Top Ten Golf Stories of 2017

Woods Comeback…Again: A WD in Dubai in February. Another back surgery in April. A DUI arrest in May with a follow-up treatment program. Tiger Woods’ came back to golf in December for an 18-man exhibition that had some in the media and some of his fans in a frenzy of expectation and speculation. The facts are Woods looked physically fit, seemed to have positive attitude and played fairly well though his short game obviously needs some work if he is to achieve his goal of besting Jack Nicklaus’ major record.

Rollback or Bifurcation: Tiger Woods and Dustin Johnson say it’s true. Gary Player, Jack Nicklaus, Hale Irwin and USGA Executive Director Mike Davis agree. The golf ball goes too far. Woods certainly never said this when his prodigious length was blowing away fields and Johnson, whose is even longer, admitted a restricted flight ball would be to his advantage. But as savvy, knowledgeable and vested in the game as these gentlemen are there’s a problem. Neither the available data nor a logical appraisal of the facts support their contention. This however hasn’t stopped them from proselytizing a rollback of ball performance or the creation of the equally objectionable alternative, separate equipment regulations for professionals, i.e., bifurcating the rules.

TMaG Sold: It took a year but Adidas AG (OTCMKTS: ADDYY) was finally able to find a buyer for TaylorMade Golf, Adams Golf and apparel-maker Ashworth. Purchaser KPS Capital Partners, a private investment group, payed $425 million, less than half of the 2016 sales figure and it could turn out to be a bargain. If KPS does as expected and applies the classic turnaround remedies–cutting costs, growing sales and refocusing management– they could recoup their investment by selling the company or taking it public in maybe as few as three years,

Lexi Thompson: Lexi Thompson, the best American player on the LPGA Tour, was penalized four strokes costing her the ANA Inspiration after a television viewer sent an email about a possible infraction the day before. There was lots of official mumbling, something about fair application of the Rules of Golf, but in December the USGA announced effective Jan. 1, no more viewer call-ins or emails about possible rules infractions will be allowed. Many think this reasonable application of common sense is long overdue. Golf now is in line with other sports where the official’s job is to officiate, and the viewer’s job is to view.

Presidents Cup Rout: The U.S. President’s Cup team captained by Steve Stricker beat up on Nick Price’s Internationals by such a lopsided margin the U.S. actually was one-half point from clinching the win before the final day singles matches. Two takeaways—first those who criticized Striker for picking Phil Mickelson were wrong…again. Lefty earned 3 ½ points and, as he has done in the past, was an inspirational leader for the team. Second and more importantly for the future of the Presidents Cup, continued U.S. dominance has made it essentially an exhibition masquerading as a real competition. This needs to be fixed before the Presidents Cup becomes totally irrelevant to players and fans, if it hasn’t already.

Callaway Surges: During the past three years Callaway Golf (NYSE:ELY) took over TaylorMade’s dominant sales position in woods and irons with products such as the technically innovative Epic driver. Callaway’s irons have been first in sales for over two years and for the past four years they have been the fastest growing major golf ball company. Company sales for 2017 are expected to be approximately $1.035 billion up substantially from the $871 million in 2016.

PXG Success: Parsons Xtreme Golf (PXG) may not be a major factor in the equipment business but owner Bob Parsons has a real success story he can boast about for this new and somewhat edgy club company with really expensive equipment (the basic driver costs $700). PXG rang up $38 million in sales for 2016, its first year in business, which was great but 2017 looks spectacular. Parsons told Dave Dusek of Golfweek, PXG will have sales of $100 million for the year but more astonishing, make a profit which may be a record for an upstart club company.

PGA Tour Shake Up: Ever mindful of the futility competing for fans attention with the NFL, the PGA Tour has some big changes coming in the 2018-2019 season. The PGA Championship will be played in May rather than August and The Players Championship now in May moves to March. The shakeup includes reducing the FedExCup Playoffs from four to three events allowing the Tour to finish before the NFL season kicks off plus provides some room for schedule tweaks in Olympic years.

Major Winners: Sergio Garcia finally won a major and appropriately it was the Masters. Long-hitting Brooks Koepka won the U.S. Open, also his first major, doing it in fine style and Jordan Spieth had another multiple win year capped off with the Open at Royal Birkdale. Then there was Play of the Year Justin Thomas who began the year with a 59 in the Sony Open and finished with five wins including the PGA Championship. Each of these players has his own compelling story and next season it should be even more exciting with the return of Tiger Woods.

