In the world of mega-endorsement deals this one, at least in newsprint, is Alex Rodriguez – a blockbuster that defies market value and the status quo.
On Tuesday Titleist confirmed it was clearing the air and essentially giving Rory McIlroy an opportunity to take his considerable talents to Beaverton, Ore., home of the Nike empire that has reportedly been wooing the Ulsterman to the tune of a 10-year deal with $20 million a calendar.
For the Acushnet Co., the parent of Titleist, the move has a familiar MO. When Tiger Woods was rumored to be headed for Nike in the late 1990s the company released him early from his endorsement deal and did the same for Phil Mickelson when he signed with Callaway.
“For Titleist to end the contract early is an incredibly intelligent decision,” said Casey Alexander, an analyst with Gilford Securities in New York. “If not, they would be paying a de facto contract for him to endorse Nike products.”
In short, that bridge had been burned. What remains in the void of the Rory sweepstakes is akin to business anarchy, a landscaped filled with questions and concerns and precious few facts.
If the reports are accurate, and there is little reason to think they are not, McIlroy’s marriage with the swoosh would create a powerful combination of the game’s top two endorsers playing for a single global brand. But to what end?
Nike Golf, for all its reach, is not the industry standard bearer when it comes to equipment. Never has been despite more than a decade of dominance by their franchise player Woods.
According to Golf Datatech, consider that Nike had 2.3 percent of the golf ball market share in 2000 when it signed Woods. In 2006 that number had jumped to 11.7 percent and has remained steady since (Nike currently has a 10.1 percent market share of the ball market). Although impressive, it is hardly the commanding presence one would expect.
“Nike could be spending a lot of money on the top two players right now and they suck at selling equipment,” Alexander said. “The apparel and footwear business is where they feel they have their edge.”
So if McIlroy’s reported deal isn’t about moving product – at least not big-ticket items like drivers and iron sets – that leaves only Nike’s brand association with the game’s best, whatever game that may be.
“Nike has always had the No. 1 players in every sport,” said one industry insider.
From Michael Jordan to Roger Federer and, yes, even Lance Armstrong, there is something to be said for being aligned with the best and that, at least fundamentally, seems to be the company’s motivation to pay McIlroy.
The down side, for both McIlroy and Nike, is a failed marriage. He’d hardly be the first Tour type to follow the money to a new bag only to see his game head in the opposite direction from his bank account.
“He has to be very cautious. It’s going to be a dangerous time,” six-time major champion Nick Faldo warned. “The equipment is part of your golf DNA. I would be really careful about that. He’s young and saying to himself he can adapt, but I promise you it will be different.”
Industry insiders estimate that McIlroy, like Woods, would have a “play in” period to adjust to his new equipment but that will mean little if he doesn’t play up to his ridiculously high standards early and often.
“What happens when a player makes an equipment change?” one industry observer asked. “All it takes is a little loss of confidence.”
There is also the question of complacency, or as one equipment representative once told me, “wealth doesn’t breed hunger.” Perhaps Woods’ greatest professional accomplishment, beyond the 74 Tour titles and 14 major championships, is that he was paid handsomely early in his career and yet maintained his competitive hunger.
With $20 million annually in the bank does McIlroy remain fixated on excellence? Given the standard he has set for himself it seems unlikely McIlroy would be impacted by such a large payday, but it is, nonetheless, part of the nuanced concerns when this kind of money is being tossed about.
There is also the question of how a potential Woods-McIlroy marketing campaign would unfold. Nike Golf, unlike Titleist – which markets the brand not the player – is personality driven. How then does the swoosh harmoniously weave together a campaign with a built-in personality disorder?
“When (Woods’) contract comes up and he feels like he’s played second fiddle what happens then?” Alexander asked. “It’s going to be fascinating to watch the interplay of this over the next few years.”
As one industry insider figured early Tuesday McIlroy’s potential move to Nike could be a “game changer,” for the Ulsterman and the industry.