Ouch Scheduling Luck: National Golf Day Hits Capitol Hill On A Slightly Busy Day In DC

Unfortunate or some might say ironic scheduling, but as the golf world's very own President Donald Trump briefed Senators on North Korea, pushed tax reform and worked to stave off a government shutdown, Capitol Hill was probably not too focused on National Golf Day.

We will never know, but credit the folks in golf for still spreading the gospel in the face of Tuesday's chaos. Over 175 meetings with House and Senate members--who were undoubtedly keeping one eye on their Twitter feeds--took place, reports Ryan Herrington for Golf World.

This year’s efforts focused on three specific areas: health, labor and the environment. Participants attended 175 meetings with members of the House of Representatives and Senate from their home states, passing along the industry’s thoughts on these issues.

In each meeting, We Are Golf participants asked for support of specific bills already proposed in Congress (notably the PHIT Act, which would include physical activity, including golf lessons, green fees and camps/clinics, among tax-deductible medical expenses) or the repeal of current provisions (such as the Clean Water Act, which golf leaders says overregulates ponds and wetlands found on golf courses).

“I look forward to National Golf Day every year,” said Congressman James E. Clyburn, a Democrat from South Carolina. “It’s a chance to visit with the folks at We Are Golf here on Capitol Hill to talk about the positive impact the game has on our economy, worthy charities and personal fitness.”

NGF: "Overall involvement in the game is actually up"

With the addition of Topgolf and other off-course experiences added to their overall counts, the National Golf Foundation's annual study of golf participation reveals a few interesting things.

First, the bad news:

While the latest research indicates a modest 1.2% decline in on-course participation – dipping to 23.8 million (age 6+ who played at least once) in 2016 from 24.1 million in 2015, commitment to the sport in many respects is more evident than ever before.

Now the positives...starting with the committed.

The number of committed golfers – a group that accounts for approximately 95% of all rounds-played and overall spending – rose for the first time in five years, from 19.5 million to 20.1 million.

An 11% increase in "off-course participation" was largely attributable to Topgolf's inclusion in counts...

Driven primarily by the popularity and growth of Topgolf, a non-traditional form of golf entertainment, there were an estimated 20 million off-course participants in 2016. Of those, 8.2 million didn’t play on a golf course.

And the next dreaded but, the conversion factor...

The number of people who say they are “very interested” in taking up golf has doubled over the past five years, growing at an annual rate of nearly 15%. In addition to the 12.8 million non-golfers who said they’re very interested in playing golf, there are another 27.8 million who responded they’re “somewhat interested” in taking up the game. That increase has driven growth in the number of beginning golfers, with those who played on a golf course for the first time jumping to 2.5 million in 2016 from 1.5 million in 2011.

Topgolf is doing its part, with free lessons April 24th as part of National Golf Day. Eric Matuszewski reports in a Forbes roundup of business stories, including the new Seamus golf shoes and other notes.

It's the economy, stupid:

Recent increases in interest (latent demand) and beginning golfers appear to be correlated with increases in consumer confidence, spending and other favorable economic indicators. Just as these measures trended downward along with golf during and following the recession, they are now increasing as interest in traditional green-grass golf builds, and participation in non-traditional golf activity, such as Topgolf, rises.

This is a big number:

Golf’s overall reach remains extensive, and steady. An estimated 95 million people (or one out of every three Americans age 6+) played, watched or read about golf in 2016, the same number as in 2015.

And the big conclusion, which probably has been written, oh, annually...

The game’s challenge remains the same: getting more of those who express interest to actually give golf a try, and converting more beginners into committed participants. The encouraging sign for the industry is that the committed participant group now appears to be stabilized, while the number of players picking up a club at off-course facilities continues to build.

Nike Commits To Rory For 10 Years!

Fascinating to see Nike fleeing from the golf equipment business but locking in Rory McIlroy for 10-years to go with their massive commitment to Jason Day. Here's guessing financial publications will not point out such bullish commitments in stories about the health of the sport.

