Callaway CEO Upheaval A Complex Situation

By Adam BarrAugust 6, 2004, 4:00 pm
The same three letters spelled both success and failure for Ron Drapeau, who resigned Monday as chief executive of Callaway Golf.
 
The letters ' Ely ' stood in lower case for his predecessor, the late Ely Callaway, founder and leader of one of golfs most successful companies until his death in 2001. Ely in lower case was Drapeaus colleague, friend and supporter.
 
But the same three letters in all caps ' ELY ' make up Callaway Golfs symbol on the New York Stock Exchange, where you have colleagues and supporters only if youre profitable, and where there are no friends.
 
Ron DrapeauDrapeau, Elys hand-picked successor, left the company immediately and reportedly without acrimony. But reading between the lines of Callaways own press release, it becomes apparent that Drapeau left because of pressure from the companys board of directors over Callaways recent substandard financial performance. That slide, which included a 60 percent drop in second-quarter net income compared to the similar quarter in 2003 ($13.7 million versus $34.1 million), got Wall Street tongues wagging, and some backchannel talk among analysts predicted Drapeaus departure.
 
But what his leaving really demonstrates is that companies such as Callaway play not one game, but two: The golf industry game and the public-company gambit. The second game is a blood sport, and the CEO is always out front to either reap the huge rewards or take the proportional fall.
 
Drapeau presided over Callaways frank self-criticism in June, when the company in a press release reduced its predicted 2004 earnings, citing weaker general sales in Japan and softer metalwood sales than expected after a strong first quarter. The company has also struggled with the costs of integrating the Top-Flite brand, which Callaway bought out of bankruptcy last September. Predicted Callaway sales for 2004 dropped from more than $1 billion to, at most, $975 million, and per-share earnings estimates decreased from as much as 97 cents to 25 cents.
 
Recent success on tour by chief competitor TaylorMade-adidas Golf, whose innovative r7 quad driver was used by U.S. Open winner Retief Goosen and PGA Tour multiple winner Sergio Garcia, also intensified the competitive environment. So did a feature article in Fortune magazine (July 26), which said Callaways share of the metalwood market had dropped from 30 percent to 16 percent since 2000, while TaylorMades had grown from 17 percent to 20 percent. (Some Callaway watchers, though, have questioned the r7s ability to sell through pro shops as well as it has sold in the shop. Others downplay the effect of the Fortune story, which broke no new ground, they say.)
 
Fortune called metalwoods a high-margin category, but lately that hasnt been universally true. In Callaways June earnings revision and throughout the industry, experts echoed concern over at least two years of downward price pressure on metalwoods as a reason for sluggish revenue streams. The concomitant pressure to innovate faster and faster, repeatedly recapturing the consumer imagination while not angering buyers with computer industry-style speedy obsolescence, makes golf one of the most difficult subsegments in the leisure products market. And faster (read: more expensive) innovation leads to more late-model closeouts and ' you guessed it ' more downward price pressure.
 
Pressed on the issue, most experts in golf clubs privately admit that among the top companies, competitors usually manage to stay even with each other in the realm of pure technical merit. Truly objective measures of differences between the r7 quad and, say, the ERC Fusion, Callaways flagship driver, are hard to find and even harder to sell universally. (Callaway got credit among club watchers for the Fusion, which solved the age-old problem of optimal placement of clubhead weight by combining a titanium front with a graphite composite body.) So allegations that Callaway, and therefore Drapeau, simply got out-developed are usually taken advisedly. Callaway has had some product miscues since Drapeau joined the company in 1996 ' the C4 composite head didnt do well ' but in general, there were more technical ' and economic ' successes than failures. (The 2-Ball putter and its progeny did wonders for Odyssey, Callaways wholly-owned putter brand, which Drapeau managed before Callaway acquired it in 1996.)
 
More telling, and harder to manage, is tour acceptance and success. The r7 quads launch, which gathered thrust from the timely wins by Garcia (Buick Classic, EDS Byron Nelson Championship) and Goosen (U.S. Open), surpassed even TaylorMades lofty expectations. But Annika Sorenstam, the worlds best woman player and far more recognizable than many men on the PGA Tour, has won four times this year, all with the Fusion (she switched to the Fusion from the Great Big Bertha II last September, and used the Fusion for the last of her six wins in 2003). So even tour success by a great player doesnt assure a retail win.
 
