Nike Golf's equipment shutdown has ripple effect on industry

RSS

CROMWELL, Conn. – Goodbye, world … of equipment.

Almost 20 years since launching the iconic “Hello, World” ad campaign with a 20-year-old Tiger Woods, Nike is exiting the equipment industry. As of Wednesday, the mega brand will no longer be producing golf clubs, bags or balls.

Their focus, according to a news release, will be shoes and clothes.

Which leaves their tour pros, coming off of four major championships and into the Travelers Championship, scratching their headcovers.

“I can’t comment at this time,” Paul Casey, a Nike ambassador for 12 years said via text. “Wish I could, but I’m still digesting it.”

Tony Finau, who signed a five-year deal to wear and play all things Nike to start the 2015-16 season, had a similar reaction.

“My agent texted me today and said we needed to talk,” he said. “We’re still trying to figure it all out. It’s now on Nike to reach out and help each one of us understand the future.”

Being a publicly traded company, Nike was required to keep employees and ambassadors in the dark until something like shutting down a branch of their portfolio is public information.

Patrick Rodgers, a Nike player who made his pro debut at the Travelers three years ago, and his caddie, Thomas Maples, were at the Nike equipment truck Wednesday morning. They talked to staff about testing wedges. The two returned in the afternoon, after news had broken, and were met with: "I don’t think we need to do any more testing of wedges. We all just lost our jobs."

As Maples said, the players will be fine. They'll play what they have for now and move on. Sympathy is for those no longer employed.

After a day of Nike Golf laying off employees, including their tour reps, there were at least some industry insiders not surprised.


Timeline: Nike in the golf industry


“To be honest, I can’t believe it didn’t happen five years ago,” said Harry Arnett, Callaway’s chief marketing officer. “They’ve been throwing a lot of good money after bad for a long time now. And at some point you need to justify the spend. There needs to be a return on your investment.”

As Arnett pointed out, with only three percent of the U.S. equipment market and not much more globally, that wasn’t happening for Nike. What has been happening has been decades of seismic deals ending in lots of zeros.

Woods signed the first of his four deals with Nike in 1996 for $40 million. Then another contract in 2001, reportedly worth $20 million a year. After another contract in 2006, and another in 2013, it looked like Woods would finish his career with the company.

In 2005, at age 15, Michelle Wie signed a Nike and Sony contract worth an estimated $10 million per year. (More than $3 million more than what Annika Sorenstam was making per year, and Sorenstam had already won nine of her 10 major championships.)

And in 2013, under the lights and through smoke machines of a stage in Dubai, Rory McIlroy, who had won two of his four majors, became what many business insiders projected was Nike’s “$200 million man.”

Woods, Wie, McIlroy, Finau, Casey, Brooks Koepka, Francesco Molinari, Thorbjorn Olesen, Russell Henley, Rodgers and Nick Watney are all golf ambassadors for Nike. And there are more. But for how long?

"Just like his comeback to golf, I think timelines inhibit you,” Mark Steinberg, Woods' agent, told GolfChannel.com. "So we'll do this methodically, and in a proper way."

Given the context of the Tour season, Finau says he will also take his time if he were to make a change.

“I’m going to stay focused on golf right now,” Finau said. “I will finish the season playing Nike. I’m happy with my equipment right now and I need to keep playing for the FedEx Cup and the Ryder Cup.”

Arnett raised another good point.

“When you think of Jordan Spieth, what brand do think of?” he asked.

Under Armour is the clear answer.

“Exactly.”

What we see are hats, shirts, bags and shoes, to Arnett's point. And then we see the logos. And although we see clubs and balls, it’s not always easy to identify the equipment brand a player is using.

So, Nike is going back to doing what it does best: shoes and apparel. And thus, the potential for less money down and more coming back.

"We're committed to being the undisputed leader in golf footwear and apparel," said Trevor Edwards, president of Nike in a statement. "We will achieve this by investing in performance innovation for athletes and delivering sustainable profitable growth for Nike Golf."

Nike was not immediately available for further comment to Golf Channel.

So, how would a mega successful brand like Nike plug the public perception of loss or failure?

Some industry insiders say it wouldn’t surprise them to see Jason Day become a Nike ambassador for clothes and shoes, while continuing to play TaylorMade clubs and balls. Adidas announced earlier this year that it will be selling TaylorMade and Ashworth.

Nike has said goodbye to equipment, but it’s still difficult to imagine the company will not continue to offer more hellos to the best players in the world.