Golf Equipments Big Five Becomes Big Four

By Adam BarrJuly 1, 2003, 4:00 pm
And then there were four.
In the biggest seismic shift yet in the golf equipment industry, Top-Flite Golf will likely be sold to competitor Callaway Golf. The consolidation will leave four companies ' Acushnet Co. (Titleist, FootJoy and Cobra), Ping, TaylorMade-adidas Golf, and the new Callaway-Top-Flite combination ' in a premium equipment arena that once had room for five.
To make the deal work, Top-Flite will declare bankruptcy under Chapter 11 of the Bankruptcy Code, which is reserved for companies that want to reorganize their debt and emerge as going concerns. But under a special provision of that law, designed to save companies that could not, in the courts judgment, make a go of it even when released from debt, the bankrupt company can come to court with a ready buyer. An approved sale seals a prepackaged deal that maintains the declaring company and gives the buyer a debt-free acquisition.
The prepackaged Section 363 bankruptcy requires a public auction, at which Callaway could be outbid. The transaction could take 70 to 90 days to conclude.
But assuming Callaway will succeed, it will pay about $125 million for substantially all the assets of Top-Flite Golf, the company that remained after Spalding Sports Worldwides non-golf assets were sold to Russell Athletics in May. (Etonic, Spaldings golf shoe division, had already been sold to a private group earlier in the spring.) Callaway will get the Strata ball brand, the Top-Flite club and ball brands, and the Ben Hogan club and ball brands, as well as golf ball plants in Chicopee, Mass. and Gloversville, N.Y., and the Hogan club facility in Fort Worth, Texas.
Also in the package would be the Ben Hogan club brands relationship with Chicago-area putter maker Bob Bettinardi. Jim Furyk used a Ben Hogan By Bettinardi putter to win the 2003 U.S. Open.
Those golf ball plants represent annual capacity of about 30 million, but current production is at about 19 million per year. Callaways five-year-old golf ball operation, which is troubled with profitability problems, says Callaway CEO Ron Drapeau, has annual capacity of about 6 million dozen per year, but is producing at an annual rate of about 2 million dozen balls now.
What Callaway wont get is Top-Flites crushing $530 million debt load. Top-Flites annual sales are about $250 million. If sales of Top-Flite products stay stable, that amount goes to Callaways top line ' and the loss from Callaways golf ball operations (said to be about $20 million per year) and Top-Flites annual interest payments (said to be $50 million per year) both go away.
Consumers will notice little, if any, change in the short term. Callaway officials confirm that they plan to run Top-Flites brands as they are now. Neither Callaway nor Top-Flite, which will continue to run the company pending court approval of the sale, would comment on long-term possibilities for the brands.
The effect on the competitive environment is, so far, no more than speculation. Titleist long ago seemed to stop fearing Top-Flite golf ball brands, turning its attention to new entrant Nike and threats from a rejuvenated Precept. Bad weather over successive springs and flagging interest in the game has injured companies across the board, but those in cash-poor and/or debt-heavy positions got clobbered hardest. Spalding, and then Top-Flite, struggled to keep up with the competition due to debts that mounted after a reorganization in 1996. Meanwhile, Titleists success with the Pro V1 line solidified its position as the premium golf ball market leader.
In golf clubs, Spalding essentially stopped competing for the same customer as Callaway, Ping and TaylorMade-adidas, although it maintained its Top-Flite club line. In recent years, Spalding acquired the Ben Hogan brand and began a campaign to attract the better-player and serious-golfer market share it temporarily ceded to competitors. Furyk was using Hogan irons in his Open win, and other prominent players have signed on to endorse Hogan, one of the games most enduring brands.
The Top-Flite brand package gives Callaway a number of options for dovetailing new offerings into its current line. If Callaway indeed intends to leave the brands as they are, the Hogan line could instantly occupy a premium, better-player spot in both balls and clubs, leaving current Callaway balls and clubs to cover the serious, but more game-improvement-minded, customer. The Top-Flite ball brands, Top-Flite XL and the new Infinity, may clash with Callaways current mid-market ball products, but with the experienced brand management at Callaway, there are likely ways around this so that the channels dont overlap or cannibalize each other significantly.
The Top-Flite club brand could give Callaway a foothold in a slightly upscale value-priced market. The puzzling piece will be the Bettinardi putters, which at this moment compete directly with Callaways phenomenally successful Odyssey 2-Ball models for the business of the putting enthusiast.
But the most compelling effect on competition may be the reduction of it. Just as TaylorMade-adidas essentially neutralized Maxfli as a competitor by buying it, so may the Callaway purchase do the same for this latest buyer ' and the rest of the industry.
Will Callaway become a more formidable competitor by bulking up? No matter what you believe about the financials, there can be no guarantee that long-term market share will follow the consolidation. Sources say Titleist is unafraid of the brands that havent been troubling it lately, no matter who the owner. And TaylorMade-adidas, always looking for a new angle in its ongoing battle with across-the-business-park Carlsbad rival Callaway, is said to be considering bidding at the court-ordered auction that must accompany the proposed Callaway purchase, if only to play a little competitive poker.
Still, Callaways marketing and brand management experience should not be underestimated ' nor should its resolve; from the days of its founder, the late Ely Callaway, the company has a history of doing what it promises and only promising what it is sure it can do. With a broader position in the premium market, the new Callaway may not dislodge Titleist as the ball leader, for example ' but it may become, with Top-Flite, a very strong second, the kind of competitor that robs sleep from Titleist execs.
As usual ' stay tuned.
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Watch: McIlroy gives Fleetwood a birthday cake