Marty Smith first had the news in this profile just posted at ESPN.com.

The piece included this:

McIlroy is genuinely aware that his closet is bountiful. He is a major champion, PGA Tour icon and global celebrity. The emergent face of Nike Golf, he recently signed a 10-year extension with the shoemaker.

Asked why Nike was right for him, he's very blunt.

"Whether it was [Roger] Federer, Michael Jordan or the soccer players I followed, they all wore Nike," he says. "I always associated Nike with the best, with greatness."

McIlroy confirmed on Twitter:

Looking forward to the next 10+ years as a @nike athlete!https://t.co/m4abneH1yQ

— Rory McIlroy (@McIlroyRory) April 2, 2017

There is a new ad campaign too. Hello World, it is not.

Always stay in the driver's seat. #NikeGolfClub

A post shared by Nike Golf (@nikegolf) on Apr 2, 2017 at 8:16am PDT

DraftKings Rolls Out Golf Push On Significant Growth Signs

The ramifications could be significant for golf on television and its appeal to a broader audience, therefore the DraftKings push this spring will undoubtedly be watched closely. How successful it all becomes could even influence television negotiations, fan interest and the overall health of professional golf. (You may recall Golf Channel's Rich Lerner asking new PGA Tour Commish Jay Monahan about this in January and receiving a surprisingly open-minded response.)

Dustin Gouker at League Sports Report notes the pre-Masters push DraftKings is making to go all in to grow their audience via enhanced app and site, uh, games. 

According to DraftKings, fantasy golf on its platform has “experienced a 23x growth and more than 15 million entries” since launch.

Gouker explained the difference in DraftKings and rival/future partner Fan Duel's approach to fantasy golf here.

The ad campaign is clever. Though how much of this is real, I don't know. But it's entertaining and of course, will lure many of us to make a donation to their cause!

Costco Case Analysis: "A bold ask in the world of golf ball patents, especially where Acushnet is concerned."

Mike Stachura and Mike Johnson try to consider what Costco aims to achieve in filing a lawsuit against Acushnet over patents, especially since they note the effort is to invalidate the works of a company known to vigorously defend their patents.

Reading the reporting by Stachura and Johnson, it's hard not to wonder if the case was started in part as a publicity plot, especially with a new version of the ball likely coming soon. However, the risks and costs in such a legal battle would suggest such a move merely to sell some golf balls could backfire for Costco.

Acushnet was asked for comment in an analysts call an declined.

"You know based on past experience that we never comment on the competition, and as you would expect, we don't comment on any outstanding litigation," he answered to one analyst's specific question about the impact of the Kirkland Signature ball. "We do respect the fact that you're going to ask questions of a competitive nature and of a litigious nature and hopefully catch us at a weak moment, but we'll take a pass on both of those."

This analysis from a legal expert suggests Costco made a bold and shrewd move in the approach to its filing.

“It’s a problem for the alleged infringer if the patent holder doesn’t sue them, so this does two things,” said Rochelle C. Dreyfuss, the Pauline Newman Professor of Law at New York University School of Law. “It accelerates the lawsuit, which sometimes the alleged infringer wants, and it also gives the alleged infringer a choice of court.”

Johnson and Stachura draw this conclusion that I'd agree with, except for the buzz and store traffic likely increased by the Costco ball craze.

For all the media hype and the cult-like status afforded the Kirkland Signature ball, fact is its contribution to Costco’s bottom line is likely no more than an accounting rounding error due to its inability to produce more than limited quantities of the ball.

Costco Sues Acushnet: "This should get real interesting, real fast."

Nice work by David Dawsey at Golf-Patents.com to spot and analyze Kirkland golf ball-seller Costco's suit against Titleist-maker Acushnet.

Many thanks to all who sent various stories in, including the full pdf of the suit here.

Dawsey writes:

Costco is seeking a declaratory judgment that it is not infringing any valid patent rights owned by Acushnet by its sale of its Kirkland Signature golf balls and that it has not engaged in false advertising regarding the golf balls. Why did they take such a provocative step? The complaint states “[t]he need for such relief exists because Acushnet has wrongfully accused Costco of patent infringement and false advertising.”

