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Web Street Golf Report


Monday, August 10, 2009

BOTTOM LINE COULD USE A LIFT: TaylorMade adidas Golf saw second quarter sales improve over a year ago but that was largely due to the acquisition of the Ashworth brand. The company had sales of 255 million Euros, up 29 million Euros from a year ago when it reported 226 million Euros. Sales from Ashworth in the reporting period contributed 23 million Euros. In the comparable quarter Ashworth wasn’t included as it had to be acquired.

However, making money proved to be a more difficult proposition during the second quarter despite the larger sales base the company enjoyed. TMaG’s bottom line came in with profit of 2 million Euros in the second quarter of 2009. It was down significantly from 2008 when it reported 19 million Euros.

Looking over the first six months of 2009, TMaG said sales were 449 million Euros, up 32 million Euros versus a year ago when it had 417 million. Ashworth was the largest contributing factor for the increase in revenues, which the company also cited as the reason for its bottom line performance. It said its operating performance was impacted by the consolidation of Ashworth, which lead to a loss of 18 million Euros at the half waypoint of the year. At the same point in time back in 2008, TMaG was sitting on a profit of 43 million Euros.

Sales in Europe improved by two percent to 63 million Euros (versus 62 million in 2008), year-to-date, while North America was up 16% (252 million in ‘09 vs. 218 million in ’08). Keep in mind that TMaG had yet to acquire Ashworth in 2008, therefore the improved sales in 2009 isn’t a true comparison of the business from a year ago.

“Despite what you hear from others, there is only one winner this year in the golf market - and that’s TaylorMade adidas Golf,” said Herbert Hainer, CEO and Chairman of adidas Group, parent company of TMaG. That’s an interesting spin on the subject by the CEO since it implies winning at any cost even if means losing money. “The global golf market is estimated to be down in the high teens so far in 2009. TaylorMade adidas Golf sales are down only 1%, or 9% if you exclude our new Ashworth business. That in itself testifies that we are taking significant market share, and certainly more than our major competitors. We have record high market shares in the US in both metalwoods and irons.” According to Hainer, TMaG’s inventories are down 28% compared to March. “We are firmly committed to bringing our inventories back into check from the high levels of the first quarter,” Hainer was quick to add. The company is projecting that TMaG sales are expected to decline without the addition of Ashworth in its top line revenues. It would also suggest that the bottom line should remain in red ink throughout the remainder of the year.

SIDENOTE: For those who are inclined to follow the progress of big three equipment makers, consider that TaylorMade’s revenues surpassed Callaway’s yet still trails the Acushnet Company (Titleist, FootJoy and Cobra Golf). Based on Friday’s closing exchange rate between the dollar and Euro ($1.4167), TaylorMade’s quarterly sales were $360 million (255 million Euros@ $1.4167) and year-to-date it has $633 million in revenues. Callaway reported second quarter sales of $302 million and at the mid point of the year it has recorded $574 million logged in sales. The company they are all chasing is Acushnet, which reported $365.8 million second quarter sales and $712.8 million through six months in 2009.

DOUBLE DIGIT DECLINE: Amer Sports, parent company to Wilson Golf reported its second quarter operating results to shareholders last week. The diversified Finnish company said its golf sales were down 19% in the quarter coming in at 22 million Euros versus the 27.2 million it had in 2008. Year-to-date sales are down 18% over a year ago at the same time, 41.7 million euros versus 50.6 million. The golf division represents 15% of total sales for Amer, which stood at 278.6 million.

Amer reported net sales in golf declined by 29% in the Americas, EMEA 9% and Asia Pacific by 20%. Based upon market data, it told the investment community golf has suffered more from changes in consumer behavior than the other categories in its Ball Sports category. It also referenced the golf industry aggressive reaction to the recession with new pricing and promotions, which has impacted its business.

NEED A RULING? As part of the implementation of the new groove rule change, the USGA has developed a low cost method of measuring the grooves on the face of clubs for conformance with the new groove regulations that will go into effect on January 1, 2010. The USGA said it’s system is easy to use and will is being made available to club manufacturers.

The patent-pending measurement system, called “GrooveScan,” uses a readily available flat bed document scanner, which has a resolution of 0.00015”. The groove measurements are obtained from a casting of the profile of the face, which is made using a fast curing, metrology grade reproduction compound. After a brief curing time, the casting is sliced with the included tool to produce an accurate reproduction of the grooves. The sliced casting is then placed on the flatbed scanner. After a few clicks of a mouse, an accurate profile of the grooves is captured by the scanner and sent to a PC for analysis, the USGA said. The included software analyzes the groove dimensions, and both the overall conformance status and the detailed measurements of each groove are provided. From start to finish, the system averages approximately 5 minutes per club when multiple clubs are measured, according to the USGA.

The system is suitable for field-testing, quality assurance, and R&D activities. Due to its high precision, field measurements obtained by the GrooveScan at competition sites will not require confirmation by distant lab measurement device. The PGA Tour has already selected the GrooveScan for use on-site at their events.

Software and slicing tool drawings may be licensed from the USGA for $700. The scanner used by this system, an Epson V-500, can be obtained at retail locations and at Internet sites for under $200. A PC also needs to be supplied by the user. The license entitles the creation of multiple testers for each license holder. The USGA will also sell slicing tools for $300 each. Instructions and a video demonstrating the use of the GrooveScan will be included with the license.

GET THE IDEA(S)? Adams Golf (ADGF: NASDAQ) isn’t running out of ideas. The company continues to build off its Idea platform with the introduction of the Idea a7OS hybrids and hybrid irons. Using patented gapping technology that optimizes each club in the iron set, according to the company, Idea a7OS increases distance, improves launch conditions and are easy-to-hit.  Intended for players looking to improve their games, the Idea a7OS set features three hybrids, two mid-hybrids and three short-irons that will appeal to a vast majority of golfers looking for the utmost in forgiveness and playability. The Idea a7OS hybrids may also be purchased individually.

Featuring 44-grams of rear weighting to increase launch angle and distance, the 3-, 4- and 5-hybrids have rounded shaping with a slight draw-bias to enhance forgiveness for the higher-handicap player. A four-way cambered sole and an H-back channel vibration dampening system are built into the 6- and 7-mid-hybrids, which Adams believes optimizes distance, gapping and launch conditions.  A low and deep center of gravity is incorporated into the short irons (8-PW) for both forgiveness and versatility.

“The patented gapping technology that we applied to Idea a7OS truly optimizes each club in the hybrid iron set to outperform traditional irons,” said Michael Vrska, Director of Product Development at Adams Golf. “The result is a set of hybrid irons that is truly the most forgiving and easiest-to-hit that we have ever designed.”

Adams Golf also created the Idea a7OS hybrid iron set for women which provides the same features and materials found in the men’s sets, but with tooling and design specifications created specifically for a woman’s swing.

The suggested retail price (SRP) for the Idea a7OS hybrid iron sets is $799.99 for graphite and a hundred dollars cheaper for those players who prefer steel shafts. The clubs begin shipping to golf shops on September 15. The SRP for the individual Idea a7OS hybrids is $199.99 and will be available individually in 2- through 6-hybrids.

Adams isn’t finished with its ideas just yet. For the first time ever, Adams Golf is expanding the Idea a7OS line to offer Idea a7OS Max, an all-hybrid set that it believes is very easy-to-hit and delivers maximum confidence and forgiveness.  An option for golfers that either love playing hybrids or those with handicaps that range from 25 to 36, the eight-piece Idea a7OS Max set consists of four wood-like hybrids and four iron-like hybrids. Available in men’s (3-6 wood-like hybrids; 7-PW iron-like hybrids), women’s and seniors (both 4-7 wood-like hybrids, 8-SW iron-like hybrids), Idea a7OS Max also begin shipping to golf shops on September 15 with a SRP of $849.99 (graphite) and $749.99 (steel) in the men’s and seniors’ sets, $849.99 (graphite) in the women’s sets.

HEADED SOUTH: Sunice announced that it has established its own corporation to sell the Sunice Outerwear brand in the United States, effective immediately. “We’re extremely confident that we will be now be in a tremendous position to build Sunice as the leading brand in the United States’ men’s and women’s golf outerwear markets,” said Mark Fletcher, President of Sunice and of the Montreal-based Fletcher Leisure Group Inc. (FLG), which distributes Sunice and other brands in Canada.

Sunice said it is in the process of hiring an Executive Vice President and Sales Team to lead the effort in the United States. Its U.S. headquarters will be based in Champlain, New York.

MORE OF THE SAME AND THAT DOESN’T MEAN ITS NECESSARILY GOOD: More supporting evidence came in that the golf business is becoming a harder and harder place to make money. Graphite shaft manufacturer, Aldila, Inc. (ALDA: NASDAQ) reported net sales of $10.6 million in the second quarter of 2009, which generated a net loss of $627,000 ($0.12 loss per share). Flash back to a year ago and the company had sales of $13.6 million and a loss of $523,000.

For the six months ended June 30, 2009, net sales were $24.4 million, down from $30.3 million a year ago. In the first six months of 2009, Aldila has lost $675,000 compared to losing $65,000 during the same period in 2008.

"The Company is actively managing its working capital and has increased its cash and cash equivalents by $680,000 as of June 30, 2009 from December 31, 2008, while reducing its total outstanding debt by $3.1 million during that same period,” said Peter Mathewson, Chairman of the Board & CEO. "We experienced a 21% decline in our golf shaft sales in the second quarter of 2009 versus the second quarter of 2008. The average selling price of our golf shafts sold decreased by 6% on a 16% decline in unit sales in the second quarter of 2009 versus the second quarter 2008. We continued to see a very difficult market throughout the quarter. The contraction of the golf club market is estimated to be on the order of 20-30% and there is uncertainty as to when it will return to previous levels.” However, the CEO has some room for optimism.

“We believe our market share remains strong based on the various programs we have been awarded for 2010 product lines set to begin late in the third quarter. Our customers continue to be cautious and take a conservative approach to their business in light of the economic climate," Mathewson said.

A STEP BACK: It may be considered as one of the better secrets in golf, that being the annual sales for Nike Golf. However, the proverbial cat is out of the bag as its parent company, Nike Inc (NKE: NYSE) revealed the breadth of its golf business revenues in a recently public filing.

Nike Golf lost some ground in its last fiscal year, (June to May) as it posted a 10.6% decrease in sales. For the year revenues came in at $648.3 million, down from $725.2 million in the prior-year period, according to Securities and Exchange Commission filings. Business in fiscal year 2008 was higher by 12% over fiscal year 2007 when Nike Inc reported worldwide sales of $646.3 million for Nike Golf.

HOPING TO MAKE A BUCK: The PGA of America is hoping to do something with its major championship that others have yet to. Often referred to as golf’s last chance for glory, the PGA of America is charging $1.99 to iPhone and iPod touch owners to download an application to follow its championship. For those that choose to pay for it they will have access to live scoring and video along with instant updates among other things from Hazeltine. In the past the Master, the USGA (US Open at Bethpage Black) and the R&A (the Open Championship at Turnberry) provided the same programming but on a complimentary basis.

But the economic opportunity, at least not yet doesn’t appear to be that significant. The $1.99 fee is being split with Apple (AAPL: NASDAQ) as it is being distributed through its application store via iTunes. Its unknown what portion is going to ether side but going off the numbers the USGA provided after the US Open concluded it would appear the audience size has plenty of room to grow. According to the USGA, iPhone owners watched U.S. Open LIVE! Webcast coverage, with more than 465,000 streams delivered during the championship. A peak concurrency of 10,215 users, it said, watched the Monday playoff stream.  A mobile version of was available for users of Web-enabled phones, and the USGA stated that 123,446 fans took advantage. Nevertheless, credit the PGA of America for exploring this potential revenue stream even if the economy isn’t helping anyone’s cause. While the other three major championships gave the application program away for free with the intentions of making it up on the back end through additional advertising revenue, the PGA will help to determine whether there is a market for such an application even if the initial cost is quite meager.