By Golf Channel DigitalJanuary 19, 2018, 2:58 pm

Tommy Fleetwood turned 27 on Friday. He celebrated with some good golf – a 4-under 68 in Abu Dhabi, leaving him only two shots back in his title defense – and a birthday cake, courtesy of Rory Mcllroy.

While giving a post-round interview, Fleetwood was surprised to see McIlroy approaching with a cake in hand.

“I actually baked this before we teed off,” McIlroy joked.

Fleetwood blew out the three candles – “three wishes!” – and offered McIlroy a slice.  

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DJ shoots 64 to surge up leaderboard in Abu Dhabi

By Ryan LavnerJanuary 19, 2018, 1:48 pm

Dustin Johnson stood out among a star-studded three-ball that combined to shoot 18 under par with just one bogey Friday at the Abu Dhabi HSBC Championship.

Shaking off a sloppy first round at Abu Dhabi Golf Club, Johnson matched the low round of the day with a 64 that put him within four shots of Thomas Pieters’ lead.

“I did everything really well,” Johnson said. “It was a pretty easy 64.”

Johnson made four bogeys during an even-par 72 on Thursday and needed a solid round Friday to make the cut. Before long, he was closer to the lead than the cut line, making birdie on three of the last four holes and setting the pace in a group that also included good rounds from Rory McIlroy (66) and Tommy Fleetwood (68).

“Everyone was hitting good shots,” McIlroy said. “That’s all we were seeing, and it’s nice when you play in a group like that. You feed off one another.” 

Full-field scores from the Abu Dhabi HSBC Championship

Coming off a blowout victory at Kapalua, Johnson is searching for his first regular European Tour title. He tied for second at this event a year ago.

Johnson’s second-round 64 equaled the low round of the day (Jorge Campillo and Branden Grace). 

“It was just really solid all day long,” Johnson said. “Hit a lot of great shots, had a lot of looks at birdies, which is what I need to do over the next two days if I want to have a chance to win on Sunday.” 

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Closing eagle moves Rory within 3 in Abu Dhabi

By Ryan LavnerJanuary 19, 2018, 12:57 pm

What rust? Rory McIlroy appears to be in midseason form.

Playing competitively for the first time since Oct. 8, McIlroy completed 36 holes without a bogey Friday, closing with an eagle to shoot 6-under 66 to sit just three shots back at the Abu Dhabi HSBC Championship.

“I’m right in the mix after two days and I’m really happy in that position,” he told reporters afterward.

McIlroy took a 3 ½-month break to heal his body, clear his mind and work on his game after his first winless year since 2008, his first full season as a pro.

He's back on track at a familiar playground, Abu Dhabi Golf Club, where he’s racked up eight top-11s (including six top-3s) in his past nine starts there.

Full-field scores from the Abu Dhabi HSBC Championship

McIlroy opened with a 69 Thursday, then gave himself even more chances on Day 2, cruising along at 4 under for the day when he reached the par-5 closing hole. After launching a 249-yard long iron to 25 feet, he poured in the eagle putt to pull within three shots of Thomas Pieters (65). 

Despite the layoff, McIlroy edged world No. 1 Dustin Johnson, coming off a blowout victory at Kapalua, by a shot over the first two rounds. 

“DJ is definitely the No. 1 player in the world right now, and one of, if not the best, driver of the golf ball," McIlroy said. "To be up there with him over these first two days, it proves to me that I’m doing the right things and gives me a lot of confidence going forward.”

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Duke to fill in for injured Pavin at CareerBuilder

By Ryan LavnerJanuary 19, 2018, 12:25 pm

Ken Duke will fill in for Corey Pavin for the next two rounds of the CareerBuilder Challenge – with nothing at stake but his amateur partner’s position on the leaderboard.

Pavin was 4 over par when he withdrew after 17 holes Thursday because of a neck injury. Tournament officials contacted Duke, the first alternate, and asked if he would take Pavin’s spot and partner with Luis Lopez for the next two rounds, even though he would not receive any official money.

Duke accepted and explained his decision on Twitter:

Playing on past champion’s status, the 48-year-old Duke has made only four starts this season, with a best finish of a tie for 61st at the RSM Classic.

Pavin received a sponsor exemption into the event, his first PGA Tour start since the 2015 Colonial.