The paragraphs noted by Dawsey are worth checking out, but this seems to be the key point:

7. In response to the popularity of the KS golf ball, Acushnet sent Costco a threatening letter, wrongfully accusing Costco of infringing 11 Acushnet patents based on its sale of the KS golf ball and engaging in false advertising based on its Kirkland Signature guarantee that all Kirkland Signature products “meet or exceed the quality standards of leading national brands.”

WSJ's Brian Costa reported the story for Journal readers with this measured take, while MyGolfSpy.com, which fueled interest in the ball with its review, reveled in the news, noting that the timing may be no coincidence:

The legal wrangling comes at a time when sources are telling us that Costco is ready to begin shipping K-Sig balls to its retail stores. Coupled with the lawsuit, the clear suggestion is that, letters be damned, Costco is going to sell its golf balls and make Acushnet fight publicly to stop it.

It remains to be seen if the new ball is the same as the old one, with the USGA conforming list suggesting that a new version of the ball has been approved.

BAT Tax Could Have Big Impact On Golf Equipment Industry

Morning Read's Alex Miceli considers the golf equipment industry ramifications of a Border Adjustment Tax, proposed by Paul Ryan (R-Wis.) and Rep. Kevin Brady (R-Texas) and now sounding like something President Donald Trump might endorse.

The 20% tax on imports is designed to keep manufacturing in the United States, and with all but Titleist/Callaway/Taylor Made* golf balls and a handful of other products made outside the US borders, customers are likely to see price increases on golf clubs. Miceli writes:

Considering the difficulties in the golf business, narrowing profit margins is not an acceptable alternative. The obvious counter to the BAT would be to start manufacturing in the U.S., but that move would be a challenge.

Manufacturing facilities that can cast clubheads are in short supply in the U.S., and the expertise is not as readily available. Plus, the cost of manufacturing in the U.S. is what forced these companies to move production overseas, much of it to Asia, in the first place.

“I just think it's a cost analysis, which is we need to bring our products to market in a way that's conducive for consumers to be able to get into those products and a large quantity consumers to get into those products, and to be that you have to be positioned and market in the right place,” David Abeles, the chief executive and president of TaylorMade-Adidas Golf, said after a pro-am round last month at the AT&T Pebble Beach Pro-Am.

Brett Conrad has penned this op-ed for Forbes against the concept, while Alan Auerbach and Michael Devereux just published an NY Times op-ed case for the tax.

They're (Maybe) Back! New Costco Ball On Conforming List

Nice spot by GolfNewsNet's Ryan Ballengee to locate a new Costco golf ball on the March 1st USGA conforming ball list.

He writes:

The new ball is the Performance One Kirkland Signature ball. It also has four pieces and has a triple cover, but not a solid core. These balls are rated for medium to high spin and are made by SM Global LLC, an American subsidiary of a Korean company that is the new manufacturing partner for Costco.

While the original Costco four-piece ball remains dead as a likely one-off product, the buying craze and ability of the ball to get people in stores seems to have inspired Costco to move quickly on another ball, just as a company executive predicted.

Update on Friday, March 3, 2017 at 09:35 AM by Geoff

**Tony Covey at MyGolfSpy.com posts an excellent analysis of the latest news.

Apart from the fact that the USGA has approved a new Costco ball, the rest is admittedly speculation. Take it for what it’s worth, but my 2 cents; it’s unlikely the K-SigP1 will be $15/dozen. Nobody, the factory included, makes reasonable money at that price. $20/dozen is plausible, I’d say even likely, but if there are legal threats, that won’t put an end to them.

NY Post On Adidas Taylor Made Sale: "May Have To Give It Away"

Josh Kosman on the distressing news that TaylorMade-Adams-Ashworth is losing between $75 million and $100 million a year, and no post-Tiger signing momentum has expedited sales talks.