As a unit of a public company (adidas) instead of a listed company in its own right, TaylorMade is immune from direct Wall Street pressures (although the competitive atmosphere at TaylorMade is intense, thanks largely to the energetic leadership of CEO Mark King). Thats not to say that TaylorMade has an easier job than Callaway does, or that TaylorMades achievements over the last few years have been anything other than phenomenal.
 
But as an NYSE company, Callaway was playing a slightly different game, living under the immense scrutiny that is the price of public capitalization. When things go bad, the head man usually goes. So it went this time.
 
Industry sources admit that Drapeau, despite his expertise at improving manufacturing and other efficiencies, had a very hard act to follow in Ely Callaway. Drapeau endured as elegantly as he could allegations that he was a manufacturing guy but not a golf product guy ' which was not true (but just to be safe, Drapeau surrounded himself with a top development team). What he lacked, if anything, was the ability to be Ely ' and only one man could do that. Industry watchers say that the late Mr. Callaways knack for managing Wall Street and leading a company emotionally is rarely found in one person.
 
That may be why Callaway has said privately that the company will take its time finding a successor, who could come from inside or outside the organization. For the present, senior board member William Baker will take over. Baker, 71, has no direct golf industry experience outside of his decade on the Callaway board, but he has been an officer or board member at 11 companies in a 46-year business career.
 
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Hensby takes full responsibility for violation

By Rex HoggardDecember 13, 2017, 5:28 pm

The PGA Tour’s Anti-Doping Program manual covers 48 pages of details, from the pressing to the mundane, but for Mark Hensby the key section of the policy could be found on Page 5.

“The collector may allow you to delay reporting to the testing area for unavoidable obligations; however, you will be monitored from the time of notification until completion of the sample collection process,” the policy reads. “A failure to report to the testing area by the required time is the same as a doping violation under the program.”

Hensby, a 46-year-old former Tour winner from Australia, didn’t read that section, or any other part of the manual. In fact, he said he hasn’t received the circuit’s anti-doping manual in years. Not that he uses that as an excuse.

To be clear, Hensby doesn’t blame his anti-doping plight on anyone else.

“At the end of the day it’s my responsibility. I take full responsibility,” he told GolfChannel.com.

Like Doug Barron, Scott Stallings and even Vijay Singh before him, Hensby ran afoul of the Tour’s anti-doping policy because, essentially, of a clerical error. There were no failed tests, no in-depth investigations, no seedy entourages who sent Hensby down a dark road of performance-enhancing drug use.

Just a simple misunderstanding combined with bad timing.

Hensby, who last played a full season on Tour in 2003, had just completed the opening round of the Sanderson Farms Championship when he was approached by a member of the Tour’s anti-doping testing staff. He was angry about his play and had just used the restroom on the 17th hole and, he admits, was in no mood to wait around to take the urine test.

“Once I said, ‘Can I take it in the morning,’ [the Tour’s anti-doping official] said, ‘We can’t hold you here,’” Hensby recalled. “I just left.”

Not one but two officials called Hensby that night to ask why he’d declined to take the test, and he said he was even advised to return to the Country Club of Jackson (Miss.) to take the test, which is curious because the policy doesn’t allow for such gaps between notification of a test and the actual testing.

According to the policy, a player is considered in violation of the program if he leaves the presence of the doping control officers without providing the required sample.

A Tour official declined to comment on the matter citing the circuit’s policy not to comment on doping violations beyond the initial disclosure.

A week later, Hensby was informed he was in violation of the Tour’s policy and although he submitted a letter to the commissioner explaining the reasons for his failure to take the test he was told he would be suspended from playing in any Tour-sanctioned events (including events on the Web.com Tour) for a year.

“I understand now what the consequences are, but you know I’ve been banned for a performance-enhancing drug violation, and I don’t take performance-enhancing drugs,” Hensby said.

Hensby isn’t challenging his suspension nor did he have any interest in criticizing the Tour’s policy, instead his message two days after the circuit announced the suspension was focused on his fellow Tour members.

“I think the players need to read that manual really, really well. There are things I wasn’t aware of and I think other players weren’t aware of either,” he said. “You have to read the manual.”

