Business Edge for Tuesday May 1 2001


The latest:
ELY ON HIS FEET: Word is that Callaway Golf patriarch Ely Callaway has been on his feet and walking around at the San Diego-area hospital where surgeons removed his gall bladder last week. He is also eating, and although the recovery is moving along well, theres no firm release date yet. Company officials have said Mr. Callaway, who is 81, hopes to be back at work in a few weeks.
Surgeons found a tumor on Mr. Callaways pancreas, but the company says the condition is manageable. The Callaway board is playing it close to the vest on succession plans. Mr. Callaway plans to retire some time this year, but he has pulled back from succession plans in the past.
Callaway stock closed at $25.50 per share Tuesday, up $1.24.
SOFTSPIKES TAKES THE HARD LINE: Oh, the tangled webs that get woven in the golf industry. Softspikes Inc. has filed for arbitration against MacNeill Engineering Worldwide, claiming that MacNeill has reneged on an agreement to manufacture a certain kind of cleat for Softspikes. But as with most disputes, theres more to it than that ' and most of it concerns things you cant even see.
Softspikes makes the popular Black Widow cleat. MacNeill owns the Q-Lok installation technology, which allows cleats to be attached to the shoe with a quarter turn of the wrench. Softspikes alleges it had a deal with MacNeill for the latter to make Black Widows with the Q-Lok system, and that MacNeill has gone back on that deal after an initial manufacturing run of 70,000 pieces.
The plot thickens when you check out MacNeills website, which says the Marlboro, Mass. company is a contract manufacturer. So whats the big deal? The contract they allegedly had with Softspikes was with a competitor.
MacNeill makes ScorpionSpikes, Tred-Lite, Edge and Soft Play cleats under its Champ brand. These cleats vie for the same market as Softspikes products, which include the Black Widow, the Shadow and the XP models.
The Black Widow is doing well in the market, and the last three winners on the PGA Tour have worn the cleats. At least one industry source has said that MacNeill feels it would be compromising its Champ products by helping competitor Softspikes put Q-Lok Black Widows in the market.
Softspikes executives say a deal is a deal. MacNeill officials did not return calls by deadline.
The importance of having a popular cleat available with the Q-Lok installation system cant be overstated, especially for the replacement cleat market. Although the Fast Twist installation system, a product of English company TriSport Ltd., comes on more than two-thirds of all golf shoes, Q-Lok is standard equipment on high-selling shoe brands such as Nike and Etonic. (Traditional metal thread installation systems, in both large and small thread sizes, are still available for certain shoe models.)
Still with me? Then consider also that Softspikes had an agreement with MacNeill between 1997 and 1999 under which MacNeill did all the manufacturing and Softspikes did all the marketing. And Softspikes bought TriSport in November 1999. It was effectively a merger, but the actual owner of TriSport is Sport Holdings Inc., a holding company set up by Softspikes. But Softspikes says theres been no change in control of the companies.
The Softspikes-MacNeill spat will be decided by a board of arbitrators, and the decision will be binding. Stay tuned.
And lest you think it never happens anywhere else in the industry, remember the worst-kept secret in the golf ball business: Bridgestone, which makes its own golf balls under the Precept brand, also makes balls for Nike.