Staying on this theme for another moment, the market for GPS units received a boost some time back when the USGA and R&A approved the limited use of them. Companies rushed to market with products and individuals paid significant amounts to own units that that could be helpful throughout a round of golf. That was then and this is now, certainly one way to consider the new economic ways of the world. GolfLogix is modifying its business strategies by being the first major player in the golf GPS handheld market to offer its application to GPS-enabled cell phones such as the BlackBerry and iPhone Smartphones for free. An annual subscription fee of less that $40 provides access to the program and its thousands of courses for those individuals who decide after a free trial period to purchase the service. In less than a week, according to the company, the GolfLogix application has climbed up the top 10 most requested sports applications in iTunes.

“Our application gives golfers more than a digital scorecard. They get a real picture of their game. It’s like having a personal caddie with you for every round,” Scott Lambrecht, CEO of GolfLogix, Inc. said “Our professionally mapped database of more than 24,000 golf courses that has been customer validated since 1999 is also what sets us apart from the other iPhone golf applications.”

The GolfLogix application is currently available on the iPhone 3G and 3GS as well as the BlackBerry Curve, Bold, Tour and Storm. “We want to give all golfers the ability to turn their GPS-enabled Smartphones into the ultimate GPS rangefinder,” Lambrecht added.

STOCK WATCH: For the week, the Dow was up 2.2 percent, the S&P 500 was up 2.3 percent and the Nasdaq was up 1.1 percent. The S&P 500 is now up about 50 percent from its 12-year closing low in early March, helped by stronger-than-expected corporate earnings and a string of economic data that has suggested a recovery. About 73 percent of the S&P 500 companies so far have beaten analysts' earnings expectations, according to Thomson Reuters data.

Despite the picture the markets are painting, the economy still lost a quarter of a million jobs in a single month, S&P earnings are down more than 20% from a year ago and the manufacturing data still indicates the sector is contracting, but just not as fast as it was a few months ago.

U.S. retailers meanwhile turned in yet another ugly month in July, with sales falling mostly across the board. Still, there are some signs that the pace of declines may be slowing, with retailers' cost and inventory controls helping them to lift profit forecasts. Retailers including Kohl's, J.C. Penney, Macy's and Gap raised their second-quarter outlooks, crediting expense and inventory control

So while the news in general can be considered better, it's hardly indicates that all is well in the US. Keep in mind that Federal Regulators shut down another two Florida banks last week as the running tally now moves to 71 failures (and safe to say still growing) in '09. So it remains to be seen whether the market is ahead of itself with respect to the economy and if it has turned the corner with respect to the recession.


DREAMS REMAIN POSSIBLE AND IN SOME CASES QUITE REAL: When it comes to golf equipment, new often helps to push the needle towards attention, which can lead to a future sale. Golf courses don’t have the same luxury, reinventing themselves on an annual basis. With the global economy being the way that it is, it may be a while before new courses begin surfacing again.

Often times, courses rely on word of mouth or magazine reviews and ratings to gain attention. Often times, courses rely on word of mouth or magazine reviews and ratings to gain attention. Often times, courses rely on word of mouth or magazine reviews and ratings to gain attention. Despite the economic woes being felt throughout the world, there is something new coming from south of the border that should gain attention and even a buzz later this year. Golf course architect Tom Doak’s 18-hole masterpiece at Bahía de los Sueños, his first footprint in Mexico is scheduled for completion in January 2010. The course – at the heart of a 4,300-acre residential resort community sheltered on the east coast of Mexico’s Baja Sur Peninsula – plays just feet from the Sea of Cortez and will be the centerpiece of the Bahía de los Sueños Golf & Beach Club. It is located just 35 miles southeast of La Paz and 100 miles northeast of Cabo San Lucas. Bahía de los Sueños, for those wondering, translates to The Bay of Dreams

“The first impression of the course at Bahía de los Sueños is its terrific, long and wide beach, which we return to three times over the course of a round,” explained Doak. “The magnificent variety of terrain and views sets this property apart from others in Los Cabos and around the world. The first few holes play among giant Cardón cacti, before a great uphill, par-five ninth hole and a stunning turn working up and around a huge hill. To me, the best stretch on the course might be the 11th through 14th holes, beginning at the high point of the course and playing back down to the beach over illustrious topography.”

The Club is now already accepting reservations for memberships, which are not exclusive to residents of the Bay. As the saying goes, timing is everything and timing may never be better (a byproduct of the economy...) at Bahía de los Sueños.

Doak who carries a big reputation throughout the world from his previous projects such as Cape Kidnappers in New Zealand, Barnbougle in Tasmania and Pacific Dunes in Oregon, enlisted the help of a strong supporting cast to build Bahía de los Sueños.

“My lead associate for the job, at least for the second half of the job was Brian Schneider who has done a lot of the shaping of greens for us on courses the last five years. Brian was on the maintenance crews at Pine Valley and Miriam and Sand Hills and Augusta and a few other courses for three or four months at a time to get familiar with all those great courses and how sever the greens really are on them,” Doak said.

PCS Development is the developer behind the project. It is believed that there are negotiations with a couple of different hotel operators for Bahía de los Sueños but nothing yet has been established. The focus is selling real estate, as in private residences. In the future years a hotel is expected to be added.

“Tom Doak’s unrivaled ability to sustainably weave 18 magnificent golf holes into this pristine landscape made him our first and only choice to design this course at the Bahía de los Sueños Golf & Beach Club,” said Charles Freedman, President of PCS Development. “He employs the same thoughtful, meticulous oversight for his golf course designs as we do for the development of our communities.” Over 50 homesites have already been sold and about a dozen luxury homes have been constructed. To learn more about Bahía de los Sueños and its Tom Doak-designed golf course, visit



Last Updated (Thursday, 28 January 2010 10:40)



Web Street Golf Report


Monday, August 3, 2009

PING WANTS TO KEEP YOU IN YOUR SWING: Ping has enjoyed success over the years with its G2, G5 and G10 line of products. The i5 and i10 have also been a hit with consumers. The company has cultivated a reputation of loyalty with its customers over its 50 years in business. The reality is the brand has delivered the goods (literally and figuratively) more often than it hasn’t in the minds of consumers. This year the Phoenix, AZ based manufacturer is bringing two new lines of clubs to help golfers enjoy the game. The G15 and i15 are the latest to carry the Ping name along with a few other items too.

Both Series, which include drivers, irons, hybrids and fairway woods, are engineered with two distinct player profiles in mind. The G15 Series continues Ping’s focus on developing forgiving, easy-to-hit clubs. The i15 Series is designed for golfers who prefer workability and control in their clubs. The company also introduced its new iN Series putter line (10 models) and two new models to both its JAS and i-Series putter lines.

“Our engineering team continues to research and analyze the needs of all golfers,” said company Chairman and CEO John Solheim. “Our newest families of clubs address the specific performance goals of these players and they are designed accordingly. The G15 Series appeals to the majority of golfers who rely on the easier-to-hit attributes of a maximum forgiveness, higher launch type of club. With the i15s, a lot of players will be attracted to the added control and versatility they offer. The i15s will deliver the forgiveness we all need, but they’ve been engineered to provide the workability that a lot of more skilled golfers look for in their clubs.”

The first-ever launch by Ping of two complete families in the main equipment categories was led by John K. Solheim, Ping’s Vice-President of Engineering and the oldest son of John A. Solheim.

“This approach furthers Ping’s goal of bringing higher performing products to market that meet the varying needs of golfers of all abilities,” said John K. Solheim. “The technologies available today, from a design and fitting perspective, allow us to segment a product’s attributes like never before. Combine that with our expert teams of engineers and researchers, who define those attributes in the development process, and we’re able to provide this type of targeted product to help all golfers improve their games.”

The technology of the G15 Iron provides the high-launching, maximum forgiveness benefits that the majority of golfers rely on to bring consistency to their iron play. The stainless steel iron’s cavity design features a new Custom Tuning Port (CTP), which expands the perimeter weighting and increases the moment of inertia. Weight savings from a thinner face are re-positioned to the toe for added forgiveness on mishits and the wider sole produces a higher launch angle. Stronger lofts combine with a center of gravity located low and farther from the face to produce longer shots without sacrificing the higher launch angle required in a maximum-forgiveness iron. The irons will carry a MSRP in the US of $107.50 per club with steel shaft and $135 in graphite.

In the design of the i15 Iron, Ping engineers said they focused on the better player who prefers an iron set that offers the control to play a variety of shots. Created as a progressive set, the longer irons are larger for more forgiveness and higher trajectories, while the mid and short irons transition slightly smaller to ensure more workability and control on approach shots. The stainless steel iron features a tungsten toe insert to add forgiveness (with slightly more weight) to the mid-size design. The i15 will be available for $115 US in steel or $142.50 with a graphite shaft.

The G15 driver has a 460cc titanium head that is longer front to back and features Ping’s patented ultra-thin crown technology. Weight savings from the thin crown are positioned as an external sole weight to optimize the center of gravity for higher trajectories and reduced spin. A larger face is designed to increase ball speed and provide consistency across the entire hitting surface. The new PING-designed TFC149D high balance point shaft allows for a five-gram increase in head mass (without increasing swingweight or overall weight), which results in higher ball speeds and an increased moment of inertia. It will be available in four lofts as well as a draw version in three additional lofts with an MSRP of US $350.

The fade-biased design of the i15 Driver is intended to meet the demands or needs of golfers who place a high priority on working their tee shots. The traditional pear-shaped 460cc titanium head is engineered with a bulge crown design and deeper face to optimize energy transfer for greater ball speed and the solid feel preferred by better golfers. Internal weighting reduces spin, Ping said, and the hosel is positioned slightly back from the face to help promote tour-preferred trajectories and control. Its titanium carbon finish provides a sleek and optically pleasing appearance. Available in three lofts is has an MSRP of $405. Both the G15 and i15 drivers will only be available in graphite shafts. Matching G15 fairway woods (which also includes a draw version) will be offered with a MSRP of $230, while the i15 fairways at $265. Again both products will only have graphite shaft options.

The G15 Hybrid is engineered as a high-launching, forgiving alternative to long and mid irons, Ping said. A large internal toe pad expands the perimeter weighting to make it Ping’s most forgiving and longest hybrid ever, the company promised. The stainless steel hybrid’s unique shape features an iron-style face and hosel design which positions the center of gravity closer to the face to increase launch angle and reduce spin. It will be available in five lofts with an MSRP of $160 with a steel shaft or $185 per club with a graphite shaft.

For players who prefer a traditional hybrid shape and size, the stainless steel i15 offers a high moment of inertia with a tour-preferred trajectory. Internal weighting positions the center of gravity low and back to produce the penetrating ball flight that gives players the control to hit a variety of shots from most any lie. Stronger lofts contribute to lower spin rates for additional control. It will be available in three lofts at $180 per club with a steel shaft or $210 in graphite.

The clubs have already been introduced to the Ping Tour staff in the last month. “The early feedback from our Tour staff has been very favorable,” added Solheim. “Several players put the product in play immediately and others will wait for the opportune time. I was at Turnberry for the Open Championship and had several great comments from the pros.”

“Custom fitting continues to grow in importance for golfers wanting to improve their games,” the younger Solheim added. “What we’re learning from our nFlight Fitting Software and other research is being incorporated into our development process. It’s leading us in some very interesting and exciting directions as we look for ways to help lower scores and make the game more enjoyable.” Look for the G15 and i15 clubs to begin appearing at retail in September.