Now Adidas, the parent company of Taylor Made, may have to give the brand away.

Losses at TaylorMade are much greater than many potential bidders anticipated, causing suitors to walk away, sources said.

The golf division that Adidas announced was for sale last May — which includes golf club maker TaylorMade, and the much smaller Adams and Ashworth brands — is losing between $75 million and $100 million a year, according to sources close to recent deal talks.

That is quite a fall from 2013 when TaylorMade was posting $1.7 billion in sales and a healthy profit, sources said. Today, sales are a little better than $500 million.

Adidas last year was asking for more than $500 million for the business, but now may have to give it away, a source who considered making a bid said.

The story goes on to say Callaway's new Epic driver taking the top spot from Taylor Made hasn't helped, but neither did the parent company CEO talking down the golf business. Or releasing three drivers in one year.

Under Armour Enters The Bag Business With Sun Mountain...

On the heels of their disappointing earnings news turned into a virtual calamity by an irrational Wall Street, Under Armour's golf expansion took an interesting turn with a new Sun Mountain partnership.

Long known for their golf bags and travel gear--count me as a huge fan--Sun Mountain will be making an Under Armour branded bag.

Given that so many have wondered if UA would ever enter other parts of the golf business beyond clothes and shoes, could this signal what their planned model looks like?

For Immediate Release:

Sun Mountain to Make Under Armour Golf Bags
 
February 7, 2017 -- Sun Mountain has entered a licensing agreement with Under Armour to create and market a new line of golf bags. The 2017 collection includes two stand bags (Speedround $239.99, Match Play $259.99) and one cart bag (Armada $259.99). These new golf bags are scheduled to be at on- and off-course golf specialty stores beginning in April. Interested retailers should contact their Under Armour sales representatives to place an order.
 
The UA Storm Speedround golf stand bag is the lightest bag in the collection and offers a 9”, 4-way divided top and the X-Strap® Dual Strap System for easy on/off. Speedround offers nine pockets, two are water resistant, and comes in men’s and women’s styles with a retail price of $239.99.
 
The UA Storm Match Play golf stand bag features a 9.5”, 4-way divided top and the E-Z Fit© Dual Strap System for customizable fit. Match Play offers 11 pockets, two are water resistant. Retail price is $259.99.
 
UA Storm Armada is a golf cart bag with a 10.5”, 14-way divided top and single shoulder strap. Armada features 10 pockets, two are water resistant, and the new Smart Strap System to secure the bag to the golf cart. Retail price is $259.99.

PGA Show Review: "An absolute sloth"

Tony Covey at MyGolfSpy.com breaks down the PGA Show highlights, trends and observations.

However, it was his overall take on the model of a convention that will not go down well in West Palm Beach.

While the daily propaganda blasts from show organizers might have you believe otherwise, I’m here to tell you that the 2017 PGA Show was an absolute sloth. With noticeably light traffic in the aisles and plenty of open space (both on the show floor and the range at demo day), 2017’s easily qualifies as the most depressing PGA Show during my time in the industry.

Take it for whatever it’s worth, but several of my media colleagues (and others I’ve spoken with from inside the industry) are in complete agreement. Call it a worse show on the heels of a bad show on the heels of a not so good show.

Covey says the show in its current form, due to cost for all, "makes less and less sense."

Thoughts from those who attended?

Hogan Equipment Co. Files For Bankruptcy, Website Down

Even though CEO Scott White said a few weeks ago that "reports of our death have been greatly exaggerated," the Ben Hogan Equipment Company, which unveiled a revamped brand and irons in 2015, has filed for bankruptcy, reports the Dallas News.

From the report (thanks reader Steve):

The Chapter 11 petition, filed with the U.S. Bankruptcy Court in Fort Worth on Saturday, lists both assets and liabilities between $1 million and $10 million. Among its top creditors are Perry Ellis International, which licensed the Hogan name to the company, owed $267,500, and Conti Edgecliff-Sias LLC, its landlord in south Fort Worth, owed $77,256.74.

The company website is no longer functional.