Fantastic News for Nike as Tiger Woods Returns to Practice

Here’s some good news for Nike Inc. (NYSE: NKE): Tiger Woods has reportedly been practicing several hours a day and even playing a few holes of golf for the first time since two back surgeries in September and October of last year.

Woods, who has won the Masters tournament four times, pulled out of this year’s contest just a few days before the tournament was scheduled to start. At the time he said, “I’ve been hitting balls and training daily, but I’m not physically ready. … I’m absolutely making progress, and I’m really happy with how far I’ve come, but I still have no timetable to return to competitive golf.”

His return can’t come soon enough for the PGA tour. Nike and Rolex, another brand endorsed by Woods, probably can’t wait either. At the last tournament Woods played in August of last year, he entered the final round just two strokes off the lead. The tournament sponsors sold 49,000 extra tickets for the weekend, most of which were attributed the presence of Woods. He ended up tied for 10th after taking an 11 on a par-four hole.

His first deal with Nike was signed in 1996 for five years and a reported total of $40 million. Although there’s been no official word on what Nike pays Woods, the contract has been extended ever since, and it has been reported to be worth about $20 million a year to the golfer since 2001. Nike’s most recent contract extension with Woods was signed in 2013. As of the end of 2014, according to a report at Forbes, Nike had built a golf empire worth almost $800 million in annual sales on Woods’s back.

Woods turned 40 last December and age is not a professional golfer’s friend. He has won 79 PGA titles, second only to the 82 victories put up by Sam Snead, and 14 major tournaments, second only to Jack Nicklaus’s record of 18. At one time Woods was a virtual lock to beat Snead, with a decent chance to top Nicklaus. Injuries have plagued Woods for more than two years, though, and both records may now be out of reach.

Still, it’s pretty hard to argue that Nike has not gotten its money’s worth from Woods. If he can wring out a few more victories over the next few years (Nicklaus won the Masters when he was 46), Woods will be a happy man and Nike could see even bigger returns on its long-term investment.

Nike’s stock price was up about 0.3% Wednesday afternoon, at $59.71 in a 52-week range of $47.25 to $68.19.

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