IT IS WHAT IT IS: Callaway Golf Company (ELY: NYSE) reported second quarter sales of $302 million, a 17% decline from a year ago when it achieved $366 million in the same time period. The bottom line saw fully diluted earnings per share of $0.10 (on 66.8 million shares outstanding), compared to $0.58 (on 63.9 million shares outstanding) in 2008.

For the first six months, the Company reported net sales of $574 million, a decrease of 22% compared to $732 million in the similar time in 2008. Fully diluted earnings per share for 2009 were $0.21 (on 65.1 million shares outstanding) compared to $1.19 (on 64.4 million shares outstanding) in 2008. The economy has taken a toll on many and these numbers indicate what it’s represented to Callaway specifically to this point in 2009.

Breaking down Big Bertha’s category sales, its wood’s business for the quarter was $76 million n sales, compared to $86 million in 2008. Year-to-date wood sales have decreased by 23% to $156 million compared to $203 million last year. Sales of Callaway irons and wedges for the quarter were $72 million, compared to $100 million a year ago. Year-to-date sales in the iron category stand at $137 million compared to $197 million last year. Golf ball sales came in at $58 million for the quarter compared to last year sales of $74 million. Year to date our total golf ball sales declined to $106 million compared to $133 million. Putter sales for the quarter declined to $26 million versus $33 million last year, with year-to-date sales at $54 million compared to last year of $67 million.

KEEP YOUR CHIN UP: Golfsmith (GOLF: NASDAQ) reported sales in the fiscal 2009 second quarter were $114.8 million compared to $130.0 million for the second quarter of fiscal 2008. Net revenues reflect a 9.5 percent decrease in comparable store sales and a 28.0 percent decrease in net revenues from its direct-to-consumer channel. Net income for the second quarter totaled $6.8 million, or $0.42 per diluted share. This compares to $8.6 million or $0.54 per diluted share for the second quarter of fiscal 2008.

Net revenues for the retail chain were $183.6 million for the six-month period ended July 4, 2009 as compared to $209.2 million for the six-month period ended June 28, 2008. The decrease in total revenue was due to a 10.3 percent decrease in comparable store sales and a 26.7 percent decrease in net revenues from its direct-to-consumer channel, according to the company.

Net income for the business totaled $1.7 million, or $0.10 per diluted share compared to $3.1 million, or $0.20 per diluted share for the six-month period ended June 28, 2008.

Top line sales in general throughout the golf industry have faired better than the bottom line in 2009. While the promotional business, i.e. buy a fairway wood for $1 has helped to generate activity and interest, it has done so at the expense of the profit line. Suffice is to say its a short term measure but should the recession hang on longer than anticipated it will clearly takes it toll on the golf retail business.

“The second half remains a challenge,” said Marty Hanaka, Golfsmith’s CEO. “On the plus side, we see more competitors closing that we’ve identified another 25 to 30 doors that close in the quarter. So the structural repositioning of the industry continues.”

The lifeblood of the business remains new products and the CEO made note of a couple of brands that he hopes will inject some added interest from golfers. “Ping is launching the G15. When the G10 launch, that came out two years ago, that carried on for well over a year because that customer wants the newest and latest Ping stuff and we want to be there first,” he said. “So, I think the appetite of their customer is strong. Now, is it as bigger as it was then, don’t know because, a lot of balance sheets have been corrected and there are probably fewer people that want it but we are going to get as much of it as we can. Same thing on Titleist, the AP1 and 2, when that came out, same thing happened, especially on the AP2 product. They couldn’t catch up to it, it was allocated for a while, I think they know that. You are going to see Titleist come out with new product in the fall for their AP1 and 2 families and when that comes out in November, I think people will be waiting for it. Mizuno has got some forged product. Cobra has forged product and some new drivers. And at the TaylorMade, their new R9 Irons are going to be spectacular. So, it’s great to see them coming out.”

Hope springs eternal as the saying goes...

JUNE GLOOM: The rounds played report was released for the month of June and it stated the amount of golf played in the U.S. slipped by 2.8% from a year ago. Despite the decrease in the month, on a year-to-date basis play remains flat (-0.1%) compared to 2008. Golf Datatech issues the report in cooperation with the National Golf Foundation, the PGA of America and the National Golf Course Owners Association.

STOCK WATCH: July was a hot one for stock prices as the Dow Jones Industrial Average managed to turn back the clock as it ended the month at 9,171.61, leaving the blue chip index up 8.6% in July for its best monthly performance since October 2002. It was the best July for the Dow in percentage terms since 1989, when it gained 9.04%.

The S&P 500 finished at 987.47 and gained 7.4% in July. It has risen an amazing 34.33% in five months, its best five-month span since October 1938. The Nasdaq Composite Index also has been on a roll at it closed out July at 1,978.50. It jumped 7.8% in the month and has risen 43.59% in the last five months, its best five-month stretch since March 2000, when it rose 54.15%.


HIDDEN GEMS RARELY DISAPPOINT: Looking for an escape? Lake Toxaway, N.C., is home to the state’s largest private lake and served as the summer respite of choice for some of the most prominent families (Rockefellers, Edisons, Firestones and Fords) in America during the early 20th century. The Greystone Inn at Lake Toxaway is now open for everyone to enjoy and it offers a destination where the North Carolina Mountains meet a crystal blue 614-acre lake.

Meanwhile, Lake Toxaway Country Club is set to debut the newest golf course in the mountains of North Carolina, a picturesque layout that carries the distinction of being the first original design by architect Kris W. Spence.

This $9 million championship course is scheduled to open Aug. 20. Spence, a Donald Ross restoration specialist who has done numerous course remodels, was charged with creating a design to maximize the property’s potential and be as special as its setting. Early reviews suggest he was up to the task. “What Kris has done on this piece of property is nothing short of amazing,” said head pro Lou Biago. “We’ve always had this beautiful setting, but the course was cramped and never took advantage of the scenery Mother Nature provided. It does now.”

Lake Toxaway rests high among the Blue Ridge Mountains between the Pisgah National Forest and the Nantahala National Forest along with its access to water. “I couldn’t ask for a better setting to create my first original 18 holes. Everywhere you look there’s dramatic scenery, from mountains with rock outcroppings to stunning lake waters,” Spence said. “There’s even a waterfall halfway up the mountain behind the fifth green.”

Spence spent a lot time walking the hills and valleys of the property, studying land forms and multiple angles of play. He decided upon a plan that reversed direction on nine holes, while repositioning five others. “My intention was to build a graceful, subtle design that’s both strategic and interesting,” he said. “I tried to create a course more in the mold of an Augusta style of play, where you have a lot of room off the tee and it’s very inviting off the tee. The game really begins on your shots into and around the greens.”

One of the ways Spence made the course inviting was by exposing vistas of the Blue Ridge Mountains. For owner Reg Heinitsh Jr., he is happy with his hunch to give Spence his first break.

“We really caught Kris at the perfect stage in his career. He’s on the cusp of greatness,” Heinitsh said. “Thanks to his talents, all of our amenities are now in balance. The lake has always been sensational. Now the golf course is sensational too.”

The course measures around 6,418 yards from the back tees with a par of 71. Lake Toxaway President David Dew says Spence was careful to create a course that accommodates golfers of various skill levels.

“When I look at the course, I see an excellent layout by all standards,” said Dew. “It’s challenging for low handicap golfers and fun for the medium to high handicap golfers. And it’s placed within a natural setting that may be unsurpassed on the East Coast.” Heinitsh and Dew expect the redesigned course to increase demand across all areas of the Lake Toxaway Company portfolio, from real estate sales and vacation rentals to resort packages at the Four-Diamond Greystone Inn.

“There is certainly a buzz. We’re fielding a lot of inquiries,” Dew said. “Reg Heinitsh had a vision of what this project would do for Lake Toxaway and that’s coming to fruition. We couldn’t be more pleased with the result.”

At 3,000 feet above sea level, on average Lake Toxaway, N.C. is considered to be at least ten degrees cooler than some of the Carolinas most popular destinations (Charleston, Columbia, Charlotte, Myrtle Beach and Greenville to name a few). For anyone suffering form the dog days of summer thanks to the mercury levels, it offers a cooler respite to enjoy the laid back summer days. “Whether you are looking for an upper-echelon golf destination that beats the heat or lakeside relaxation, you will find it at The Greystone Inn,” said Dew. For information on golf, real estate offerings, vacation rentals or resort packages, call Lake Toxaway Company at (800) 443-0694, or visit



Last Updated (Wednesday, 03 February 2010 09:52)



Web Street Golf Report


Monday, July 27, 2009

MAY FORTUNE FAVOR THE BRAVE: Making a buck in today’s economy is tougher than it’s ever been. For those in the golf industry the degree of difficult is higher for a variety of reasons. Some are out of anyone’s control and others are not. The world is a more complicated place today versus a year ago when consumers were counted on to spend more freely. Nevertheless, market conditions in a sense are the same for every business despite the fact it is trickier to navigate.

Two weeks ago Callaway Golf (ELY: NYSE) pre-announced its second quarter operating results, which it will confirm later this coming week. The company stated worldwide sales would be off 17% from a year ago coming in at $302 million. It expects to see a profit of $6.7 million compared to $37 million in 2008.

Fortune Brands (FO: NYSE) delivered its second quarter operating results last week. The company’s golf division saw sales down 19% from a year ago coming in at $365.8 million (versus $452.4 million in q2 ’08). It announced an operating profit of $43.6 million in the reporting period. “On a constant currency basis, sales were down 14%. While sales were off 20% in the U.S., they were off 5% outside the U.S. on a constant currency basis,” Fortune Brands, CFO Craig Omtvedt explained. “Sales were down in the double-digit rate across product categories. While the premium priced Titleist ProV1 golf family has grown market share year-to-date in a competitive category, our golf ball sales were adversely impacted by two key factors: softer demand for other models, and sharply lower corporate custom-imprinted orders,” he continued. “Despite the challenges in competitor promotional activity in the golf ball segment, we grew our industry-leading golf ball unit share on a year-to-date basis at on- and off-course U.S. golf shops.” The moneyman added, “Impacted by soft industry conditions, sales of FootJoy golf shoes were off at a double-digit rate against a double-digit increase in the year-ago quarter. And sales of gloves and accessories were off versus a solid performance last year.”

Year-to-date, the Acushnet Company (Titleist, FootJoy and Cobra Golf) has sales of $712.8 million, down 16% from 2008 when sales were $848.8 million. It has earned a profit of $52.6 million, which is less than half of where it stood a year ago ($119.6 million). “While we expect to continue to outperform the industry, operating income before charges in golf will be negative in the back half of 2009 due to seasonality and lower volumes spread across our fixed cost base,” Omtvedt stated. He estimated foreign exchange rates would impact the company’s operating income by $25 million for the year.

“This has emerged as a very challenging year for the golf industry. In this cautious consumer environment, golfers are deferring discretionary purchases and spending less associated with rounds they play,” said Bruce Carbonari - Chairman and Chief Executive Officer for Fortune Brands. “The pull back in discretionary spending has hit the golf club market especially hard.

While total industry shipment of golf balls are off at a double-digit rate, the high end of the golf ball category is holding its own. In fact, it's gaining a larger share of the overall golf ball market. The steepest declines of golf balls have been in the custom orders placed by corporations, a segment that represents about 20% of the golf ball market in the United States,” he said. “Participation has remained relatively solid, with rounds of play up modestly in the U.S. through May. Even so, we anticipate rounds of play will contract this year in both the U.S. and in Europe,” he said.

