Dispute With USGA Helps Put Callaway in the Rough

The seasons are changing and, just as the crocuses herald the coming of spring, the PGA Tour has decamped from Hawaii for California, the first leg in its Sherman’s march toward Augusta in May.

And so it’s the right time for Ron Drapeau to reflect on the continuing battle between Carlsbad-based Callaway Golf Co., which he heads as chairman and chief executive, and the United States Golf Assn. “This has got to be the only industry in the world,” he says resignedly, “that allows someone else to set the rules.”

Drapeau speaks as someone who still feels the sting of his latest imbroglio with the USGA, which last year outlawed a driver that the company was convinced would have taken the domestic golf market by storm. The club was the ERC II (the initials are those of the company’s late founder, Ely R. Callaway), which already had become the top-selling driver in Japan.

When Callaway Golf brought it here, the USGA determined that it exceeded the allowable “spring-action” limits for drivers, and therefore threatened the integrity of the game by giving its wielders a few extra yards off the tee. After a couple of months of fruitless negotiations, the USGA ruled the club “nonconforming,” which in the golf world has the finality of a judgment by Torquemada.

Almost all players, from club pros to weekend gravediggers, treat a “nonconforming” club as stigmatized. Golfers across the nation, even those who would not have any hope of competing in a tournament or registering a handicap -- the only aspects of the game over which the USGA has actual sanctioning authority -- abandoned the ERC II in droves. Instead of breaking sales records, the driver contributed to a painful $9-million inventory write-down Callaway recorded for 2002.

Most industries in the United States have long since found a way to bring their corresponding standard-setting bodies to heel, whether through intimidation, co-optation or even bribery. Think broadcasters and the FCC, energy companies and FERC, Korean lobbyists and Congress.

Golf equipment is an exception. Scarcely a year passes, it seems, that manufacturers do not take two steps forward in technology, only to have the

USGA push them a step and a half back. If it’s not the shape of the grooves on the club face that brings the association’s regulatory wrath, it’s the size of the club head and length of the shaft. In fact, the USGA has standards for the latter two issues now under consideration.

As a company founded on the bedrock of a supersized new driver designed to add tens of yards to the weekend golfer’s game, Callaway generally has been the first to feel the USGA’s thumb on its breastbone.

For the record, Drapeau acknowledges that USGA officials are only doing their job, as they see it. “I think they believe that they’re doing the right thing,” he says. But he blames the association for a stagnation in recreational golf reflected in two straight annual declines in the number of rounds played in the U.S.

Meanwhile, the number of players taking up the game each year for the first time is equaled, if not exceeded, by the number of golfers abandoning the links for good. The latter, Drapeau argues, comes disproportionately from the cadre of aging golfers who could best be assisted by the technology he wants to put in their hands but that is denied them by the USGA.

This is understandably a crucial issue for Callaway Golf, which finds itself fighting for points of market share in a shrinking market. The company’s revenue declined to $792 million last year from $816 million in 2001, and profit fell to $69.6 million from $72.8 million.

Not that this record is all the USGA’s fault. Callaway is hamstrung by its foray into the golf ball business, a highly competitive sector in which the company lost $25.6 million last year despite having the No. 2 market share among high-priced balls. Drapeau promises to eliminate the losses by next year, possibly by dumping the business outright.

What’s more, the economic recession strikes hard at products such as golf equipment, which Drapeau concedes sits solidly at the luxury end of the scale of human necessities. And developments that once looked like boons for golf simply have not panned out. Despite predictions that the advent of Tiger Woods would put clubs in the hands of children of all races, creeds, colors and socioeconomic levels, his impact has been limited to increasing the TV ratings of the PGA Tour, not the throngs on the links.

The dispute between Callaway and the USGA goes back years, to when Ely Callaway, picking a fight over his earliest generation of Big Bertha drivers, took out a series of full-page ads accusing the organization of “elitism” and of “acting without regard for ... millions of golfers.”

Callaway’s argument was that the USGA stood in the way of the satisfaction afforded recreational golfers by that rare great shot, the lone 200-yard pasting that stands out from the 102 other lousy shots in a Sunday morning round. If Big Bertha improved the chances of achieving that one great moment, Callaway argued, who was the USGA to stand in the way?

The company still makes the same argument. “We know the golfer better than anybody,” Drapeau says, and, indeed, the statistics come rolling off his tongue: Of a total of 4.5 million players in the U.S., fewer than 2% have a single-digit handicap and only 22,000 are scratch golfers (that is, boast a handicap of zero). Some 80% are purely recreational players, meaning they do not bother to keep a handicap. “These are the people we are losing from the game,” he adds.

Drapeau likes to point to other sports that allow amateurs to use equipment denied the pros. Baseball, for example, is “played at a variety of levels of capability from kids’ tee ball to Little League

Golf purists have a ready reply. For one thing, baseball pits human beings against other human beings. As others have noted before, decades of improvement in baseball equipment and training regimes have not changed the fact that a peg to second base can still beat a base stealer by a split second. The USGA argues, with some justification, that in its game the battle is between the ever-ingenious human being and the unchanging course, with the rules acting as an intermediary.

“Rules are artificial impediments we put in place to arbitrarily challenge ourselves,” Dick Rugge, the USGA’s senior technical director, told me from the association’s New Jersey headquarters. He pounced on Drapeau’s baseball analogy, noting that metal bats have turned college baseball scores into multiples of basketball’s. “I’m sure that the NCAA would love to go back to wooden bats, but they can’t get that horse back in the barn,” he says.

That will not happen at the USGA, he vows: “We have a long vision of the game. We have to protect it for centuries.”

A good part of the appeal of golf equipment is subjective -- as illustrated by Callaway’s disappointing experience with its C4 driver. The C4, which was fashioned from a composite material, failed to catch on last year largely because it did not deliver the sharp thwack when it struck the ball that customers had come to expect from titanium metal drivers.

So Callaway will continue looking for ways to give customers that elusive thwack, and it will continue to squirm in the USGA’s fetters.

“We believe we have the ability to bring out products that can separate ourselves from the competition,” Drapeau says. “Are they the best products we can make? No.”

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Michael Hiltzik can be reached at golden.state@latimes.com.