BOOM TIME
These days, everybody in the foursome has a driver that looks like a Volkswagen beetle on a stick, but usually there’s one guy in the group with all the latest and greatest. His wedge looks like a doorstop, his oversize irons are perimeter weighted to produce a sweet spot the size of a grapefruit, his shafts are bubbled, his balls are titanium and the shaft of his putter is a cigar humidor.
He’s probably wearing a Nike cap and an expensive belt too.
The number of golfers in the United States has hovered between 24 million and 25 million for a decade (it peaked at 28 million in 1990). And the number of rounds played in the U.S. last year--477 million--was 13 million fewer than in 1995. But the folks swinging the clubs are swinging expensive ones, and virtually every golf-related product is experiencing a boost in sales.
“There are a lot of innovations driving the market,” said Ash Jaising, president of Golf Market Research Institute, a Boston firm that keeps track of the golf marketplace. “Material technology, shaft technology, titanium. . . . The designs are better and the sex appeal is way up.
“The average age of a golf-club buyer is 43, and as long as the stock market doesn’t really crash, I don’t see a saturation point any time soon. I think the sales of the high-end clubs will continue to grow for the next few years at least.”
Sales of clubs were up 11.4% from June 1996 to June 1997, according to Golf Retailers Magazine. Sales of rainwear increased 21.7%, gloves 12.8% and those all-important golf socks were up 13.2%. The biggest jump was in accessories (33.7%), with “high-priced belts” a “driving force.”
Industry sales--including shoes--will rise to an estimated $3.9 billion in 1997, according to the National Sporting Goods Assn. And you can look for a stampede to Roger Dunn and Nevada Bob’s in the future when baby boomers who are too career- and family-oriented to find time for golf move into the active years of playing and spending.
Golfers in America spend about $600 a year each on the sport, according to the National Golf Foundation.
“I think this boom we’re having right now can be directly attributed to Tiger Woods,” said Jim Colbert, Senior PGA Tour player of the year in 1995 and ’96. “And I think his impact will have a lasting effect.
“I’ve got a friend in Kansas City who’s been in the driving-range business for 40 years. His business is up 40% this year because it’s not just dad who wants to hit balls, it’s mom and the kids too.”
Woods’ swoosh to international stardom may have spurred some spending--golf outlets across the country have reported huge increases in the sale of Nike apparel and junior clubs--but high-tech, high-priced clubs have had the greatest impact on the industry’s soaring sales numbers.
“The companies that sell their clubs in Kmarts, Wal-Marts and Targets have high volume but very low [profit] margins,” Jaising said. “You can get a whole set of a mass-market brand woods, irons, wedge, putter, bag, even throw in a towel and umbrella, for $200 to $300.
“The list retail price of a Taylor Made Titanium Bubble Burner driver is $499.”
Are these clubs better?
Sure, but it’s not as if every duffer swinging a $500 driver has suddenly been transformed into a scratch golfer. In fact, handicaps have remained constant for 15 years, according to the U.S. Golf Assn. Clearly, the popularity of the newest clubs is rooted in the deeply held tenet of millions of recreational golfers: It’s easier--and a lot more fun--to buy a new club than fix your swing.
Would the money be better spent on lessons?
Probably, but most will choose titanium over the tedium of the practice range every time.
BIG WINNERS
If your jaw dropped when you saw what Nike was paying Woods--$43 million for five years--to endorse its products, grab hold of your chin: Looks as if the corporate giant suckered the poor lad. Nike’s golf footwear sales alone jumped 80% in the second quarter this year--after Woods’ Masters victory--compared to the same period in 1996.
Nike sold $120 million in golf shoes and apparel in ’96 and should hit $200 million this year. But Woods has nothing on 77-year-old Ely Callaway when it comes to making money in the golf industry.
Callaway Golf Co.’s Big Bertha line--named after the railroad car-mounted World War I German artillery piece--has transformed the Carlsbad firm into a juggernaut that is blowing away its closest competitors. Callaway, Taylor Made, Cobra and Ping account for more than 75% of the high-end clubs sold worldwide, but Callaway sells more than the other three combined.
Adidas, setting its sights on becoming a global sporting goods powerhouse, last month bought French sports equipment group Salomon and got Taylor Made Golf Co. in the bargain. Taylor Made, which has had sales soar with the advent of its bubble-shaft technology, and Cobra Golf, recently bought by American Brands Inc. (owner of the Titleist golf line) are Carlsbad neighbors of Callaway in a sort of Titanium Valley.
Sales at Taylor Made and Cobra were less than $100 million five years ago and both have projected sales in excess of $250 million this year. Karsten Manufacturing (Ping)--which doesn’t have to reveal its revenues because it is a private company--is expected by industry estimates to sell about $150 million worth of clubs this year.
But the Great Big Bertha is still the biggest gun on this block. In 1988, Callaway sold $5 million worth of clubs. Last year, it shipped out $679 million worth.
“It’s just the best driver ever built,” Colbert said. “I mean 70% [actually 67%] of the golfers playing for a living [on the PGA, Senior PGA, LPGA, Nike and European tours] use it. It just goes straighter, higher and longer.”
Wall Street predictions for Callaway sales this year exceed $800 million.
“After 30 years in the textile business, I learned that success in American business is driven by new and improved products,” Callaway said. “So I started this company with the core philosophy of trying to find a way to make a golf club that’s more forgiving and more satisfying for the average golfer.”
Callaway spared no expense, combining space-age technology and aerospace-like research and development to forever alter the business of manufacturing golf clubs.
“We call it blue-sky design,” said Bill Reynolds, head of Callaway’s research and development department, a golf version of Lockheed’s famous “Skunk Works” experimental-aircraft program in Burbank that resulted in the revolutionary U2 and SR-71 Blackbird.