Meanwhile, the golf division has taken painful, yet necessary steps to position itself for the future. “Over the course of the past year, we have reduced the number of worldwide positions in our golf business by 13%,” the CEO stated. “The international piece of our golf business continues to increase as a percentage of our overall sales. As we make targeted investments to pursue promising growth opportunities, such as Korea, where we are growing rapidly as the game continues to grow in popularity, and in Japan, where we're gaining share in a market where we have significant upside for growth. We are moving forward with plans for our golf ball production plant in Asia that will more efficiently meet growing demand in these markets.” Carbonari said the facility has already broken ground.

“We will also work hard to reduce our cost structure in golf and aligned our supply chain with industry conditions,” he said. “We will continue to make difficult decisions to reduce positions at all levels of the organization. That includes shift reductions, operational streamlining, and the closure earlier this year of a golf shoe production facility in the U.S.”

It remains to be seen when better days lay ahead both for the economy as well for golf. But the Acushnet Company by virtue of its downsizing, is prepared for market conditions to persist rather than bounce back.

HEARD ON THE TEE: Look for Ping to introduce two new lines of products sometime this week. Various Internet reports have surfaced in recent weeks over the company’s new G15 driver, which Mark Calcavecchia used at the Open Championship at Turnberry and played a helping hand in recording nice consecutive birdies at last week’s Canadian Open.

Its also rumored that Ping has a i15 line to complement the G15, which if accurate would mark two family extensions simultaneously from the company. There is also talk that nano technology is involved in the new product launches, Ping is showing at its annual worldwide sales meetings in Phoenix this week.


CHANGE IS A COMIN’: Predicting the future is impossible. However, history is often leaned upon to help recognize trends that may be mirrored in the days yet to come. It isn’t foolproof but it can be an aid towards the unknown.

Golf has some unknowns heading into 2010. The one that is likely to capture the most attention is the change in groove configurations. How much it will influence the outcome of tournaments is unclear. Whether it’s the same players who reside near the top of the earnings list or enter the winner circle may or may not be in some jeopardy. “I heard Tiger Woods is already playing with the new grooves for next year,” Greg Norman said from the Senior Open Championship at Sunningdale. “Smart move.”

Another major champion, Tom Lehman noted that in some ways golf in the US has become one-dimensional but he sees that changing. “ I would hope that the public would say, you know what, I'm kind of sick and tired of these 7,700-yard courses where only guys that hit 350 can win,” he said. “It's fun to watch guys that hit shots have a chance. You play a wet course like Bethpage where only those who can hit it 330 have a chance, versus a Birkdale in the wind and at Turnberry in the wind, you realize that there's a lot more to golf than just hitting a long ways.”

Lehman believes the new groove implementation will cause a ripple effect in how the game is played as well the equipment players use in competition. “ I think what you're going to see is the ability to use a really hard golf ball in order to achieve maximum distance being somewhat diminished,” Lehman stated. “ And they (Tour players) will look for that recipe that still gives them a lot of distance but gives them back some control, because without square grooves out of the rough, it's tough to control your golf ball. We all know that. You'll see guys playing a softer ball, one they can spin more and one they can control more,” he predicted.

“Shot-making. You know, I liken it to baseball where a pitcher has four or five great pitches versus a pitcher who has one great pitch,” he said. “I think golf has gotten to be a power game where guys hit it one way, they just hit it hard, hit it high, and let square grooves help them out where they need on position. Whereas guys who are older grew up having to hit high, low, left-to-right, right-to-left; the Corey Pavins of the world will be ecstatic next year when shot-making becomes more of a premium,” Lehman concluded.

LEE TREVINO FINDS LOVE AT FIRST STRIKE: You’re never too old to fall in love and the merry Mex, Lee Trevino is living proof. “This spring, I was playing a round with some friends and stumbled across the B330-RX on the course,” said Trevino. “It was like love at first strike. I couldn’t believe how far I hit the ball and neither could my playing partners. Not only did this baby go off the tee, but also the performance on and around the greens was pure tour. It was then that I realized that I had found the Holy Grail of golf balls.” And a partnership was born as Bridgestone Golf announced it has reached an agreement with the 6-time major champion to endorse the company’s popular Tour B330-RX golf ball.

“The way all of this came together is still amazing when I think about it,” said Dan Murphy, Senior Director of Marketing – Bridgestone Golf, Inc. “After Lee found the B330-RX he came to us and wanted to order some balls for a Boy Scout Tournament he was involved in because he was so impressed with how well they performed for moderate swing speeds. In hearing Lee tell his story, we thought it was perfect for an ad. One thing led to another, and now here we are, proud to be associated with one of the greatest and most recognizable golfers of all time.”

As part of the arrangement, Trevino will play the B330-RX in all professional and exhibition appearances this year, and will star in an upcoming ad with Fred Couples. Recently, Trevino joined Bridgestone Tour Team member and the US Presidents Cup captain Fred Couples at Robert Trent Jones Golf Club in Manassas, VA, to film the newest spot, which is set to break during Buick Open coverage on The Golf Channel on July 30th. However, for those who can’t wait a sneak peak is available through YouTube at

TICK, TOCK: The waiting game continues for shaft maker True Temper. The company, which is in default on its credit facility, was granted another extension. It now has until August 17, 2009 to work towards finding a solution to its financial capital challenges.

As of March 29, 2009, it listed its long-term debt at more than $271 million. On March 16, 2009, it did not make a payment ($20.0 million including $17.0 million in borrowings and $3.0 million in outstanding letters of credit) then due on its revolving credit loans. It also did not pay interest on the same day that was due to the holders of its 8 3/8% Notes, which has a face amount of $125 million.

The non-payment triggered a default with its credit facility. It was originally given a 90-day forbearance with all of the lenders in the company's revolving credit facility. Under the terms of the forbearance, the lenders agreed not to exercise their rights as a result of this default through June 16, 2009, provided True Temper adheres to the requirements of the forbearance terms. It was given an additional 30 days after the 90 days expired. This marks the second 30-day window its being provided to find a means to settle its debts. For those who are unfamiliar with this situation, True Temper’s first quarter sales were off 48% ($18.4 million versus $35.8 million) from a year ago. Second quarter (which ended in June) results have yet to be released.

The Company's non-compliance with these debt covenants, decreasing revenues resulting from the current global economic downturn, and substantial annual cash interest payment requirements raise substantial doubt about its ability to continue to operate under its existing capital structure.

WHATEVER THE MARKET WILL BARE: Golf is a game that prides itself on tradition and playing within the rules. Its difficult not to dispute these points, however its also fair to say it doesn’t necessarily cover everyone’s’ feelings.

Market forces being what they are these days, an interesting situation has popped up regarding retail sales of a golf ball. While there are no shortage of choices available or prices for consumers to consider, one unlikely suspect appears to be gaining some traction that flies against the face of tradition and rules.

A ball, clearly marked, “Illegal” has run some test sales at the corporate stores in Oklahoma City, OK for Golf USA. Foo King Long, no joke, has seen some interesting market acceptance by consumers. According to Web Street sources, speaking on the condition of anonymity, the ball, priced at $24.99 a dozen, out sold such familiar models such as Top-Flite D2 15 ball pack, Titleist DT Carry, Bridgestone’s E7+, TaylorMade TP Red and Black, along with several other recognizable names over the last 90 days. According to sources, the Foo ball, ranked 15th overall in sales by volume despite no attempts to “push” the product on consumers. There appears to be an argument that can be made that at least for now, a segment of the market is interested in alternative products regardless of the USGA rules for handicapping.

FINDING EQUILIBRIUM: Demand and supply is often overlooked in discussing today’s economy but one golf course tipped the scales in its favor to stimulate the desired results it was looking for. The Tobiano golf course and residential community (approximately 10 miles west of Kamloops, B.C., or a three-hour drive from Vancouver, and the Canada/US border) held a 50% Off Win/WIN! sales campaign back on Saturday July 18. It generated 16 lots sold, with additional sales pending, according to the company, in just 48 hours.

Offering one-quarter to one-half acre lake-view, golf course and equestrian lots from $139,950 to $249,950 the 50% Off Win/WIN! campaign was announced in full-page advertisements in Kamloops, Calgary, Edmonton, and Vancouver newspapers and through

“We are extremely pleased with the reception of our aggressive 50%-off Win/WIN! campaign,” said Michael Grenier, President of Pagebrook Inc., developer of Tobiano. “Prospective homeowners can pair our exceptional lot values with today’s significantly reduced construction costs to achieve a completed dream home in one of Canada’s premier resort communities for approximately $460,000 - $580,000. It is an exceptional opportunity for those in a position to capitalize on today’s new market reality.”

The additional “Win” for the resort development will be the retirement of the infrastructure financing used to construct the Tobiano resort development.

“Our award-winning golf course and the resort’s horizontal infrastructure [roads, water, sewer, telecommunications, power, gas] are all in place and operating,” Grenier added. “Prospective purchasers can see that this is a real project which is extremely important in today’s economic reality. We are particularly excited to move onto the vertical phases of our development; building the retail village and on-site golf accommodation. We want to wrap-up the original infrastructure financing, and take advantage of today’s reduced construction costs ourselves while we can.”

Construction of the Tobiano resort began 43 months ago. Primary infrastructure including the resort’s golf course, municipal water and sewer treatment plants, reservoir and water pumping station were followed by the extension of approximately 6.5 kms of internal paved roads and underground services, and the relocation of 1.4 kms of the Trans Canada Highway. A 220-slip marina and multiphase equestrian centre will be under construction later this year. Over 320 detached lots and townhouse sites have been purchased, with the first homes and town homes now being completed and occupied. Tobiano was awarded Best New Golf Course in Canada in 2008 by SCOREGolf and Golf Digest magazines.

DARE TO BE DIFFERENT: Its been said that necessity is the mother of invention. Now it can be debated what is or isn’t necessary but that is truly in the eye of the beholder. For Paul Hartog, a self-described golf addict, his necessity also became an obsession. Playing his home course in the Netherlands, he noticed that while golf was rejuvenated and the equipment almost space aged, the clothing still looked outdated to him. When he couldn’t find golf apparel he wanted to wear, he decided to launch a golf-clothing brand. He co-founded Golfjunkie, which is based in Arnhem, which some consider to be the fashion capital of the Netherlands. The company designs and manufactures a winter and summer collection for men and women featuring an edgy mix of street, fashion, and comfort. The company recently reached an agreement with Lanctôt out of Montreal, Canada to distribute its products.

“I know that men and women golfers – and fashion conscious non-golfers – will love Golfjunkie as I do because it is young, trendy, fashionable and rebellious at the same time,” said Linda Di Genova, Brand Manager, Lanctôt Ltée. “ I have not seen anything like it in the golf market. There is nothing out there even close to Golfjunkie. It’s going to be a lot of fun.”

“Golfjunkie was looking for a professional and well-organized partner who understands the concept and the potential of the brand,” said Hartog, one of six Golfjunkie co-owners. “Lanctôt was the 100 percent match.”

The unique Golfjunkie style may best be characterized as clothing designed with a golf twist. “When I talk with customers, they tell me every line looks the same, that there is nothing new and different,” Di Genova added. “Well, Golfjunkie is definitely new and different, and very exciting.” With the unveiling of the Golfjunkie 2010 line, Lanctôt said it would bring the new apparel line to the finest golf shops and retail outlets across Canada. The company has four divisions: optics, skiing, hockey, and apparel and inside the golf clothing division it handles several brands including Jack Nicklaus. For more about Golfjunkie and the line visit

STOCK WATCH: Wall Street appears to be liking what it’s hearing from corporate American as earnings report cards are coming in with above average grades. The optimism has pushed the major stock indicators up 11 percent in the past two weeks, which are their best levels since last fall as hopes for an economic recovery take hold. While the rest of main street may not be quite as overjoyed, its worth noting that in the past 10 days the Dow Jones industrial average has jumped 947 points and broke through the 9,000 barrier for the first time since January. For the week, the Dow rose 4 percent, the S&P 500 index added 4.1 percent and the Nasdaq rose 4.2 percent.

