Companies Taking Out Tiger Woods Insurance
The Tiger Woods scandal has sent companies who use celebrities to endorse their products scrambling to purchase insurance that would protect them from potential losses in similar cases, the New York Times reported on Sunday. Brian Socolow, a partner at the New York law firm of Loeb & Loeb who focuses on sports, told the newspaper "Companies are saying if it could happen to Tiger Woods, it could happen to anyone. ... For some companies, it's a tremendous investment, and when it goes bad, it is not only the loss of investment, it's a black eye for the company." The problem, the Times observed, is that it's difficult for insurers to determine the value of a celebrity endorser. However, there are several tangible costs -- for example, the costs to shoot endorsement ads in which the celebrity appeared and the costs to shoot new ones with replacements. Companies are also seeking new morals clauses in athletes' contracts that would give them the right to terminate their endorsement deals to cover any occurrence involving moral turpitude -- not just those involving the commission of a felony, the current standard.