Aiming a Long Shot Right at the Green : Tiny Atrigon Golf Inc. hopes to get a boost from its deal with top pro Nick Price in its drive to sell high-tech clubs.
Like a 5-iron shot from the deep rough, Atrigon Golf Inc. came out of nowhere two weeks ago to score one of the biggest golf equipment endorsement coups in memory. Outmaneuvering much larger rivals, the 2-year-old firm signed a 10-year deal with Nick Price, the world’s top-ranked golfer and winner of the PGA and British Open championships last year.
Price didn’t come cheap. Atrigon reportedly agreed to pay him $1.5 million a year over the life of the contract, plus 10% of the company, royalties worth up to $1 million a year and bonuses of $100,000 for each tournament victory. The Camarillo-based company also gave Price control over the design of the clubs.
Atrigon, which only started manufacturing woods last year and won’t introduce irons until next year, hopes Price’s visibility combined with a high-tech club design will drive the company to the front of the $1-billion-a-year golf equipment industry.
David Fernandez, the company’s chief executive, has set his sights on the lush green of the premium golf club market, which accounts for 40% of unit sales each year but nearly 70% of the revenue. He hopes Price will help boost the company’s sales so that in a few years Atrigon can go to Wall Street and raise money through a public stock offering.
“The golf community has seen the success of Callaway and Cobra,” said Fernandez, citing two publicly held golf club makers that had a combined $573 million in sales last year. “We expect to do the same.”
But industry analysts say Atrigon is a long shot. The premium golf club market is already cluttered with a confusing array of designs and technologies after a massive shift to oversized clubs in recent years. “Building a new successful brand in golf today is virtually impossible,” said Shelly Hale Young, an analyst at Hambrecht & Quist in San Francisco.
Others say the value of Price’s endorsement is uncertain. Although Price, 38, has been one of the game’s strongest players in recent years, he is not considered an icon like old-timers Arnold Palmer and Jack Nicklaus, who have had mixed success selling their own brands. Price isn’t even as popular as his modern rival, Greg Norman, whose current deal with Cobra is the envy of many on the professional tour.
When Price steps up to the first tee this week at the Masters golf tournament in Augusta, Ga., his golf club bag will bear the Atrigon logo. But it could be a year or more before Price actually begins playing with Atrigon clubs. First, he and the company have to come up with a design he’s willing to use. For now, he will continue playing with the Ram irons he has endorsed while winning 10 tournaments and $3 million in prize money over the past two years.
Price has switched clubs a number of times over his career, hopping from Hogan to Wilson to Spalding to Ram. But as his $150,000-a-year contract with Ram came to a close last year, he is said to have begun looking for a way to match the huge endorsement success of Norman.
Norman signed with Cobra in 1990 for about $500,000 a year, plus 12% of the company. That chunk of stock wasn’t worth much then, when Cobra was still privately held. But since then the company has undergone two public stock offerings, and Norman’s holdings are worth more than $20 million, not to mention the $12 million he made selling some of his shares.
All of which helps explain why Price bypassed offers from Cobra, Taylor Made, Bridgestone and other established golf club brands to cast his lot with the upstart. “The great thing about this is that everyone involved in the company is going to benefit if they all pull their weight,” Price said.
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Atrigon is a subsidiary of Fernandez’s Dasia Corp., which makes products ranging from space shuttle parts to elevator platforms, and had sales of $15 million last year, Fernandez said. Dasia’s expertise in working with composite materials has also helped it win contracts as a supplier to major sporting goods manufacturers. The company was one of the first to make graphite tennis rackets for Prince, Fernandez said, and in the mid-1980s made golf club heads for Wilson.
But Fernandez, who doesn’t play golf, said he saw a need to change direction several years ago when aerospace contracts started to shrink, and sporting goods manufacturers increasingly turned to suppliers in Asia. In 1990, Fernandez hired Jack Savage, who had been in charge of marketing for Arnold Palmer’s golf club company in the early 1970s, and for the Japanese club manufacturer Yonex through the late ‘80s. Together, they began laying the foundation for Atrigon.
Last year, they sold stock through a private placement to about 50 investors, though they decline to name them or how much money they contributed. In recent months, they have assembled a team of 27 sales representatives across the country, and hired a high-priced advertising firm to put together a campaign that will be launched later this year.
But their boldest move was signing Price, who gives the company tremendous visibility with the weekend players who buy premium brands, and the marketing presence needed to get retailers to stock Atrigon clubs.
Larry Rem, manager of the Roger Dunn Golf Shop in Canoga Park, said last week that he’d never heard of Atrigon, but “Price will help them get in the store.” Last year, his shop started carrying a strange new putter simply because Price had used it to win the PGA championship. “That’s the value of his endorsement,” Rem said.
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But now comes the hard part for Atrigon. To succeed, the company will have to elbow into a foursome--Callaway, Cobra, Ping and Taylor Made--that currently controls about 70% of the high-end golf club market.
Callaway and Cobra are the biggest of the bunch. These companies have gained unprecedented market share in recent years after they were the first to mass market oversized clubs that make it easier for amateurs to hit the ball. Callaway led the way with its Big Bertha driver in 1991, and company sales skyrocketed from $22 million in 1990 to $448 million last year. Cobra came out with oversized irons in 1992, and Cobra sales raced from $35 million that year to $125 million in 1994.
Atrigon is banking on an innovation of its own called uni-body design. Most clubs consist of a head and shaft fastened together with epoxy, but Atrigon’s graphite clubs are molded as one solid piece. Fernandez, 52, says one-piece construction increases power and accuracy by eliminating the twisting and flexing two-piece clubs undergo when they strike the ball.
Atrigon--supposedly named for an ancient game played with a stick and ball--started selling drivers in a limited number of golf pro shops and other outlets across the country last year. Atrigon’s graphite drivers cost about $350 apiece, making them one of the most expensive clubs on the market.
Many doubt Atrigon, even with Price’s help, will be able to convince weekend golfers that the uni-body design is a must-have item, superior to the titanium heads, bubble shafts and other innovations competing for consumers’ attention. “If they can pull that off, they’re a bunch of geniuses,” said Ely Callaway, the 75-year-old founder of Callaway Golf Co.
Others say Atrigon has mortgaged its future by signing Price, who, despite his recent success, couldn’t boost business for Ram. Steve Herold, marketing manager at Ram Golf Corp. in Illinois, said the company doesn’t release sales figures, but acknowledged that Price “did very little to help us sell irons.”
Price said that’s because Ram didn’t know how to use him properly. “If you have the top player of a sport as one of your company’s sponsors and you go backward, something is wrong,” Price said. “I did my work. I can’t do their marketing, their manufacturing, their research.”
Finally, if everything works according to plan for Price and Atrigon, the company will have to survive the pressures of going from a tiny firm that turns out 750 clubs a week into a much bigger one that makes that many clubs or more each day. Even Price acknowledged that will be a challenge. “I have but one reservation,” Price said. “We are a new company and it’s going to take time. It might take a little longer than anyone thinks.”