But just as euphoric as the bulls on Wall Street may be feeling, the banking industry continues to see its challenges. Waterford Village Bank of Clarence, N.Y., became the first in New York State this year, according to the Federal Deposit Insurance Corp., to require an intervention. The news surfaced that six subsidiaries of Macon, Ga.-based Security Bank Corp. were closed by regulators, bringing the number of U.S. bank failures in 2009 to 64. The Federal Deposit Insurance Corp. said Pinehurst, Ga.-based State Bank and Trust Co. has agreed to assume the six failed banks' deposits. The six banks, with a total of 20 branches, had about $2.4 billion in deposits as of March 31, the FDIC said.


STAY IN TOUCH EVEN IN THE AIR: In early 2010, US Airways fleet of 50 Airbus A321 aircraft will become the equivalent of flying hotspots with the addition of Gogo Inflight Internet Wi-Fi service. The company said it has partnered with Aircell, which it terms an industry leader, to offer full internet access, productivity and entertainment of its Gogo system to anyone with Wi-Fi enabled laptops, smartphones and PDAs. If this service is available on your flight, you'll see a Wi-Fi icon when you’re booking your flight on starting in early 2010.
The cost for the service has yet to be determined, but Aircell's current prices for Gogo Inflight Internet range from $5.95 to $12.95, depending on the length of flight and type of Wi-Fi enabled device used.

The Federal Communication Commission (FCC) currently prohibits the use of cell phones in flight because they rely on cellular technology, which operates at a wireless frequency that could potentially interfere with the aircraft’s electronics. Gogo Inflight Internet operates using Wi-Fi technology, which runs on a different frequency that is FAA-approved and considered completely safe. Passengers who access the service will only be able to use the Wi-Fi feature (airplane mode) of a Wi-Fi enabled smartphones and PDA devices.

If the service is successful with passengers, it offers the airliner an opportunity to access incremental growth revenue possibilities as the cost of the service would the equivalent of an adult beverage or two. It would allow business travelers to remain in contact with clients and or the company by accessing email.

The company currently offers service with American Airline, AirTran, Delta, United and Virgin America.

AFFORDABLE OPTIONS FOR ISLAND GOLF: Pawleys Plantation Golf & Country Club in Pawleys Island, S.C., has announced three new golf packages that will be available throughout the summer. Each features a variety of playing options, spacious villa accommodations, and daily breakfast.

The “Divots & Dunes” package, priced at $234, includes three-nights accommodations (third night free) and two rounds of golf — one round on Pawleys Plantation's Jack Nicklaus signature course and one round at the Founders Club. Golfers have the option to replay either course for just a cart fee. The ‘'Divots & Dunes” package is valid through August 31, 2009.

The “High Value Lowcountry” package, priced at $329, includes three-nights accommodations and three rounds of golf. Golfers will play one round at Pawleys Plantation and choose two of the following courses to complete the package — Wachesaw East, The Tradition, Litchfield Country Club, Blackmoor or the Preswick Country Club. This package is valid  through September 9, 2009.

The “Pro’s Choice” package, priced at $355, includes three-nights accommodations and three rounds of golf, a one round at Pawleys Plantation. Players can choose two of the following courses to complete the package — Founders Club, Willbrook, River Club, Arrowhead, Wild Wing Avocet, Man-O-War, The Witch or The Wizard. The “Pro’s Choice” package is valid through September 9, 2009.

All rates are per person, do not include applicable taxes and service charges and are based on double occupancy. Additional information is available at or by calling 877-763-7345.



Last Updated (Wednesday, 03 February 2010 09:54)



Web Street Golf Report


Monday, July 20, 2009

HOW’S BIZ? These are indeed challenging times for all business owners. The global recession has been felt in many walks of life including those that typically are somewhat insulated to the ebbs and flows of an economy. The Open Championship is one of those that weren’t inoculated, but it’s managed to hold its own. “Like almost every sport and organization, the corporate sales are down. And that's just a fact of life,” said David Hill, director of championships for the R&A. When he was pressed for a number to identify the weaker sales, he responded, “It depends on what you compare it with, because in England corporate sales are always stronger, just because it's a much bigger area. The best comparison would probably be with Carnoustie (2007) in Scotland, and on that basis they're about 20 percent down,” he said prior to the start of play last week. “What is interesting is that the public sales are up, which maybe reflects the fact that people are not traveling overseas for holidays and staying at home.” According to Hill, there was a late rush for last-minute ticket requests through the Internet to attend the Open at Turnberry. He estimates the attendance figures to be over 120,000 for the week, which is up from the last time it was held on the Ailsa Course in 1994. Attendance then was said to be 114,000. “Obviously it's not as high as other venues, and financially the R&A doesn't -- the bottom line is never as good at Turnberry as it would be at certain other venues, but we take a sort of 10- to 15-year view,” Hill said.

That view might come in handy for a strategy it deployed this year where it offered transportation and tickets from several local golf clubs to attend the Open. “The take-up from the golf clubs was a little disappointing,” said Hill. “But in all the e-mails that we received, it does seem that it's almost too new a concept for golf clubs to take on board to get on a coach and get 30 people on it. I can't remember the exact number, about 20 clubs or so have come aboard, but most of them have just said, hey, we're coming to The Open, but we'll make our own way there.”

Meanwhile, a couple of English hopefuls who made it to the weekend told the Guardian they noticed Turnberry wasn’t as busy as past venues.

Paul Casey remarked after his opening round that, "Hopefully a few more people come out over the weekend" while Justin Rose remarked, "I noticed it [the low crowds], very much so. I was saying to someone out on the course that you would expect the stands to be pretty full by Friday lunchtime and they were a quarter full. It is a sign of the times maybe." Lee Westwood added, “I think the current economic climate does Turnberry no favors. I think it's a fantastic links golf course, and it would be a shame if it wasn't on The Open rota.”

AMERICA IS DEAD: Greg Norman made a name from playing golf and then used it to parlay into a business career. Norman has been involved in many different ventures, including once upon a time having a stake in Cobra Golf before it was sold to Fortune Brands (FO: NYSE). Until last year at Royal Birkdale when he turned temporarily back the hands of time, his playing career was essentially dormant as most of his time was devoted to his various business interests. While he is known for his golf, business has been the majority of his focus in recent years and he was asked prior to the start of play at Turnberry how the economy has affected his world.

“My business is like any business. You have to make adjustments,” Norman stated. “If you become reactionary to a situation you're probably in a bad state. If you're proactive to it and you know you've prepared yourself for moments like this -- nobody can really pick when a recession is going to hit, nobody really knows to the magnitude of what it is, but if you have a good business model and you have the flexibility and adaptability to work with that you can get yourself through it,” he continued.

“I've had to make changes. I've unfortunately had to lay off people, which is not a good feeling,” he revealed. “It's the first time in my entire life, in my short business life of nearly 20 years that I've had to do that, because of the golf course design business. America is absolutely dead, and it doesn't look like it's going to come back for quite a while, to tell you the truth. This is in golf course design I'm talking about.

“We see, in our business, the rest of the world leading the come back from the recession before the United States. I think the United States has got a lot of understanding of regulations that are being put in place by President Obama. Those regulations are different than what we had before. It's kind of like the free market enterprise that it used to be. Entrepreneurs had a great way in the United States, and now there are a few more encumbrances on us to really go. So we have to understand those as we go forward. And some of them are still being written. And it will probably take ten years to really understand them once they get into maturity and then try to figure out what's going on. It's not good out there, especially in the United States. But in our world and the world of sport I think we're very lucky to be in the position we are in. I feel for everybody in this world with the recession, where every one of us has been affected to some degree. It's one of those things, we have to suck it up and go forward with it. ”

Coming back on the topic of golf, the Great White Shark does see some potential opportunities on the horizon. “If golf gets in the Olympics, look out the rest of the world,” he predicted. “I think golf will really take off in China. The growth in China right now is like 50 percent a year in the number of players. They estimate by 2020 there will be 26 million golfers in China; that's more than the United States or anywhere else. So if we all study what's happening in China, then golf, all of us are going to be much better off and there will probably be more events there and it will be a destination to go to.”

Norman the businessman can recognize an opportunity and it isn’t domiciled to one geographical location. “You have to put ideological thoughts and opinions aside; you have to see where the growth of our game is going to go,” he explained. “And that goes into a lot of places. We see development in the Far East. We see right now Vietnam is doing very good. We see Laos and Cambodia. I'm building three golf courses in Vietnam, one in Da Nang and one on China Beach. And you think oh, my gosh, you only have to go back in a period of time, and you think these are all American dollars coming in,” he continued. “And it goes to show you time is a great healer for many things, just what happened in Japan and Germany and stuff. Same thing will happen in the rest of the world. We'll all work our way through it.”


IT’S A BIG BOYS GAME: The Shark also shared his thoughts on the equipment business. An area he has had some experience with. “I had a very small part of MacGregor,” he began. “People thought I owned it outright, but I did not, I only had a small percentage. And there was a management buyout. There was a management buyout in the UK and in the United States. We still owned the intellectual property up until a certain period of time, just recently, and we sold that off to a retailer. 
It was a decision that the senior shareholders wanted to do. I supported it. The survivors in this game right now in the hard goods business are Wall Street brands. The middle tier and the lower tier brands are going to get killed, because the Wall Street, being the Nikes and the Callaways and those guys, and the Acushnets of the world, they've got the volume and they've got the penetration to be able to survive through this. But the mid-tier brands or the smaller brands, they're going to have a harder time. And that's where we kind of saw the writing on the wall and we got out while we could.”

SOMEONE IS HAPPY TO SEE CHANGE: The old saying still applies even in today’s fast paced, modern world. You can’t please all of the people all of the time, which is maybe the most appropriate way to describe the never-ending debate over the place technology should have in golf. The PGA Tour upheld its decision to move forward with the rule change towards V grooves in 2010 and despite the grumbling of some, it managed to please one important constituent. “It was pretty important to us that the Tours upheld the timing of the condition of competition for January 1, '10, and we're very pleased that they have done so,” said Peter Dawson, chief executive of The R&A. “Tim Finchem, when his board began to have some doubts about it, consulted very widely, including ourselves and the USGA.

BEEN THERE, DONE THAT: Despite coming ever so close to winning the Open Championship at age 59, Tom Watson wouldn’t mind a chance to sit on top of another perch. “ If I were commissioner for a day or if were commissioner for ten years, I would do three things; I would roll the golf ball back 10 percent,” he began. “ The golf ball, we've exceeded the distance it should be going. I'd get rid of square grooves, and they're going to do that in the States. And the other thing is I would reduce the size of the head of the driver, say you can't have it 460; you can have it 240 or 250, and that's it.”

Watson captured the attention of the golf world on the Ailsa Course at Turnberry, last week, which over looks its namesake Ailsa Craig located to the west it. His game from tee to green looked as if it hadn’t skipped a beat over the 72-hole competition. His experience, especially on links golf, appeared to give him an edge heading into the play off. When he went around Turnberry back in 1977 to claim the Claret Jug his clubs looked a little different than they did in 2009. “Has anybody here taken an old persimmon head driver and hit it recently?” the five time Open Champion asked. “I couldn't hit the sweet spot if it saved my butt. No way I could hit the sweet spot. They have that big old thing and you swing it as hard as you can, and if you miss hit it off center it still goes out there. It makes you sloppy,” he stated. “The big-headed clubs make you a little sloppy. That's what I would do. But is it going to be done? No. Square grooves, yes. But rolling back the golf ball, probably not. And the big-headed driver, probably not.”