It was a similar message Stallings offered following his 90-day suspension in 2015 after he turned himself in for using DHEA, an anabolic agent that is the precursor to testosterone production and banned by the Tour.

“This whole thing was a unique situation that could have been dealt with differently, but I made a mistake and I owned up to it,” Stallings said at the time.

Barron’s 2009 suspension, which was for a year, also could have been avoided after he tested positive for supplemental testosterone and a beta-blocker, both of which were prescribed by a doctor for what were by many accounts legitimate health issues.

And Singh’s case, well that chapter is still pending in the New York Supreme Court, but the essential element of the Fijian’s violation was based on his admitted use of deer-antler spray, which contained a compound called IGF-1. Although IGF-1 is a banned substance, the World Anti-Doping Agency has ruled that the use of deer-antler spray is not a violation if an athlete doesn’t fail a drug test. Singh never failed a test.

The Tour’s anti-doping history is littered with cases that could have been avoided, cases that should have been avoided. Despite the circuit’s best educational efforts, it’s been these relatively innocent violations that have defined the program.

In retrospect, Hensby knows he should have taken the test. He said he had nothing to hide, but anger got the best of him.

“To be honest, it would have been hard, the way I was feeling that day, I know I’m a hothead at times, but I would have probably stayed [had he known the consequences],” he admitted. “You’ve got to understand that if you have too much water you can’t get a test either and then you have to stay even longer.”

Hensby said before his run in with the anti-doping small print he wasn’t sure what his professional future would be, but his suspension has given him perspective and a unique motivation.

“I was talking to my wife last night, I have a little boy, it’s been a long month,” said Hensby after dropping his son, Caden, off at school. “I think I have a little more drive now and when I come back. I wasn’t going to play anymore, but when I do come back I am going to be motivated.”

He’s also going to be informed when it comes to the Tour’s anti-doping policy, and he hopes his follow professionals take a similar interest.

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Lesson with Woods fetches $210K for Harvey relief

By Will GrayDecember 13, 2017, 2:51 pm

A charity event featuring more than two dozen pro golfers raised more than $1 million for Hurricane Harvey relief, thanks in large part to a hefty price paid for a private lesson with Tiger Woods.

The pro-am fundraiser was organized by Chris Stroud, winner of the Barracuda Championship this summer, and fellow pro and Houston resident Bobby Gates. It was held at Bluejack National in Montgomery, Texas, about an hour outside Houston and the first Woods-designed course to open in the U.S.

The big-ticket item on the auction block was a private, two-person lesson with Woods at Bluejack National that sold for a whopping $210,000.

Other participants included local residents like Stacy Lewis, Patrick Reed and Steve Elkington as well as local celebrities like NBA All-Star Clyde Drexler, Houston Texans quarterback T.J. Yates and Houston Astros owner Jim Crane.

Stroud was vocal in his efforts to help Houston rebuild in the immediate aftermath of the storm that ravaged the city in August, and he told the Houston Chronicle that he plans to continue fundraising efforts even after eclipsing the event's $1 million goal.

"This is the best event I have ever been a part of, and this is just a start," Stroud said. "We have a long way to go for recovery to this city, and we want to keep going with this and raise as much as we can and help as many victims as we can."

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LPGA schedule features 34 events, record purse

By Randall MellDecember 13, 2017, 2:02 pm

The LPGA schedule will once again feature 34 events next year with a record $68.75 million in total purses, the tour announced on Wednesday.

While three events are gone from the 2018 schedule, three new events have been added, with two of those on the West Coast and one in mainland China.

The season will again start with the Pure Silk Bahamas Classic on Paradise Island (Jan. 25-28) and end with the CME Group Tour Championship in Naples, Fla., (Nov. 15-18).

The LPGA played for $65 million in total prize money in 2017.

An expanded West Coast swing in the front half of the schedule will now include the HUGEL-JTBC Championship in the Los Angeles area April 19-22. The site will be announced at a later date.

The tour will then make a return to San Francisco’s Lake Merced Golf Club the following week, in a new event sponsored by L&P Cosmetics, a Korean skincare company. Both new West Coast tournaments will be full-field events.

The tour’s third new event will be played in Shanghai Oct. 18-21 as part of the fall Asian swing. The title sponsor and golf course will be announced at a later date.

