Not only has Woods issued a public apology on his website, but the The Daily Beast reports that he will pay his wife, Elin Nordegren, $5 million upfront and another $55 million to persuade her to stay in their marriage for another 24 months.
Like many couples with tens of millions of dollars in their bank accounts, Woods and Nordegren have a prenuptial agreement -- and a big one at that. US Weekly reports that the prenup is worth $300 million, but other news outlets say it's a more modest amount. Either way, Nordegren was already entitled to a nice chunk of change.
According to The Daily Beast, the prenuptial agreement they signed in October 2004 would award Nordegren $20 million just for sticking with Woods for 10 years. But now that allegations of affairs with two women -- Jaimee Grubbs and Rachel Uchitel-- are making headlines, it looks like that contract is being tossed out the window, and the couple are negotiating new, more lucrative terms for Nordegren.
Instead of waiting until 2014 for her $20 million payday, Nordegren will only need to stay married to Tiger until October 2011 and by doing so, will get more than twice what she was entitled to under the original prenup, according to The Daily Beast. The new agreement would also pay Nordegren more if she stayed even longer -- a staggered schedule of payments over five years that could top $75 million.
Look Happy, Stay Mum?
Getting that grand sum of $80 million (the $5 million she's getting upfront, plus the $75 million in the new prenup), however, will require Nordegren to stay with Tiger for another seven years, show up with him at social events and in public as if they were still the perfect couple, and sign a nondisclosure form that will prevent her from ever telling her story.
From Tiger's perspective, this is probably a good deal. After all, $80 million is a mere 8% of his $1 billion in career earnings as calculated by Forbes. An earlier Forbes report indicates that Woods has won more than $80 million on the golf course. Annual prize money, Forbes says, accounts for under 15% of his income. Sponsorship deals with Nike (NKE), Accenture (ACN), AT&T (T), Gatorade, and Procter & Gamble's (PG) Gillette pay him at least $100 million a year.
For now, all these sponsors are sticking with him. The jury is still out on whether they would view an alleged serial adulterer as a good image for their products and services over the longer term.
So, if Tiger can pay $80 million to stay married to Nordegren and somehow buff his image back to where those sponsors will want to keep forking over the cash, it would be a good investment. Of course, Tiger would still need to keep winning golf tournaments.
Meanwhile, I wonder whether he thinks his extracurricular activities were worth the price he's paying in Nordegren's eyes.
Peter Cohan is a management consultant, Babson professor and author of nine books, including Capital Rising (due in June 2010). Follow him on Twitter. He has no financial interest in the securities mentioned.