Turnberry will be the last Open Championship where square grooves are in play and a year from now will be the first time anyone will see how much of a difference it makes towards scoring. One person who is looking forward to St. Andrews, host to the 2010 event is last year’s surprise dark horse, Greg Norman. “ I really think St. Andrews, the way it played a couple of years ago, suits any player, especially with the new groove technology coming in next year,” the Great White Shark said. “ I think the younger generation have never experienced it, don't have a clue what is going to happen to their game. They better start making the adjustment very early on before January comes here. When you go to a British Open style where you can't spin the ball as much, the whole game of golf is different. So I actually look forward to it.” Watson echoed his feelings, “ It's going to be interesting to see how the square grooves work.” In the meantime Watson let his clubs speak for him at Turnberry. It will be interesting to see what effect the new groove policy will have next year at St. Andrews...

MORE BLUES FOR BIG BERTHA: Callaway Golf Company (ELY: NYSE) revealed its preliminary financial results for the second quarter. The backwards trend in sales remains as it stated it expects to see a decrease of 17% from a year ago. It estimates revenues of $302 million compared to $366 million for the second quarter of 2008. The weaker American dollar hurt its sales by $19 million in the quarter, Callaway said. Big Bertha anticipates earnings (per diluted share) to be approximately $0.10 (on 66.8 million shares) compared to $0.58 (on 63.9 million shares) it earned for the second quarter of 2008.

“Consumer spending is recovering more slowly than we had anticipated and market conditions remained soft in the second quarter of 2009 in both the United States and internationally,” commented George Fellows, President and CEO of Callaway Golf in a press release. “Despite this challenging environment, we were able to outperform the market and gain market share in almost all categories, which is a testament to the strength of our brands and our products,” he added. No mention of $1 fairway woods helping the cause or free FT-iQ drivers, nor whether the market itself is growing or contracting on a macro basis. But in these trying times, we look for any silver linings to cling to. Its a safe best to say the market share gains, Fellows referenced are in the number of units sold at retail versus any sustainable long term dollar amount.

Callaway currently estimates that sales will be down approximately 15% to 17% for the year due to factors beyond its control such as the macro economy as well as the promotional turn the equipment segment has taken. Meanwhile, it has demonstrated a propensity to be as aggressive, if not more so than its peer group in 2009 towards this business strategy. However, any added potential sales volume in the equipment market comes with lower profit margins since price is clearly being used as a stimulus to promote a possible sale.

The Company estimates that full year operating expenses will be approximately $370 to $380 million, as compared to its prior estimate of $375 to $390 million, and as compared to $403 million in 2008. While it should be applauded for cutting its costs given the market conditions, its crystal clear that management has been slow to adopt the appropriate measures or underestimated the power of its brand given the new world that is present. A reduction to get to the lowest level of $370 million would represent a $33 million cut back from 2008. This however is only an 8% cut back whereas its already forecasting annual revenues will be down double that rate. So suffice is to say, management’s inability to properly anticipate or forecast its business year will influence its bottom line, which appears to be headed towards the red. Management hasn’t made the appropriate adjustments and should sales remain weaker, it will likely be a case of it chasing its cost structure (and tail) as it reacts to contracting revenues.

“While we are disappointed with the pace of the economic recovery, we believe that the current conditions are temporary and we remain optimistic about the Company’s prospects and the golf industry over the long-term,” emphasized Fellows. However, he isn’t able to offer any insight into how long the temporary conditions may in fact remain present. Perhaps he is keeping this valuable information back for the second quarter conference call with analysts on July 29th. “Underlying our optimism is the fact that rounds played in the United States are up for the year reflecting consumer interest in the golf category. We also continue to gain market share, reduce operating expenses, and realize savings from our gross margin initiatives, and we have a strong balance sheet and ample liquidity. These factors, together with the strength of our brand and expansive global presence will allow us to take advantage of opportunities as the economy and golf industry continue to recover.”

While rounds played appears to be holding steady, it hasn’t shown any direct relationship to equipment purchases for any manufacturer given the economy recession has disrupted this in 2009. Fellows points to a “strong” balance sheet, however only five weeks ago it needed a $140 million preferred stock deal since it was unable to amend its credit facility. It has cut back on its spending but not nearly enough given it has underestimated the market conditions at retail with consumer spending. For example, five weeks ago when it was in the midst of its convertible preferred stock offering, Callaway forecast its second half sales would be flat. As of now, it said it would be down. The question is by how much... Callaway shares closed on Friday down 10.44% in trading on the news of its weaker operating results.

IS THE WORSE OUT OF THE WAY? There are reports that golf on the emerald isle is getting squeezed. Call it a case of over supply, but some courses are succumbing to the economic realities that no longer make it viable for them to remain in business. The Irish Independent reports that golf courses could fall victim to the credit crunch as demand is over matched by supply. To read more click here.

MORE THAN ONE WAY TO SKIN A CAT: While the impending rule change for now is simply talk, soon it will be reality. In many ways equipment companies are already living in this world as they are counted on by players to find alternatives to compensate for the upcoming rule change. As its been said, through adversity comes opportunity. The tricky part is marrying the two but it can be accomplished and time will tell who it is that solves this equation.

Japanese club maker K.K. Endo Seisakusho is of the opinion it can enhance spin produced through wedges by modifying the center of gravity. It’s an alternative way of approaching (pun intended) an answer versus focusing on the groove pattern. The IP Golf Guy, David Dawsey spotted the following patent filing US Pub. No. 20090176596 titled “Wedge Type Golf Club Including Pitching Wedge, Approach Wedge, and Sand Wedge.” Take a look for yourself and see what you think.

Bridgestone Golf is looking at dimple patterns on the golf ball as another way to offer an alternative. Thinking outside the box, the dimple pattern in a patent filing (USPN 7559857) appears more like the outline of a putting green that it does a traditional circle that has changed in size over the years. For those interested in seeing the illustrations and reading more on the topic, click here.

HERE TODAY, GONE TOMORROW: The Golfer’s Warehouse has filed for Chapter 11 bankruptcy protection. A combination of factors were cited by the company, such as a lack of credit, deteriorating sales due to the general downturn in the economy, and an inability to purchase adequate inventory for its stores as reasons for its downfall. Along with its online presence, the company has six stores, including one in Cranston, R.I. another in Hartford, CT., and four in Massachusetts (Natick, Braintree, Danvers and Burlington). It has 107 employees.

Golfers' Warehouse Inc. stated it had about $28.4 million in sales for the year ended Dec. 31, 2008, according to court documents. As of May 31, 2009, the company had assets totaling about $15.8 million and liabilities of about $20.8 million, court papers showed.

Its primary secured creditor is Wachovia Bank, which is owed about $1.5 million. (Wachovia's claim is secured by a lien on nearly all of the company's assets.) The company has plans to sell substantially all of its assets including its six stores to Worldwide Golf, a California-based retailer. The deal is believed to be for $3.6 million, including $3.1 million in cash and $500,000 in liabilities that World Golf would assume - including all customer gift cards and other such customer arrangements. The figures are subject to revision.

Golf Clubhouse Inc., of Ponte Verde, Fla., owns golfers’ Warehouse and its creditors include the usual suspects such as Callaway Golf, Nicklaus Golf Equipment, Titleist, Top Flite, Nike and Under Armour.

Government entities listed as creditors include the City of Cranston, the Rhode Island Division of Taxation, the Massachusetts Department of Revenue, and the Connecticut Department of Revenue Services

Media companies are also listed as creditors such as Rhode Island radio and TV stations, New England Sports Network; Golfing Magazine, and a number of newspapers, including the Providence Journal, New Haven Register, Hartford Courant, Boston Herald, Boston Globe to name but a few.

JACK GOES FORE A MAKEOVER! This is a bit of a curious one but then again we heard the Golden Bear sent his first text message (with help from wife Barbara) last week to Tom Watson, so maybe it isn’t as odd as it might appear. The Nicklaus Companies and David Chu Management Group (DCMG) have established a strategic partnership to develop and evolve the Nicklaus Brands in the lifestyle category. Given the world we now live in and the age of the Golden Bear, presently 69, it might be a stretch to accomplish. However, Tom Watson reminded us that age is nothing but a number. While many of the golf fans that are enamored with Nicklaus likely don’t think of him in his “golden” years, its fair to say they are past their own prime and not as vulnerable to marketing strategies as they once upon a time may have been.

Chu will work with Nicklaus Companies in the planning and development of a new vision for Jack Nicklaus, Nicklaus and Golden Bear products. Everything from product design consulting and creative direction to distribution strategy, brand management and new business development are said to be among the items under consideration for an overhaul.

"This is an important day for our business as we develop long-term plans for all of our brands," said Jack Nicklaus, founder and chairman of the Nicklaus Companies. "To be able to form a relationship with David is a unique opportunity for us to tap the expertise of one of the world's most recognized designers and developers of successful brands. This is not business as usual."

Nicklaus Marketing, which will receive advice from Chu, has developed a global licensing business with sales of over $250 million, based on relationships with apparel companies and distributors in the U.S., Asian territories, and other emerging markets worldwide, dating over 40 years.

"I have always admired Jack Nicklaus and what he represents in the world of golf and sports," Chu said. "He has invested a lifetime establishing an iconic name that is globally recognized for being the best. Starting with apparel, I want to invigorate the Nicklaus brands by creating a compelling story through products with appeal that reaches beyond golf. This will be an important part of Jack's legacy."

COMING TO AMERICA? Nike Golf has created a new collection using CoolMax fabrics with Wool, which is said to be a combination for climate-control properties. The company has successfully introduced a variety of apparel items throughout the years that have focused on technological performance specifically towards heat. The latest offering intended for European markets only, incorporates CoolMax is a high-tech fabric that helps to improve comfort and freshness for the players who wear it by moving perspiration away from the body towards the exterior of the fabric, where it evaporates quickly.

Nike worked with ADVANSA, a wholly owned company of Haci Omer Sabanci AS of Turkey to create the line. ADVANSA’s manufactures and sells polyester intermediates, fibers and resin across the European, Middle East & Africa (EMEA) region. ADVANSA has developed special fibers, it said, which can be blended with wool.

Silvia Toledo of ADVANSA stated, “We are really excited that Nike Golf as a pioneer of technical fabrics, has introduced garments made from Coolmax with wool, which feature in the current range and in the newly launched Fall 09 collection. This gives wearers a good opportunity to experience high-performance and natural comfort benefits. It offers unparalleled comfort with excellent climate-control properties.”

Look for more details as the line as it is expected to be in Nike’s European Fall/Holiday 09 line. Two players that are expected to be using the new product are Paul Casey and Suzanne Petterson.

ARE YOU READY FOR THIS? When it comes to golf, the word Wii has essentially been spelled Wie as in Michelle. However, that looks to be changing as Data Design Interactive’s new “My Personal Golf Trainer” game for Wii features none other than swing analysis and lessons by David Leadbetter.

Incorporating the Wii Balance Board and new for 2009 Wii MotionPlus Controller, this game is the first to analyze the full golf swing in 3D space and give feedback to include weight transfer, grip, posture, alignment, swing path, angle at impact, swing speed, ball position, coil, tempo and more.

Using Leadbetter’s 7 Steps to a Better Golf Swing, “My Personal Golf Trainer” offers instructional videos and drills to help players improve their swing. It offers instructional videos and drills within each of these seven basics, so players can work to improve their swing step-by-step and then graduate from training mode to the practice range and onto a full 18-hole game. Within the 18-hole game, after each shot the golfer has the option to have feedback from Leadbetter and suggested drills for improvement.

