How Tiger Woods became a bubble

Marketplace Staff Mar 26, 2010

How Tiger Woods became a bubble

Marketplace Staff Mar 26, 2010


Kai Ryssdal: The professional golf tour is in Orlando, Fla. this weekend for the Arnold Palmer Invitational. Without intending any disrespect at all to Mr. Palmer or the people of Orlando, nobody’s really thinking about you all when golf comes up in conversation these days.’Cause Tiger’s comin’ back.

He’ll make his return at the Masters in a couple of weeks, as you’ve probably heard. It’ll be good for the game of golf — after all that’s happened he’s still ranked number one in the world and it’ll be even better for the business of golf. Until his fall from grace, Woods was almost single-handedly responsible for the rising economic fortunes of the PGA and those attached to it.

Jonathan Mahler explores the “Tiger Bubble” in the New York Times magazine this weekend. Johnathan, it’s good to have you here.

Jonathan Mahler: It’s my pleasure.

Ryssdal: You point out — and many others have made this observation about the financial world — that bubbles begin with this belief in the transformational power of something, whether it’s housing prices or what have you. This case, it’s Tiger Woods. What was it about him that got this bubble going?

Mahler: There’s sort of an economic expectation that Tiger would bring a lot more viewers to the game of golf. But there was also the expectation that he would bring more participants to golf. And at the same time, there was also an expectation that he would transform the demographics of the sport. So there was both kind of an economic and a cultural expectation, I guess you could say, that fueled the growth of the bubble, to mix the metaphor a bit.

Ryssdal: And as in the early days of all bubbles, it paid off for a while, right? People started watching golf on television, that got corporations excited, they started plowing more money in, which got golfers attracted, because it meant more money that they could win in the tournaments — all of that stuff.

Mahler: He brought a lot more viewers. When Tiger plays, twice as many people turn on their TVs to watch. However, more people were not playing the game. Moreover, the demographics of the sport wasn’t changing. So as a result of that, now we’re in situation where golf courses are closing and golf clothing and equipment manufacturers aren’t selling anymore equipment of golf clothing than they had been, nor has the game been discovered by different ethnic groups.

Ryssdal: So in the wake of the bubble popping over Thanksgiving weekend, when he had that car wreck and all this information came spilling out, is golf itself — the PGA tour and the golfers who make up that tour — are they rethinking things, post-Tiger?

Mahler: Well, I mean, he’s coming back, so I guess one option for them is just to return to the “it’s all about Tiger” strategy, though I do think that, clearly, a lesson has been learned here. And that lesson is the danger of investing too heavily in one player, just as the metaphor would hold for any company investing too much in one product. The problem is, Tiger’s just such a unique phenomenon. He got out there and within weeks of going pro, he was winning tournaments and he was winning them in dramatic fashion. So it’s been difficult and it may prove impossible to reproduce that and if stat’s the case, then there really will be no way to rethink their strategy. Golf would just have to kind of return to its core audience that was sustaining it before Tiger came along.

Ryssdal: Which was smaller, it was less lucrative. I mean, that’s not an attractive proposition if you’re Tim Finchem, the commissioner of the PGA.

Mahler: That’s right. Professional golf benefited enormously from Tiger. And he allowed the PGA tour to ask corporate sponsors for more money and that in turn, trickled down into the players. So now you have nearly 100 guys making a million dollars. And I’m talking about guys who never come close to winning tournaments. It’s hard to believe that absent of Tiger Woods that the tour’s going to be able to maintain those purse sizes.

Ryssdal: So, do you think in his heart of hearts, Tim Finchem, the commissioner, is praying for a re-inflated Tiger bubble?

Mahler: Well, I think he certainly wants Tiger to come back and come back strong. But I think that, at the same time, I am sure that he’s also thinking about, not quite exit strategies, but plan Bs. He’s thinking about other ways to grow golf’s revenue and to keep golf going.

Ryssdal: Jonathan Mahler writes about the “Tiger Bubble” in the New York Times magazine this weekend. The Master’s is coming up. Jonathan, thanks a lot.

Mahler: My pleasure.

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