Tiger Woods: Ruining Celebrity Endorsements for Everyone

(Story updated with news that Tiger has set up a bachelor pad in New York.)

NEW YORK (TheStreet) -- How far-reaching has the Tiger Woods scandal been?

Big enough to destroy Tiger's reputation? Yes. Big enough to damage the fortunes of the companies that endorsed him? Sure. How about big enough to ruin the very notion of celebrity endorsement? According to two U.C. Davis economics professors, absolutely.

"It appears that the scandal sent a negative market-wide signal about the reputation risk associated with celebrity endorsements," U.C. Davis economics professors Christopher Knittel and Victor Stango said a report released late last week.

Knittel later told the TheStreet that as the Tiger scandal erupted, some consumers who used to buy from Nike(NKE) Golf began buying from Ping or Callaway Golf Company(ELY) instead.

Indeed, late last year, the professors came out with a study suggesting that big Tiger Woods sponsors -- such as Accenture(ACN), Nike, P&G's(PG) Gillette, Electronic Arts(ERTS) and PepsiCo's(PEP) Gatorade -- shed 2% to 3% of their aggregate stock market value after his fateful car accident on November 27. Meanwhile, core sponsors like Electronic Arts, Nike and Pepsi lost more than 4%.

"We find that as sponsors lost market value, competitors gained market value," the professors said in their updated report. "More compelling is that these gains seem to accrue only to competitors that are themselves not heavily invested in celebrity endorsements."

There, indeed, is the rub: Tiger sponsors' competitors with at least one celebrity endorsement deal didn't experience any gains. For the study, Knittel and Stango studied ten rival sponsors for each Tiger sponsor and split them into two groups: companies that don't tend to use celebrity endorsers and just advertise in a more traditional manner, and those that use celebrity endorsers like Tiger Woods.