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.

The Times They Are A-Changin’—Bob Dylan

dyaln_640x400Though Bob Dylan sang the lyrics to The Times They Are A-Changin’ in 1964 to reflect the social unrest of the time he could have been singing about the golf equipment business today.

The trials and tribulations of golf equipment manufacturers and retailers have been well reported with Dicks Sporting Goods (NYSE:DKS) purchasing Golfsmith out of bankruptcy and Nike’s (NYSE:NKE) decision to withdraw from the club market receiving the most attention. At the same time two of the largest club makers are undergoing major changes.

Potentially the sale to the public of Acushnet, makers of the number one ball brand Titleist and the number one golf shoe FootJoy, will have an impact that could be more far reaching.

Owners Fila Korea Ltd. and an investment group led by Mirae Asset Private Funding purchased Acushnet from Fortune Brands in 2011 for $1.23 billion and will not relinquish their entire ownership in the initial public offering only selling roughly one-third of their shares. The prospectus also states the proceeds from the public stock sale will not be used by Acushnet to reduce debt or for product development but retained by Fila and the others.

Fila also has told Pulse News in Korea they have plans to purchase more shares, up to 50 percent, from other current shareholders to keep control of the company.

As a publically traded company Acushnet (NYSE:GOLF) will be making decisions differently than when privately owned. The pressure from investors will place them in the same position as every other public company. Quarterly results will be closely scrutinized and management decisions will be made in light of that attention.

In other publicly-held corporations long-term strategy may be compromised for the sake of short term profits. One of the most obvious areas of change could be the balance of profits retained by the company to fuel growth and the amount distributed to stockholders. It wouldn’t be the first time short term decision making overrode long term product development.

TaylorMade Golf owned by adidas is for sale and after six months no deal has been signed leading some to ask why. Adams Golf and Ashworth brands will likely be included in any deal. Adidas CEO Herbert Hainer said in May, when the possibility of a sale was being investigated, they wanted to concentrate on other divisions of the company with better prospects for growth. A reason essentially the same as that given by Nike in August when they decided to leave the club business.

It may or may not be significant but TMaG has not announced any new models for the 2017 season even though during late summer and fall all the other makers are introducing their latest. TMaG has the leading driver on the PGA Tour and has the largest selling iron model, the M2, on the market so it would be expected new clubs would be introduced at this time or at least an announcement there would not be new club models for 2017.

One interesting possibility is, if the Acushnet IPO is popular with investors, TaylorMade could be seen as a more attractive acquisition.

The Dick’s/Golfsmith deal for a reported $70 million remains to be finalized and as yet unresolved is how many of the Golfsmith stores will remain open and if Dick’s other specialty retailer Golf Galaxy will assume Golfsmith locations. Dick’s bought another competitor, Sports Authority, also in bankruptcy earlier this year.

Stay tuned. The Acushnet IPO is Friday the 28th, more news about TaylorMade’s fate will surely be coming and Dick’s decisions about Golfsmith will to a large degree set the pattern for big box retailers.

TaylorMade on the Block?


Adidas (OTCMKTS:ADDYY) said they have engaged an investment bank to look into selling non-core golf brands Adams and Ashworth which along with TaylorMade Golf make their golf division. A sale of TaylorMade however, was not ruled out as golf division sales had double-digit declines in the second quarter following lower first quarter sales following a 29 percent drop in 2014.

Golf industry insiders speculate a purchaser may come from outside the sporting goods business segment due to the long term trend of declining equipment sales particularly in the U.S. which accounts for approximately one-half of worldwide market.  

In response to decreasing business TMaG has already changed Chief Executive Officers twice in the past 18 months and undergone two rounds of employee layouts in the past year. Adidas Chief Executive Herbert Hainer said TaylorMade’s the current R15 and AeroBurner metalwoods had not met sales expectations and he was hopeful the new models being introduced next month would be a success. 

Not part of the consideration, at least at this time apparently, is spinning Adams, Ashworth and TaylorMade off as a separate company and selling shares to the public as Acushnet-owner Fila has announced it is considering.

Tough Times at TaylorMade—Club Prices Cut


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.