“Perhaps the most important aspect of our schedule is the consistency — continuing to deliver strong playing opportunities both in North America and around the world, while growing overall purse levels every year,” LPGA commissioner Mike Whan said in a statement. “There is simply no better [women’s] tour opportunity in the world, when it comes to purses, global TV coverage or strength of field. It’s an exciting time in women’s golf, with the best players from every corner of the globe competing against each other in virtually every event.”

While the Evian Championship will again be played in September next year, the tour confirmed its plans to move its fifth major to the summer in 2019, to be part of a European swing, with the Aberdeen Standard Investments Ladies Scottish Open and the Ricoh Women’s British Open.

The Manulife LPGA Classic and the Lorena Ochoa Invitational are not returning to the schedule next year. Also, the McKayson New Zealand Women’s Open will not be played next year as it prepares to move to the front of the 2019 schedule, to be paired with the ISPS Handa Women’s Australian Open.

The U.S. Women’s Open will make its new place earlier in the summer, a permanent move in the tour’s scheduling. It will be played May 31-June 3 at Shoal Creek Golf Club outside Birmingham, Ala. The KPMG Women’s PGA Championship (June 28-July 1) will be played at Kemper Lakes Golf Club on the north side of Chicago and the Ricoh Women’s British Open (Aug. 2-5) will be played at Royal Lytham & St. Annes in England.

For the first time since its inception in 2014, the UL International Crown team event is going overseas, with the Jack Nicklaus Golf Club in Incheon, South Korea, scheduled to host the event Oct. 4-7. The KEB Hana Bank Championship will be played in South Korean the following week.

Here is the LPGA's schedule for 2018:

Jan. 25-28: Pure Silk-Bahamas LPGA Classic; Paradise Island, Bahamas; Purse: $1.4 million

Feb. 15-18: ISPS Handa Women's Australian Open; Adelaide, Australia; Purse: $1.3 million

Feb. 21-24: Honda LPGA Thailand; Chonburi, Thailand; Purse: $1.6 million

March 1-4: HSBC Women's World Championship; Singapore; Purse: $1.5 million

March 15-18: Bank of Hope Founders Cup; Phoenix, Arizona; Purse: $1.5 million

March 22-25: Kia Classic; Carlsbad, California; Purse: $1.8 million

March 29 - April 1: ANA Inspiration; Rancho Mirage, California; Purse: $2.8 million

April 11-14: LOTTE Championship; Kapolei, Oahu, Hawaii; Purse: $2 million

April 19-22: HUGEL-JTBC Championship; Greater Los Angeles, California; Purse: $1.5 million

April 26-29: Name to be Announced; San Francisco, California; Purse: $1.5 million

May 3-6: Volunteers of America LPGA Texas Classic; The Colony, Texas; Purse: $1.3 million

May 17-20: Kingsmill Championship; Williamsburg, Virginia; Purse: $1.3 million

May 24-27: LPGA Volvik Championship; Ann Arbor, Michigan; Purse: $1.3 million

May 31 - June 3: U.S. Women's Open Championship; Shoal Creek, Alabama; Purse: $5 million

June 8-10: ShopRite LPGA Classic presented by Acer; Galloway, New Jersey; Purse: $1.75 million

June 14-17: Meijer LPGA Classic for Simply Give; Grand Rapids, Michigan; Purse: $2 million

June 22-24: Walmart NW Arkansas Championship presented by P&G; Rogers, Arkansas; Purse: $2 million

June 28 - July 1: KPMG Women's PGA Championship; Kildeer, Illinois; Purse: $3.65 million

July 5-8: Thornberry Creek LPGA Classic; Oneida, Wisconsin; Purse: $2 million

July 12-15: Marathon Classic presented by Owens-Corning and O-I; Sylvania, Ohio; Purse: $1.6 million

July 26-29: Aberdeen Standard Investments Ladies Scottish Open; East Lothian, Scotland; Purse: $1.5 million

Aug. 2-5: Ricoh Women's British Open; Lancashire, England; Purse: $3.25 million

Aug. 16-19: Indy Women in Tech Championship presented by Guggenheim; Indianapolis, Indiana; Purse: $2 million