LPGA Commissioner Michael Whan had quite a year: In the Solheim Cup, the American squad beat up on Team Europe and subsequently Whan offered to aid the financially struggling Ladies European Tour. He had to cancel the Alisport Shanghai tournament from a lack of proper permits and then had to shorten the Evian Championship major to 54 holes from a lack of dry weather but caused an eruption of controversy. Hall of Famer Juli Inkster then rattled some cages with her outspoken contention corporations are unfairly depriving the LPGA of a fair share of monetary support. But when the player’s dress code was modified social media and some conventional media were exposed at their mean and bitchy worst.

Tough Times at TaylorMade—Club Prices Cut

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Following what can only be described as a dismal 2014 sales and profit performance accompanied by a dramatic drop in their share of the metal wood product category, TaylorMade-adidas Golf (a division of adidas AG– OTCMKTS:ADDYY) laid off six percent of their employees July 15 and has been quietly cutting retail prices of their leading models.

CEO David Abeles, in the top position for only six months, saiTMaG_DavidAbeles_Captiond in the company announcement:  “In light of the continued challenges TaylorMade is facing in the market place, we have to fundamentally rethink our business. We need to redesign our business with a more focused approach to product innovation, brand marketing, sales and customer service. We have now begun the process and rebalanced our workforce by six percent on Wednesday to increase operational efficiency. This measure is a difficult and necessary step in order to lead our organization into a successful future. At the same time, we will continue to analyze our business. The outcome will be a more nimble, more creative and more profitable company.”

This follows a restructuring and realignment done last year when Adams Golf division closed their Texas plant and moved to TaylorMade’s headquarters in Carlsbad, Calif. It was also reported TaylorMade laid off 15 percent of the golf division employees at that time.

Under former CEO Mark King, who left in the spring of 2014 to take over Adidas Group North America, TMaG had forged a commanding lead in metal wood sales for its drivers, fairway woods and Rescues further enhanced by the purchase of Adams Golf, a leader in game-improvement clubs. Sales in 2013 set a record of $1.4 billion strengthening its position as the world’s largest golf equipment company.

The 2014 restructuring and layoffs reflected TMaG running into trouble with the King strategy of market domination that saw three major product introductions in quick succession during 2013 forcing inventory on retailers and virtually blitzing competitors such as Callaway Golf with new technology particularly in drivers, typically the highest priced golf club. But in a market with intense competition and at best flat demand, consumers became confused when forced to make buying decisions in order to be playing the “latest-greatest-longest,” delaying purchases or even buying from competitors.

Unsold inventory at retail rapidly became a problem with a very public example being Dick’s Sporting Goods (NYSE:DKS) in July 2014 dismissing over 500 PGA Professionals. Price cutting not just of TaylorMade clubs but other brands became the norm which, though giving golfers some great bargains, meant lower sales and profit numbers for both retailers and club companies continuing through the fourth quarter.

Ben Sharpe followed King to the top job and oversaw thTaylorMade-r15-driver-TaylorMade-AeroBurner-Drivere August 2014 Adams relocation and golf division layoffs while initiating talks with key retailers to address product cycle, inventory and pricing concerns. When Abeles took over from Sharpe, who ran TMaG for only 10 months, he was faced with sales having fallen from 2013 $1.4 billion to $1.0 billion in 2014 and poor results in the first half of 2015 as a result of a one-third drop in metal wood sales even with the introduction of the new R15 and AeroBurner models.

Competitor Callaway Golf (NYSE:ELY), who TaylorMade supplantedPING_G30Trio_400x300 as the top club company, has had a resurgence in metal wood sales and introduced three new models for 2015 while privately-held PING’s G30 Driver became the bestselling model so far this year.

To boost sales TaylorMade began cutting prices on both the R15 and AeroBurner model lines before mid-season and well in advance of new model announcements. Seemingly to keep pace, Callaway is matching and exceeding the TMaG price drops with reductions of $150 across the board for all their new driver lines. This has forced Cobra-Puma Golf (Puma AG–ETR:PUM) and others to allow retailers to cut prices pushing the general price level of all metal woods down an estimated 10 to 12 percent.

Some industry analysts see this as another round of fierce price competition with the company that can bring the products with the most innovative technology to market the quickest as the winner. However, it is also clear price differentiation will be difficult to maintain as has been seen so far this summer.