The “My Personal Golf Trainer” is so sophisticated that it records the full golf swing from address to backswing; impact to follow through, in the full four dimensions. It then offers the opportunity to compare the users own swing with an ideal swing to identify areas for improvement. This can be displayed in 3D, and the user can view their swing from different angles, and animated slowed down or sped up for detailed analysis. Taking advantage of the new MotionPlus controller, which was just introduced in June 2009, “My Personal Golf Trainer” is the first golf game to actually record and analyze the full golf swing. To date, a few golf devices have given feedback on clubhead speed and angle of impact, but they are pricey and do not include analysis of weight transfer, swing plane or tempo, and do not offer individualized instruction and suggestions for improvement. It’s the equivalent of a virtual launch monitor but with swing tips.

“My Personal Golf Trainer” will be available in October at golf shops and computer game retailers, such as Best Buy and Wal-Mart for $50. To learn more about Data Design Interactive and its “My Personal Trainer” series, visit

STOCK WATCH: Heading into last week, stock prices were limping. However, the second quarter earning season kick started equities as if the wall of worry stocks were climbing had never existed. The Dow Jones industrials and the Standard & Poor's 500 index posted their best weekly performance since the week ending March 13, when the market's spring rally began. All the major stock indexes rose about 7 percent for the week. The upward move temporarily halted a decline that began in mid-June as investors worried the 40 percent jump in stocks this spring was overdone. Earnings season gets into full stride this week, which remains to be seen whether the outlook will remain quite so rosy.

Meanwhile, the American banking system continues to be under siege as Uncle Sam remains in the business of rescuing it. The FDIC on Friday came in and took over another Georgia bank making the failure rate in the Peach state at 10. It also seized South Dakota's BankFirst, making it the 55th bank this year that has required the US government’s intervention.


MAY DAY: Global airline passenger travel dropped faster in May than in the previous months, a trade group reported thus suggesting the skies are anything but friendly for airline carriers. The number of passengers flying on premium tickets fell 23.6 percent in May compared with May 2008, according to the International Air Transport Association. That follows a 22 percent decline in April. Meanwhile, the number of passengers flying coach fell 7.6 percent, after growing 0.3 percent in April.

Travel in first- and business class section is only 7 percent to 10 percent of overall airline travel, but accounts for up to 30 percent of passenger revenue. In May, revenue from those premium seats fell 40 percent to 45 percent, IATA said. Meanwhile, international travel fell 9.2 percent in May, the biggest year-over-year drop so far in 2009. Premium traffic in the North Atlantic was down 16.5 percent in May and travel across the North and Mid-Pacific was down 30.7 percent. Travel within Europe was said to be down 30.6 percent.



Last Updated (Thursday, 28 January 2010 10:30)



Web Street Golf Report


Monday, July 13, 2009

IT CAN BE DONE: The unthinkable has happened. Despite a sputtering economy teetering of the verge of a financial meltdown, Australians insulated themselves, by and large by playing golf. Total golf participation increased in 2008 by more than 260,000 - a whopping 29% increase from 2007.

The figures, released as part of the Australian Sports Commission’s annual Exercise, Recreation and Sport Survey (ERASS) rank golf as the most popular club-based activity for 2008, overtaking tennis in the top spot.

“With every year that passes more and more Australians are realizing both the health and social benefits derived from visiting their local golf course,” said Max Garske, CEO of the PGA of Australia. “Through our vast network of PGA members across Australia the PGA’s mission is to promote the game of golf to the masses- and we are extremely pleased to see that over 1.1 million Australian’s enjoyed a round of golf during 2008.”

With a total participation rate of 1,181,100 throughout 2008, golf topped tennis, football and netball on the list of the most popular club-based physical activities for Aussies. This is the first time golf has eclipsed the total participation of tennis since the 2002 ERASS survey period.

Garske is of the opinion there will be more good news to come. “Many of our PGA Members servicing local golf clubs and growing the game have indicated that rounds of golf have been on the increase in the last few months,” he said. “Typically the biggest concern for golfers is not finding enough time to play a few holes on a regular basis. But the current economic situation has created more leisure time for many Australians,” he continued. “Traditionally as the unemployment rate rises, so to does demand for tee times.”

Garske said the PGA in cooperation with the entire Australian Golf Industry are working on several initiatives to facilitate further increases in golf participation, including the launch of a new national junior golf program, Pumpgolf, made possible by the PGA’s partnership with Coca-Cola Amatil.

HELP IS ON THE WAY: It can be categorized that business and life has been difficult in 2009 for many people. The global recession is the biggest culprit for this occurring. The golf industry is going through its own trials and tribulations. While the forecast remains murky for the foreseeable future, there is some good news that came from the United States Golf Association. It announced that $1,358,850 was awarded at its April grant distribution meeting. The funds are going towards the support of the development of 86 golf programs through its “For the Good of the Game” Grants Initiative.

The USGA says it’s Grants Initiative empowers programs to make golf more affordable and accessible for its participants by funding essential aspects of the game, including professional instruction, golf course and range access, equipment, transportation and alternative golf facilities.

“The USGA is very pleased to support many young people and individuals with disabilities as they seek to play golf and experience the many values inherent in the game,” said USGA President Jim Vernon. “It is inspiring to see so many non-profit organizations around the country utilizing the game to fulfill their missions.”

In 2009, the USGA said it has distributed $505,000 in grant funding among 37 chapters of The First Tee program. Three USGA corporate partners contributed to USGA charitable efforts. The Royal Bank of Scotland Group made possible a USGA grant to further the development of LPGA-USGA Girls Golf, which comprises nearly 200 sites nationwide. In 2009, Girls Golf celebrates its 20th anniversary of making the game more accessible to young women. American Express provided assistance with 13 grants benefiting youth and individuals with disabilities made in the three 2009 U.S. Open markets. Lexus supported a USGA grant to the National Alliance for Youth Sports to help fund various Hook A Kid On Golf clinics and other activities. The clinics serve as a gateway for juniors to participate in the game and develop into avid players.

PLEADING THE FIFTH: When you become a major champion, people take notice of your opinion more than before. Lucas Glover, still in the afterglow of his US Open win, didn’t exactly throw his weight behind the recent decision to go forward with a change in grooves for next year. “I think probably 75 percent of the guys have been to their respective club company's test site or had clubs brought out from the Tour van or whatever just to see,” he said. “Nike's golf headquarters are in Ft. Worth, so the week of Colonial I went over and tested wedges and hit some irons with the V-grooves that are similar to what I'm hitting now. I think guys are starting to move forward with the process of preparing for change,” he continued. “It's going to be different, but we'll see.”

When questioned about his feelings on the rule change and whether it was necessary, Glover decided to play it safe. “ I'm going to say no comment on that one. Sorry,” he answered.

SOMEONE HAS A FEW SECRETS: It appears Ping has some new products that have made their way onto the worldwide professional stage. According to Web Street Tour sources, Mark Calcavecchia put a new G15 driver and two i15 hybrids in play as the John Deere Classic. Heath Slocum also put the G15 driver in is bag. Mark Wilson and Jeff Maggert opted for the i15 driver. Several hybrids and fairway woods were seen at the US Women's Open as well.

For now, the Phoenix-based company isn’t commenting on the subject, but that position is likely to change before too long.


NEVER FEAR SOMETHING NEW IS HERE: Adams Golf (ADGF: NASDAQ) has introduced its latest ideas, literally and figuratively with the new Idea a7 hybrids and hybrid irons. Intended for mid-handicap players, the eight-piece Idea a7 hybrid iron set consists of a 3- and 4-hybrid, which can be purchased individually, a hollow-back 5 transition iron and 6-iron through pitching wedge. According to Adams, the irons are precision engineered for scoring, but it will be in the hands of recreational golfers to ultimately attest to this.

The 3- and 4-hybrids take the best attributes from several generations of the Idea Pro hybrids to offer a better blend of high-performance with forgiveness, Adams said. An improved sole camber makes the Idea a7 easy-to-hit out of any lie and the rear-weighting increases carry distance, according to the company.  With a patented hollow-back design and a 13 percent thinner face, the company stated, the 5 transition iron promises improved gapping between the hybrids and short irons. Thinner top lines and sole widths for workability are incorporated into the short irons (6-PW).  They also feature dual cavity-backs and stabilizer bars for enhanced forgiveness and feel.

“By advancing the theories in club design through individual engineering and integration of each club into the next, we are proud to be offering what we believe to be the future of irons sets and a better alternative to anything currently on the market,” said Chip Brewer, President and CEO of Adams Golf.

“With Idea hybrids ranking as the most-played on the 2008 and 2009 PGA, Champions and Nationwide Tours, the Idea a7 hybrids continue a tradition of our tour-tested designs being brought to all golfers,” said Tim Reed, Vice President of Research and Development at Adams Golf.  “When we heard the tremendous positive feedback and saw the great results from Tour players on the prototype Idea ‘Peanut’ hybrid, we knew we had to use the best attributes of that design in the new Idea a7 hybrids.”

The stock shaft for the Idea a7 hybrid is the UST Proforce AXIVCore Black 85-gram graphite shaft. For the irons, consumers have a choice of either a True Temper Performance Lite shaft in steel or the UST shaft in graphite. The eight-piece sets begin shipping to golf shops on August 1 with a suggested retail price (SRP) of $699.99 for graphite and $599.99 for steel. The SRP for the individual Idea a7 hybrids is $199.99.

WHAT WILL THEY THINK OF NEXT? Bushnell has introduced the Yardage Pro XG and Yardage Pro XGC. According to the company, the two GPS handheld units offer increased storability and provide the distance of your last shot, as well as to any point on the hole.

"We are thrilled that these two new premium GPS handheld devices continue the Bushnell commitment to make GPS technology simpler than ever before," said Bushnell National Golf Sales Manager Jason Seeman. "Both units offer compact size, enhanced features and map capabilities that cater to the skill level of any golfer."

Bushnell has partnered with iGolf to offer downloadable course files for the products. For example, the company said the XGC model can store up to 100 custom color course maps. Both units will be available at select green grass shops in July. The XGC offers score keeping and statistics capabilities and a rechargeable battery life up to 16 hours. It is priced at $349.99.

The XG can store up to 20 course maps and offers front, center and back distances to greens. It is priced at $249.99. Both units are believed to be rainproof. "With the addition of the XG and XGC this provides us with a full range of GPS devices at different price levels to meet the needs of our consumers," Seeman said.

WHEN IT RAINS, IT CAN POUR: While the economy has proven to be a wary adversary for nearly every industry in 2009, it may be enlisting a partner in crime. North Carolina Gov. Bev Perdue has proposed imposing a 7.5 percent sales tax on recreational activities; yes it would include golf, in an attempt to overcome a $4.6 billion budget shortage. According to a media report, Ricky Murphy, with the Carolinas PGA, said the golf business employs nearly 70,000 across the state, all of who face the prospect of losing their jobs if the tax goes into effect. The proposal implies the tax would be temporary however, and it is expected to face stiff public opposition before going to a vote.

ENCORE: Padraig Harrington is looking to keep his streak alive. He was successful in doing so with the first of the two part equation as the Irishman coasted to his third successive Irish PGA Championship. Now he has to tackle the Open Championship, this time at Turnberry. Should he successfully complete the second leg of his impressive feat, his earnings will be the same as in 2008. Its unlikely the 37-year old will be disappointed with that since possession of the Claret Jug for a third successive year would easily offset any financial short comings, if it can be classified as such.

The R&A has announced that prize money will be held at the same level as last year for this year’s Open Championship. The total prize fund will be £4.2 million, with the Champion receiving £750,000. Due to the global economic recession and the television costs back to the R&A being denominated in US dollars (the £ is weaker than it was a year ago at this time) there was some talk that the purse might be lower due to these factors. However, whomever Peter Dawson declares champion golfer of the year will also receive £750,000 for their effort. Anyone finishing in 121st place or below at Turnberry will be entitled to £2,100.