Aug. 23-26: CP Women's Open; Regina, Saskatchewan, Canada; Purse: $2.25 million

Aug. 30 - Sept. 2: Cambia Portland Classic; Portland, Oregon; Purse: $1.3 million

Sept. 13-16: The Evian Championship; Evian-les-Bains, France; Purse: $3.85 million

Sept. 27-30: Sime Darby LPGA Malaysia; Kuala Lumpur, Malaysia; Purse: $1.8 million

Oct. 4-7: UL International Crown; Incheon, Korea; Purse: $1.6 million

Oct. 11-14: LPGA KEB Hana Bank Championship; Incheon, Korea; Purse: $2 million

Oct. 18-21: Name to be Announced; Shanghai, China; Purse: $2.1 million

Oct. 25-28: Swinging Skirts LPGA Taiwan Championship; New Taipei City, Chinese Taipei; Purse: $2.2 million

Nov. 2-4: TOTO Japan Classic; Shiga, Japan; Purse: $1.5 million

Nov. 7-10: Blue Bay LPGA; Hainan Island, China; Purse: $2.1 million

Nov. 15-18: CME Group Tour Championship; Naples, Florida; Purse: $2.5 million

Newsmaker of the Year: No. 4, Jordan Spieth

By Golf Channel DigitalDecember 13, 2017, 1:00 pm

Dismissed because he’s supposedly too short off the tee, or not accurate enough with his irons, or just a streaky putter, Jordan Spieth is almost never the answer to the question of which top player, when he’s at his best, would win in a head-to-head match.

And yet here he is, at the age of 24, with 11 career wins and three majors, on a pace that compares favorably with the giants of the game. He might not possess the firepower of Dustin Johnson and Rory McIlroy, but since he burst onto the PGA Tour in 2013 he has all that matters – a better résumé.

Spieth took the next step in his development this year by becoming the Tour’s best iron player – and its most mentally tough.


Full list of 2017 Newsmakers of the Year


Just a great putter? Oh, puhleeze: He won three times despite putting statistics (42nd) that were his worst since his rookie year. Instead, he led the Tour in strokes gained-approach the green and this summer showed the discipline, golf IQ and bounce-back ability that makes him such a unique talent. 

Even with his putter misbehaving, Spieth closed out the Travelers Championship by holing a bunker shot in the playoff, then, in perhaps an even bigger surprise, perfectly executed the player-caddie celebration, chest-bumping caddie Michael Greller. A few weeks later, sublime iron play carried him into the lead at Royal Birkdale, his first in a major since his epic collapse at the 2016 Masters.

Once again his trusty putter betrayed him, and by the time he arrived on the 13th tee, he was tied with Matt Kuchar. What happened next was the stuff of legend – a lengthy ruling, gutsy up-and-down, stuffed tee shot and go-get-that putt – that lifted Spieth to his third major title.

Though he couldn’t complete the career Grand Slam at the PGA, he’ll likely have, oh, another two decades to join golf’s most exclusive club.

In the barroom debate of best vs. best, you can take the guys with the flair, with the booming tee shots and the sky-high irons. Spieth will just take the trophies.

THE MAJORS

Masters Tournament: Return to the 12th; faltering on Sunday (T-11)

Spieth pars 12, but makes quad on 15

Spieth takes another gut punch, but still standing

Article: Spieth splashes to worst Masters finish

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U.S. Open: 1 over usually good ... not at Erin Hills (T-35)

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The Open: Unforgettable finish leads to major win No. 3 (1st)

Spieth survives confusing ordeal on 13

Photos: Spieth's incredible journey on 13

Take it, it's yours: Spieth gets claret jug

Chamblee: Spieth doesn't have 'it' - 'he has it all'

Article: Spieth silences his doubters - even himself

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PGA Championship: Career Grand Slam bid comes up well short (T-28)

Article: Spieth accepts that Grand Slam is off the table


TWO REGULAR TOUR WINS

AT&T Pebble Beach

Article: Spieth rising from 'valley' after Pebble Beach win

Travelers Championship

Spieith wins dramatic Travelers in playoff

Watch: Spieth holes bunker shot, goes nuts


FUN OUTSIDE OF TOUR LIFE


PHOTO GALLERIES

Photos: Jordan Spieth and Annie Verret

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Photos: Jordan Spieth through the years