OK, so maybe the 15-inch hole wasn't the greatest idea
after all, but Hack Golf's efforts fizzled out too quickly
Adidas Group recently announced that
they have put their golf division, TaylorMade, up for
sale. It's easy to blame golf (or more specifically the
golf consumer) as the culprit for TaylorMade's recent
woes. The thing is, this
kind of complaining doesn't help anything, it just
perpetuates a problem facing the game. We've
known golf is a no-growth business for years, but the
sport of golf is much bigger than the equipment
business. So I hope people won't again sound the
"death of golf" alarm bell when seeing
that TaylorMade is being sold.
Geoff Shackelford
recently reported, on former TaylorMade CEO
Mark King's recent interview with Yahoo Finance.
(You can watch the video at the bottom of the page.)
"I think the decision was made to sell
it," King says, "because the company has
realized that we should be focusing on the biggest
growth opportunities. And the biggest growth
opportunities are in running, training, basketball. And
we have a lot of runway in those. As opposed to
being in something that is harder to focus
on."
Harder to focus on? In other words, golf equipment
is a bad business these days (despite Adidas Group
CEO Herbert Hainer's insistence to the contrary)?
"It is," King says. "And that was the
realization."
King's comments struck a nerve with me, but to
be fair, a great deal of the credit for TaylorMade's
meteoric rise in the 2000's came under King's
leadership and I think his recent words are an
attempt to justify Adidas putting TaylorMade up for
sale.
I've always known King to be upbeat and full of
energy. He's the kind of guy who remembers
everyone's name and loves playing golf with the
guys on weekends. So as much as I'm disappointed
with his recent tone, and with TaylorMade's
inability to follow up on their $5 Million commitment
to foster new grow-the-game ideas after the
"Hack Golf" announcement in 2014
(remember the 15-inch hole?) I'm willing to give him
a pass. After all, he's not running the company
anymore, having moved on to the role of running
Adidas in the U.S. in 2014. Maybe the 15-inch hole
and other ideas quietly died because he was not
there to champion them.
My take is this. While TaylorMade was riding
their "Number One Driver on Tour"
position to double-digit growth, the overall
equipment market wasn't growing. Something had to
give. Just ask Apple, now trading at a 52-week low.
Great products, ecosystem, and happy customers.
But people aren't' going to buy a new smart phone
every year forever, especially at Apple's prices.
The same goes for golf clubs. I would love to
see all of the top manufacturers do well all the time.
But that's simply not going to happen. The biggest
success story of the past three years has been the
comeback of Callaway Golf under the leadership of
Chip Brewer (former CEO of Adams Golf). Fighting
against a shrinking equipment market, foreign
currency headwinds -- the strong dollar makes sales
in major foreign markets like Japan less valuable --
Callaway has focused on improving their entire
product line. They've brought back the "Big
Bertha" name, focused on a young and vibrant
Tour staff (Lydia Ko can be a force to reckon with for
years to come), and focused on the core strengths in
creating performance equipment. Several years ago,
low handicappers might have overlooked the brand.
But Brewer insisted that any "pro" model
club include (at no upcharge) the same OEM shafts
that would cost
hundreds of dollars if purchased separately, not just
a "made for" model that saved the
company money. They also leveraged Roger
Cleveland's strength not just as a wedge designer,
but as an industry design veteran. Callaway is now
No. 2 in wedge sales. And their new Chrome Soft
ball is the best they've ever manufactured.
Callaway never complained about the golf
consumer, they just focused on getting better. I think
that might be a metaphor for improving our golf
games!
Neither did Titleist, who would of course love to
have their huge golf ball market share in a larger
market, growing at 20%. But since that's not going
to happen anytime soon, their focus is on the core of
the game. Their Jim Nance-narrated advertisements
THANK golfers. "The dew sweepers, the
weekend golfers..." -- you know the
commercial. On the equipment side of Titleist's
business, the most amazing thing is that while the
other manufacturers have at times released as many
as three drivers in a single year, Titleist has
maintained its commitment to a 2-year product
cycle, alternating release years with irons and woods
the way the Walker Cup and Curtis Cup are played in
alternate years.
As for PING, they can be credited with
popularizing custom fitting, inventing a color-coding
for lies of irons before most Tour players were born.
Heel and toe weighting was born in Karsten
Solheim's Redwood City, California garage -- it's
continued to be a mainstay in putter and club design
to this day. There
was a time when PING could have complained about
losing driver market share. Instead, they designed
the G30 series, which was such a hit with consumers
that it became the number one driver at retail for a
period of time, while TaylorMade was continuing to
advertise themselves as the Number One Driver on
Tour.
Nike took a long view when they entered the
golf market, and it seems to have worked out well.
The fact that they didn't jump into the ball market
and claim the number one spot (while having the
number one player using their ball) speaks volumes
about golfers' brand loyalty. Their clubs are bold
looking, and appeal to young golfers. Cobra-Puma
also continues to carve out a niche appealing to
younger golfers, and like Nike the performance
apparel and shoe connection makes the brand more
relevant (and profitable) as shoes and apparel
leverage the companies' design and manufacturing
strengths.
The reason I've chosen to highlight the strengths
of these companies is that I sometimes get tired of
hearing that golf is a dying game. It's not like golf
equipment manufacturers are making fax machines
or PCs. (Now there's a business I don't envy.) Golf
has been played for hundreds of years and it will be
played for hundreds more. Even if the number of golf
courses gets cut in half due to population growth and
water constraints, the lure of our historic game will
always be there. And somebody smarter than me
will come up with ways to fight the issues we've always
faced in golf: It's hard to learn, expensive to play,
and takes too long.
Recently, that somebody has been Top Golf, a
driving range/entertainment complex that has to be
experienced to be appreciated. Rock music, bright
lights, colorful targets, and 500 friends hitting balls
on a Friday night? That's fun. And I guarantee if you
live anywhere near a metropolitan area, Top Golf is
coming to a location near you. As for traditional golf
resorts, I've got just two words for you. Bandon
Dunes. Swimming upstream in a slow-growth
business is putting it lightly, the place is pure magic
as a destination and a business.
Rounds of golf just soared through the roof in
the first quarter of 2016, according to the National
Golf Foundation. I'm not sure if that trend will
continue. But as I've said all along when people ask
me about the state of the golf business: "All I
can tell you I'm still playing my 100 rounds a year --
golf isn't dying because of me!"
ABOUT THE AUTHOR
Pete Wlodkowski is the founder of golf
tournament website AmateurGolf.com. Three of the
equipment manufacturers referenced above --
Callaway, Titleist, and PING -- are paid sponsors of
that website.