In a recent post we covered the disappointing sales and earnings reported by Addidas and Dick's, both specifically tied to their golf businesses. It's not exactly a well-kept secret that the golf world is economically-challenged, as more recent items make clear.
Shackelford went on a Unplayable Lies-worthy rant about this Bloomberg item on the state of our game, and while I didn't think it was quite as off-base as he, his points were typically well-taken. Let's start with their lead:
Once the go-to activity for corporate bonding, the sport is suffering from an exodus of players, a lack of interest among millennials and the mass closure of courses.
As Shack is all over, by mass closings they mean 160 course closed out of some 16,000, so use of the word "mass" could be a tad overwrought. But as they note later, it's the eighth consecutive year in which more courses closed than were built. There's no question that too many courses were built, especially in the wrong places, so this smells to me like a much-needed correction.
Next up the authors get into the retail side of the industry, quoting the Dick's numbers and the hit taken by Callaway's stock on the day they announced a "dim forecast" of future performance. Their forecast is, of course, fair game, and the descriptions of the glut of product in retailers' inventory is troubling, but the authors' point is undermined by the fact that the stock has rebounded to where it was before the announcement.
But what to make of these numbers?
About 400,000 players left the sport last year, according to the National Golf Foundation. While almost 260,000 women took up golf, some 650,000 men quit.
I'm always puzzled by numbers like these, because we don't know how they define a golfer. The women numbers seem encouraging, no doubt a reaction to Augusta National ordering two green jackets in women's sizes (just kidding there), but don't we suspect that the 650,000 men were infrequent players, the outing golfer if you will?
I try to focus on the number of rounds played, on which those outing golfers will have no real effect:
The people sticking with the sport are playing fewer rounds than before, often opting for nine holes rather than 18. In total, U.S. golfers played 462 million rounds last year, according to Golf Datatech. That was the fewest number since 1995.
It sounds pretty bleak, but wouldn't you like to see those annual numbers before leaping to any conclusions. Particularly since this particular article seems to lead with the more dramatic numbers while burying the mitigating factors deep in the text. For instance, after citing Dick's and Callaway in the opening paragrah, this come later:
TaylorMade, the Adidas AG-owned brand that makes clubs and golf accessories, also is suffering. The business saw a 34 percent sales drop in the first quarter, Adidas said earlier this month. Still, not all golf equipment is in decline. Overall, manufacturers’ sales rose 1.2 percent last year, according to the Sports & Fitness Industry Association. While sales of golf balls fell 4.9 percent, clubs grew 4.2 percent.
TaylorMade has admitted that it somewhat created its own problems through the shortened product cycle, and the full-year numbers indicate an industry that is essentially flat. Flat isn't great and no doubt they need to do better, but it's also not, as Shack notes, in freefall.
Obviously the authors had limited space in which to make their case, but they also wasted it on tying the industry malaise to one Eldrick Woods. There's no doubt that Tiger's impact can be felt in television ratings, but to me the case has never been made that he's actually grown the game.
Those television ratings are the subject of a related item, in which the title sponsor of the Tour event at Colonial indicated their decision on whether to renew will be based on those TV ratings:
That question will be answered in September, said Gina LaBarre, vice-president of Crowne Plaza brand management. During her visit to Fort Worth, which concluded with LaBarre handing the ceremonial winner’s check to Scott on the 18th green, she stressed the need to maximize exposure for the brand in exchange for extending Crowne Plaza’s contract as title sponsor beyond the 2015 event.
She also said television ratings for the 2014 tournament, which will not be available until Tuesday because of the holiday weekend, will be significant in deliberations by corporate executives.
“It’s all going to be in the ratings because, really, that’s what it’s about at the end of the day,” LaBarre said. “So I won’t know at the end of this week what’s going to happen. We’ve got to see what we do from a ratings perspective … For us, it’s about how do we get more national exposure for the brand.”
Not sure if Son of the Bronx is back in business, but Shack has those ratings for us:
Sunday's final round playoff win by Adam Scott over Jason Dufner drew a 1.5 average, down from a 1.7 in 2013. The tournament drew a 2.1 in 2011 when the event's audience size was last cited as "buzz-worthy." Though the tournament likely delivered the same number of viewers as tournament broadcast windows have expanded. Seems like a wash to me, but we'll find out later this year how the brand managers felt.
I've always suspected that golf sponsorships are boondoggles for golf-loving CEO's that couldn't possibly pay for themselves, given the huge financial commitments. I'd love to do such a post on the economics of of sponsoring a PGA Tour event, if I could somehow access the data. But of course Commissioner Rtached keeps such data in the same vault as John Daly's disciplinary file.
As an exit question, if the industry is so gosh darn awful, why are presumably smart guys investing to relaunch the Ben Hogan product line?
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