PEELING BACK THE ONION LAYERS: The golf industry represents many things to many people. Often it starts with the PGA Tour and quickly transitions of course to Tiger Woods, its poster child of sorts. Ratings tripled on the Sunday telecast when he won his own event, the AT&T. But the other half of the story and nothing against Anthony Kim, means that a year ago when #1 was on the shelf there were a loss less people that tuned in.

The multimillions they compete for and the exotic locations that act as the backdrop to the drama, is another compelling sidebar. Equipment is also a secondary subplot to the game as technology has rapidly changed the appearance of it. Clubs and balls have been somewhat vilified for altering the landscape in some peoples’ minds. Several courses, most notably August National felt the need to lengthen itself as a means to maintain a modern day test of the old game. Courses themselves are also a major component of the industry. Sometimes they are overshadowed, but nevertheless, it is the place where nearly everyone aspires to spend time at regardless of the state of the economy. The people who shape the next generation of creations also play a vital role in the evolution of the game, which is expected to help keep recreational players as well as the best of the best on their toes.

Tom Doak is a name that may not be quite as familiar to the masses that arrive each day at pro shops around the country as they check in for their tee times. It’s his work that has made a name for itself around the world.

Pacific Dunes is his most famous in the United States. He also designed Cape Kidnappers in New Zealand and Barnbougle in Tasmania. These are three of the four Doak courses that are already featured in Golf magazine’s Top Fifty Golf Courses in the World.

While the PGA Tour is certainly holding its own in these challenging economic times, the same can’t be said for equipment sales. Golf courses appear, in general, to be holding up better (up 1.6% through the month of May versus 2008) than many might have expected given the new ways of the world. But golf course architects are feeling the pinch as well.

“Right now I’ve got nothing under construction and I’m not the only golf course architect in America who would say that,” Doak said. “ We’ve got three courses that we’re signed up to do that we think we’ll break ground toward the end of this year or the beginning of next year. One in China on Hainan Island. China is the place for golf growth in the world as far as I know,” he added. “ I’ve talked to a lot of golf course architects who are doing something there. There are not many places like that right now.” Doak said he has also signed to do a second course in Black Mesa in New Mexico. “Aside from those two I have about six contracts in various stages of planning that are stalled because of the economy. I would guess that three or four of them will never happen. But I don’t want to identify which those might be. I’ll just cross my fingers that a few of them do start up next year as we’re going on.”

The U.S. market, in general, has been somewhat on a path of contraction but Doak is optimistic some early signs could see that changing down the road. “We are looking at a couple of other projects. I’ve actually had a couple of new calls in the U.S. in the last couple of months which it had been about six months since we had heard anything like that that would be new. We’re hopeful that those will get started but it’s still early days on those. The earliest any of those would get started would be next summer I would think.”

The economy is often to blame but for the man who received a scholarship from Cornell University that entitled him to live on the links -- caddying at St. Andrews the summer after his graduation, it won’t impact his minimalist approach towards designing. “The ‘cost is no object’ approach of the last five or ten years has to go by the wayside now. I was never known as one of those architects so I think that is good for my business in general,” he said. “It’s maybe good for my market share but there’s a lot less market now. Overall I wouldn’t say the recession is good for anybody in the golf business right now.”

While the words are sobering for obvious reasons, Doak does have some things to be excited about. One of those is Bahia de los Sueños (translated means Bay of Dreams) a secluded 4,300-acre residential resort, nestled along the coast of the Sea of Cortez in Baja California Sur. It is 35 miles southeast of La Paz, a 45-minute drive from the capitol city or about a 2-hour drive from the Los Cabos Airport. Bahia de los Sueños will have an estimated 600 custom home sites, plans for 450 casita-style residences and a boutique hotel and commercial centers. But the heart of it is Doak’s 18-hole masterpiece, which is scheduled to be completed this fall, most likely late October/early November. The Bay of Dreams plays just feet from the Sea of Cortez and will be the centerpiece of the Bahía de los Sueños Golf Club. A formal Grand Opening is expected to occur in 2010.

While the economy remains rough, for the foreseeable future and dreams have been tempered, they do still remain alive especially south of the border at Bahia de los Sueños.

GOING IT ALONE: Mizuno and Bettinardi Golf came together with the debut of the 100% precision milled Mizuno Bettinardi A-Series and C-Series at the 2006 PGA Show, and later went on to introduce the Black Carbon Series. But the time has come for the two to part ways. The decision is said to be a mutual one. Mizuno will continue to sell, market and service Mizuno Bettinardi putters through June of 2010, while Bettinardi Golf will begin to sell and market putters under the 'Bettinardi' name beginning in the fall of 2009.

"We have the utmost respect for Bettinardi Golf and Bob Bettinardi for their skill in putter design and milling, and we wish them the best going forward,” said Dick Lyons, Vice President and General Manager, Mizuno USA Golf Division. "I feel that the relationship between our two companies has been very successful. The introduction of the F.I.T. Face Technology has redefined the qualities of a Milled putter. I have the highest regard for Mizuno and wish them success in all their future endeavors," said Bob Bettinardi, President/C.E.O of Bettinardi Golf.

BETTER DAYS AHEAD FOR CALLAWAY GOLF’S STOCK? ONE PERSON THINKS SO: Back on June 15th, Callaway Golf (ELY: NYSE) announced the successful completion of a $140 million convertible preferred stock offering. The company’s common stock closed that day at $5.78 a share. Lazard Capital Markets LLC (remember that name) acted as the sole book-running manager of the offering, and Raymond James & Associates, Inc. and Stifel, Nicolaus & Company, Inc. acted as co-managers. Since that time Callaway shares have been in a free fall. It traded down as low as $4.66 before closing at a new 52 week low of $4.80 on July 6th.

However, on July 7th, the same company that acted as manager of the recently completed stock deal, Lazard Capital Markets LLC, issued a buy recommendation on Callaway shares. Now I’m not trying to say there was some funny business here, just pointing out the obvious.

In the research report, analyst Todd Slater stated he believes the shares have been severely punished by the current economic environment, (joint the list) augmented by the discretionary and luxury characteristics of golf. Slater’s research is calling for Callaway generating earnings power of $0.80 per share in a more normalized economic environment but without assuming significant revenue upside. He is forecasting that to happen in 2011 and thinks the stock can reach $12 again based on this earnings potential. However in the same breath he notes the negative effects of the economic downturn on the golf industry has seen a total spend down 14% YTD and total units sold down 13% YTD. Meanwhile, Callaway reported a sales drop of 26% in its first quarter of 2009. Second quarter operating results for Big Bertha are due out at the end of the month.

Part of Slater’s investment thesis references a potential lottery ticket in the form of the ongoing litigation Callaway is locked in with Titleist. “ELY is expected to receive an appeal decision in the next month that, if favorable, will lead to an extent of damages trial that could result in a $50-$100M payment to the company, based on our estimates of lost sales, legal fees, and other damages,” he told investors. “Its (Acushnet) final appeal was heard on June 1, 2009 with an outcome to be decided 30-90 days hence. While we expect a positive outcome for Callaway, as previous rulings have determined that its claims have merit, Acushnet can either appeal to the US Supreme Court or consent to an extent of damages trial. An extent of damages trial would likely commence in 2H09 and conclude in 1H10.”

However, the analyst recognizes it currently isn’t all roses for Big Bertha. “Currently, the two most challenging categories for ELY are woods, where its 19.6% market share is second to TaylorMade, and golf balls, where its 8.7% share is third to Titleist and Bridgestone,” Slater stated. “Although ELY has increased its share in woods 3.1% YTD, it faces a dilemma competing against TaylorMade, which employs a strategy of buying market share at the cost of margins and profitability. While this strategy is not sustainable long-term, it is likely to continue in the near term, especially given the financial backing of Adidas. In the ball category, Bridgestone has passed ELY to take the #2 rank in terms of market share. Much of the recent market share decline (-1.6% YTD) appears to be more a function of product introductions by competitors, but not reflective of anything self-inflicted.” Slater may want to revisit the landscape when he asserts TaylorMade’s strategy, as Callaway has been the most promotional equipment company in golf this year. It may have an influence on its wood market share growth, year-to-date, by promoting fairway woods for a $1 and currently offering its FT-iQ driver for nothing. However, he is correct that this ploy isn’t something a business can be built on long term. But if it can, TaylorMade has proven to be more adept at it than anyone else. He also failed to acknowledge Callaway’s recent “Good ball” mishap with its Tour i golf ball. He could have checked with Paul Azinger about it. According to the PGA Tour, due to a label issue, the Callaway ball he used at the Travelers in the first round became nonconforming and therefore he was disqualified since he put it in play. These kinds of things generally don’t endear themselves with avid golf fans, which can help or hurt your respective market share. Just keeping it real.

But the basis for the buy recommendation on Callaway shares is the company will earn more money when the economy finally picks up. There is no way to dispute that won’t happen. But the bigger question on everyone’s’ mind, including management’s is when that might start to happen. For the time being it appears Wall Street isn’t buying into it as the stock closed for the week at $5.07 a share.

STOCK WATCH: For the week, the Dow lost 1.6 percent; its fourth straight weekly decline (off 7.42% in that time), the S&P 500 index slide 1.9 percent and the Nasdaq lost 2.3 percent. The blue-chip index closed at 8,146.52, its lowest close since April 28. The Nasdaq has strung back-to-back weeks where it has fallen, down 4.47% during the period. The S&P 500 appears to be mirroring the Dow as it too has lost ground for four consecutive weeks. The broader index has dropped 7.09% during that time.

The market direction will rest on corporate America’s earnings shortly. Chip maker, Intel will be a company many will key on when it reports on Tuesday, while search engine Google is scheduled to report on Thursday. A number of financial companies are on the docket throughout the week as well as traders will attempt to piece together the progression of data points in an attempt to uncover the near term fate of a possible recovery in the economy.

Meanwhile, the banking crisis isn’t completely over, at least not for some. Regulators closed the Bank of Wyoming last Friday, after the financial markets closed for trading, marking the 53rd U.S. bank failure of 2009. Bank of Wyoming, the first bank in that state to fail this year, had $70 million listed in assets as of June 30, and $67 million in deposits, the Federal Deposit Insurance Corporation said. The FDIC estimated that the cost of the bank's failure to its deposit insurance fund would be $27 million.


THINGS ARE NOT SO GOLDEN ON THE LEFT COAST: The Golden State has seen better days, and then again they aren’t alone. The number of California hotels in default or foreclosed on jumped 125% in the last 60 days. The state now has 31 hotels that have been foreclosed on and 175 in default, according to California-based Atlas Hospitality.

San Bernardino County leads the state in foreclosed hotels with 19.6% of the total. Riverside County follows with 16.1% and San Diego County has 12.9%. Los Angeles County has the most hotels in default at 12% of the total. San Bernardino County is next with 9.7% and San Diego County follows with 8.0%.

Non-franchised hotels account for a disproportionate number of foreclosures. This segment represents approximately 87% of the total. But franchised hotels make up 59% of the defaulted properties.

As the hotel economy has worsened it has impacted all types of properties, ranging from the luxurious St. Regis Monarch Beach Resort in Dana Point to the more economical Extended Stay and Red Roof Inn chains.

In reviewing the hotels in default or foreclosed on, Atlas Hospitality found that over 75% of the loans originated from 2005 to 2007. During this period, over 2,500 California hotels either refinanced or obtained new purchase loan financing. Based on today’s market values, it estimates that none of these hotels have any equity remaining.

The unprecedented decline in room revenues (California is down 21.5% year-to-date) combined with the jump in cap rates has resulted in a massive loss in values. Atlas estimates values are currently 50-80% lower than at the market’s peak in 2006-2007.



Last Updated (Wednesday, 03 February 2010 09:56)

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