left Nike: What comes next?
On 8 January, Tiger Woods and Nike confirmed that their partnership was coming to an end after 27 years. Throughout the period, Woods received in the region of £400 million from Nike and Nike itself generated billions in sales of golf products, making it one of the most successful brand partnerships in sports history.
The multi-million-pound question, is where will Tiger Woods go next?
Crucially, Woods is in a strong bargaining position as he already owns the intellectual property rights to his TW logo. This will not only give him significant leverage in negotiations with a potential new partner but also give him the option to launch his own company under the TW brand.
In contrast, when Roger Federer and Nike recently ended their partnership, Nike kept the rights to the RF logo because they had registered it as a trademark. The agreement between the parties did not specify who owned it after the conclusion of the agreement. This stopped Federer’s new sponsor, Uniqlo, and Federer himself from using the logo. This led to a lengthy dispute between Federer and Nike, culminating in Federer securing the transfer of the rights to the RF logo two years later.
The above highlights the importance of those entering into partnerships with third parties. When drafting an agreement, it’s crucial to consider who will retain the rights to brands bearing an individual’s name or initials after the contract ends. If needed, this should be incorporated into the contract terms.
Given the above, Tiger Woods has many avenues he could pursue going forward. Notably, something that we are seeing more and more of in the sports, media and entertainment sectors are ‘sweat equity deals’ which could be an option. In this type of financial arrangement, Tiger would be given ownership equity and/or revenue participation in exchange for his endorsement and other involvement in brand building or a business venture. A good example of this was when Lebron James was given shares in the company Beats by Dre for his contributions to marketing the brand. A few years later, Apple acquired Beats by Dre for $3 billion and James was able to cash out those shares given to him for a sum of approximately $30 million.
It would not be surprising to see Woods partner with a golf brand and take an equity deal rather than an endorsement deal, which has the potential to be even more lucrative.
Woods’ next move will be eagerly anticipated by those tuning into the next event he attends, the Genesis Invitational next month.
Our Commercial team can help with any questions you may have about partnership agreements including those already in place and drafting new agreements.