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Tiger Woods, The Next Billionaire?

After Tiger Woods won the U.S. Open last month, one golfer said “he beat everybody on one leg.” It’s an exaggeration, but only a slight one. Woods won the championship over five grueling rounds, despite playing with a torn ligament in his left knee.

Surgery and recovery will sideline Woods for the rest of this year’s golf season. Although it might be difficult for the legendary competitor to stay off the green for that long, he can certainly afford the hiatus. Even with the knee injury (and barring a catastrophe), Woods will become the world’s first billionaire athlete in the next few years.

Woods is on track to pass $1 billion in career earnings by 2010. Becoming a billionaire – that is, having a net worth above $1 billion – will take slightly longer, since a sizable chunk of Woods’ prize and endorsement money is eaten up by taxes and management fees – we estimated 45 percent. We also credited Woods with annualized investment returns of 8 percent.

From 1996 (the year Woods turned pro) to the present, we based his earnings on estimates from Forbes’ Celebrity 100 list. In 2007, we estimate Woods earned $115 million, $65 million more than runner-up David Beckham.

Based on those criteria, we project Tiger Woods should join our list of the world’s billionaires in 2011.

It will be an unprecedented occurrence. There are plenty of billionaires who have excelled at sports, like Switzerland’s richest man and champion sailor Ernesto Bertarelli. But there are no billionaires who accumulated their fortune by playing sports. A representative for Woods did not respond to a request for comment.

A billionaire Tiger would also be unique for earning his money through paychecks. If a billionaire didn’t inherit his or her money, he or she typically made it by holding a stake in a company with a soaring valuation: Think Bill Gates. He didn’t make his billions from his Microsoft salary, but from all the stock he owned.

Woods is poised to become a very unique billionaire because of his tremendous earning power. This is based, first and foremost, on Woods’ remarkable golfing ability. His recent U.S. Open victory was his 14th major championship. He’s only 32, and is quickly approaching Jack Nicklaus’ record of 18 major career wins.

His list of accomplishments keeps going. Woods, a golf prodigy as a child, is the youngest golfer to achieve a career Grand Slam. He won 50 tournaments on the PGA Tour faster than any player. He’s been the PGA Player of the Year nine times, another record.

Prize money only accounts for about one-tenth of Woods’ earnings. The remainder comes from lucrative endorsement deals. This is another crucial cog in the money-making machine that is Tiger Woods – he’s not just an excellent player; he’s an exceptionally popular and marketable one.

Television ratings for golf tournaments increase by nearly a third when Woods is playing. “He has brought a new level of interest and fans to the sport that weren’t there before he arrived,” says Scott Sanford, a senior director at the marketing company Davie Brown Talent.

Nike Golf is the most prominent example of Woods’ selling power. When Nike signed Woods to an endorsement deal in 1996, it didn’t have a separate golf unit. It launched one in 1998, with Woods at the center of its marketing push. Last year, Nike Golf posted over $600 million in sales. It is now the biggest golf apparel company in the world.

“He built Nike Golf,” says Sanford. “When you show the best golfer in the world using certain balls, irons, apparel – viewers want to use the same equipment. No other athlete could have built up the brand at the rate he did.”

That selling power is why Woods also has big deals with Accenture, Buick and Gillette. Gatorade recently launched a new line of drinks called Gatorade Tiger. Woods will rake in about $90 million in endorsement contracts this year alone. Over the course of his career, he’s earned more than $750 million from such deals.

Just how far might Woods climb up the ranks of the world’s billionaires? It’s difficult to tell. Common risks for athletes include divorce and injuries, which slow wealth accumulation, says an investment manager who works with about two dozen professional athletes.

Retirement would also have an effect. Even though Woods is the best in the world, and golfers have exceptional longevity as pro athletes, there’s no guarantee how long he will play.

“After all the records are broken, what else is there?” asks Alan Lancz, president of Alan B. Lancz & Associates. “I’ve seen that with athletes I work with. They make their mark and then move to other priorities, like family.”