“We don’t have to worry about budget, we don’t have to worry about whether a design is going to be hard to manufacture or can’t possibly make a profit. All we have to do is design what Mr. C calls ‘a demonstrably superior, pleasing different product.’ ”
Reynolds doesn’t have to wait for his prototypes to be sent out to be forged, or worry about anyone outside Callaway seeing his new ideas. Wax models of his team’s computer-assisted designs are made 20 feet away from their computer screens by a machine previously used primarily by the aerospace industry.
The wax models are used to make molds, the club heads are forged--in either titanium or stainless steel, two completely different processes that require different foundries--and the graphite shafts are hand wrapped like cigars, all right on site.
Then it’s over to the test center--a lush, private driving range equipped with the latest in video swing technology--to hit some balls.
Ben Crenshaw was testing some clubs recently and noted that he would like the graphite shaft of his five-iron to be a little “stiffer in the butt.”
“One hour later, we had a new one in his hands,” Reynolds said, “and he put it in play that weekend.”
Jack Nicklaus, who used a Big Bertha three-wood in the PGA Championship in August, toured the Callaway facility this summer and apparently was quite impressed.
Nicklaus, co-owner of his own golf club company, couldn’t have made the folks in the home office too happy when he told Golf World magazine, “It was quite obvious to me that their technology is so far advanced, that there’s no way to compete with them.”
BURIED IN THE ROUGH
Twenty years ago, Karsten Solheim’s hollow-backed, perimeter-weighted Ping irons revolutionized the industry. Pro golfers such as Colbert, Davis Love III, Fred Couples, Phil Mickelson, Bob Tway and John Daly all once were members of the Ping family.
But the family-held Phoenix firm missed out on the initial metal wood explosion in the ‘80s after Taylor Made founder Gary Adams introduced the first high-performance, hollow, steel driver in 1979, and now barely 1% of the pros on the PGA Tour use a Ping driver.
Colbert had been playing with Ping clubs for 21 years when a friend of a friend asked him if he wanted to try a new club at the practice range of a San Diego course.
“I didn’t want to, but I said OK to be nice,” Colbert said. “It didn’t have any markings on it at all, but the guy said it was a three-iron. I was going to hit three or four balls and ended up hitting 30.”
Colbert wanted to know more about the mystery club and was told he could play a round with a whole set the next day. Halfway through that round, Ely Callaway showed up in a golf cart.
“When I saw him, it dawned on me that these were his new irons,” Colbert said. “The guy with the clubs turned out to be Richard Helmstetter [Callaway’s senior vice president for new products]. Ely asked me if I wanted to play them, but I’d been with Ping forever.”
Colbert finished ’93 with his Pings, but “couldn’t get the feel of those clubs out of my mind,” and switched to Callaway the next year. He was the Senior PGA Tour’s leading money winner in ’95 and again last year when he pocketed a then-senior record $1,627,890.
Pro golfers using Great Big Bertha titanium drivers won more than $55 million in 1996, but Callaway isn’t resting on reputation or results. For years, Karsten relied on golfers seeing Ping clubs, maybe borrowing them for a couple of shots, and then buying them.
But that approach can no longer compete with Smokey Robinson singing to his Biggest Big Bertha driver.
Callaway will spend at least $20 million in print and television advertising this year, 25% more than in 1996. It will spend an additional $20 million in promotions. Taylor Made also figures to have pumped $40 million into advertising and promotions by the end of ’97.
With a 30-second TV spot during a high-profile tournament such as the U.S. Open or the Masters running more than $100,000, selling golf clubs has become a very pricey--and risky--business.
And simply building a better golf club isn’t enough. It has to be marketed and marketable. Mike Kelly, marketing manager at Taylor Made, says his firm hires designers to “add flair and spice to every product.” Fashion experts design the firm’s head covers, an idea that would have been a subject of ridicule only a couple of years ago.
All of which has pushed what Golf Market Research’s Jaising calls the “second-tier firms, like [Cypress’] Cleveland, [City of Industry’s] Lynx and Arnold Palmer,” into a situation where they must grow or shrivel up and die.
“Consumers want to look at three or four good choices,” said David Braham, president of New York’s World of Golf retail stores. “The [second-tier] companies either go out, and with better technology and advertising, find a way to become one of the big guys, which isn’t easy, or they get smaller and smaller.”
BIG BUSINESS, BIGGER HEADS
No matter the brand, there are two things that aren’t shrinking: shafts and club heads.
When Callaway introduced the Biggest Big Bertha titanium driver, he said it was “the biggest ever . . . so far.” It was also longer, and remarkably, lighter than its predecessors.
Titanium drivers were first made in Japan in the early ‘80s but didn’t show up on U.S. tee boxes until 1995 when Callaway introduced the Great Big Bertha. Despite the fact they cost at least $100 to $150 more than stainless steel models, titanium drivers outsell all others by a ratio of at least three to one, according to Eloy Vigil, assistant manager of Roger Dunn Golf in Mission Viejo.
But in a few years, titanium could go the way of hickory shafts. Reynolds says new synthetic materials such as Kevlar will be the wave of the future.
“Titanium, tungsten, we’ve just about exhausted the metal alloys,” he says, smiling. “Who knows what kind of clubs we’ll be making next?”
One thing is certain. They won’t be inexpensive.
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Setting Its Own Course
Sales of golf equipment have skyrocketed since 1987, jumping from about $1.8 billion to a projected $3.9 billion in 1997, a jump of more than 113%. For the third year in a row, golf has led all other sports in total sales. How golf has fared compared to several other sports in that time period, in millions of dollars:
Golf: $3,916
Hunting and Firearms: $2,184
Alpine Skiing: $763
Tennis: $240
Basketball: $208
Racquetball: $40
Source: National Sporting Goods Assn.
