Daily Pulse for January 7, 2013

         

BRAIN TEASER: Do you know when was the last 54-hole or 36-hole event was held on the PGA TOUR?

THEN AND NOW: Looking back on 2012, it was a tale of two halves, according to Scott Hennessy, CEO of True Temper. “The first half was fairly strong,” Henenssey stated. “The weather was mild, the economy and stock market has some momentum and there was optimism that we were on a roll. In the second half it reversed. The weather wasn’t so good and the economies in Europe, Japan and the US were sluggish. We (True Temper) were on track for a great year but turned out to be a good year,” he remarked. True Temper, by virtue of providing shafts to most if not all the equipment companies is considered a barometer of the sector.

While the golf industry settles back to business this week for 2013, Hennessey’s expectations are more of the same. Before rolling your eyes or groaning, its worth noting that the #1 steel shaft company enjoyed some outside help in the past couple of years business-wise. In 2010, wedges were being replaced due to a groove rule change on the PGA TOUR. Recreational players didn’t need to change out the product, yet many did. In 2011, leading into 2012, the battle cry was long putters. “We have nearly 100% of the long putter shaft market and we doubled our revenues (in 2012),” Hennessey revealed. “We don’t anticipate that happening again in 2013,” he quickly added. “There was so much momentum in the front half of 2012 in the long putter category that it may have gotten ahead of itself. We were running two shifts a day and overtime on weekends to keep up with it. Even if the USGA and R&A hadn’t indicated a change was coming, the category was beginning to slow. Everyone was ramping up to the point of excess,” said Hennessey. “Even though we doubled our long shaft putter numbers, the category itself wasn’t up dramatically overall.”

The CEO doesn’t expect the putter business will see much of a dip in the coming year. “I don’t see the unit volume changing dramatically in 2013 even though there will be a mix change from long back to short putters. I don’t think the category will be adversely affected even if the market softens. The two clubs out of the 14 in players’ bags that have the most turnover are drivers and putters. Everyone is looking for some magic in their hands. Due to the price point and offerings in putters coming, I don’t think the overall unit volume will change. We’ve probably settled in a normal pattern that won’t go away,” he said.

So without the aid of wedges being replaced or the excitement over belly and long putters, Hennessey sees the industry hanging tough. “The global golf markets are flat,” he said. “The European market has started to settle down and may have hit bottom. The US may be solving its fiscal cliff. We see a slow growth model largely due to the global economies. We are budgeting a low single digit growth rate for the business,” he said. “Golf is global in terms of business and the game but influenced by the economy. We see a continued trend towards consolidation at the retail environment and equipment vendors. The big will continue to get big and the small will get smaller. Last year we saw Adams Golf sold to TaylorMade and Aldila, #1 in graphite, sold to Mitsubishi Rayon.” The transaction value of the Adams deal last March was roughly $70 million (approximately EURO 53 million), while the Aldila deal was valued at $22 million. Neither would be considered blockbuster in terms of valuations. Nevertheless, the deals were made.

“Golf is in a low churn towards upward growth. It is no longer a high growth industry and not many sports are growing aggressively. Consumers will still pay for a game-changing product. But you don’t see many companies like Apple. I do believe we have seen the worst of the downside in terms of course closures, equipment unit sales and rounds played,” he said. “We are modestly optimistic for the year largely based on global economic conditions. We are more optimistic for the next five years than we were for the past five,” Hennessey added. “The equipment business is influenced by the economic conditions since hard goods are closer to a durable good versus a consumable item such as golf balls. We have increased our marketing budget this year and recognize, like all golf companies, you must continue to innovate. New products are attributed to 25% of our revenues. It keeps golfers interested. A couple of trends I think you will see in 2013 and 2014 are that no new product will be heavier. The move continues to be towards lighter as golf caters to aging baby boomers. That’s happening globally not just in the US. You will also see iron set make-ups evolve. The days of 3-PW are long gone replaced by hybrids. Equipment companies are driving this but you will also see the number of wedges players carry increase.”

CHANGE IS COMING? One major champion isn’t thrilled about the ruling bodies decision regarding anchoring but understands.  “Obviously, things have changed now with the long putter. I've discussed it with Peter Dawson and while I am not altogether in favor of the proposed ruling, I fully respect the R&A's decision. We've been practicing and playing with the conventional putter for a few months already and, to be honest, it feels pretty good. I haven't decided when I'll make the switch. We'll see,” Ernie Els, the 2012 Open Champion wrote on his web site.

R.I.P.: While the PGA TOUR is trying to get its 2013 season underway, Titleist Brand Ambassadors are recognizing the life of Jaime Ramos. Golf ribbons are attached to Titleist hats at the Hyundai Tournament of Champions in memory of Ramos, Titleist's Master golf club builder for the past 16 years. Ramos was stricken with a heart attack while working at his home in San Diego, Calif. during the holiday break and passed away on Sunday, December 30.  

Ramos, 58, had been a clubmaker for 35 years, beginning his career at Cobra Golf where he built clubs for some of the greatest players in the world including Greg Norman, Hale Irwin and Seve Ballesteros. When the Acushnet Company bought Cobra in 1996, Ramos joined the Titleist Tour Department where he was the Master club technician for the past 16 years, building irons for all of the Titleist Tour staff across the worldwide professional tours.

He was described as a workout enthusiast and took advantage of Acushnet Company's Health and Wellness opportunities.  He had played golf just a day prior to being stricken while he was at home with his family for the holidays.  

"I will miss him dearly,” stated Bob Vokey, Master Wedge Craftsman. “He was a pleasure to work with, and he always had an unbelievable attitude. We always had fun and great conversation. When I was down, he always had this thing about him that helped pick me up. I have never heard a negative word said about him. He was a very dedicated, knowledgeable and hard working gentleman, who was well respected among his peers and players. He will be missed by all. I am still in shock.”

Chris Tuten, Director, Titleist Tour Promotions, added, "Jaime was a fantastic Associate who was liked by all and had true passion for his craft. I am going to miss calling into the office and not hearing his voice on the other end. He took pride in his job and enjoyed watching the players with whom he built clubs for have success.  He was a legend among club builders and will be sorely missed by the Titleist family and all those who knew him."

Larry Bobka, Vice President Titleist Tour Promotions, remarked, "Jamie's talents were exceptional. He knew how to build, grind, change offsets and satisfy the player’s needs.  Personally, he's been my right-hand man in finishing and building custom sets (from raw heads) for the most discerning players in the world. He's provided his thoughts and ideas on our iron models for years. He was a true professional in all he did. I just didn't lose a great co-worker, I lost a great friend. Jaime had tremendous pride in his work. He worked hard but always had a smile and a kind word for everyone. The company has lost a great employee and life has lost a great man."

ODYSSEY INTRODUCES VERSA: Turns out a happy accident from a fictitious college friend uncovered something obvious to Austie Rollinson, Principal Designer, Odyssey. It, in turn, lead to the impetus for Odyssey’s newest putter micro-franchise. Internally the company is already calling it a home run. In essence Versa is an alignment story in a blade model. “If your two degrees open or two degrees closed, you have no chance on a six foot putt,” stated Chris Koske, Global Director, Odyssey. Now the guessing game can be eliminated. Versa putters feature stark black and white contrast laterally on the putter head, which accentuates the face angle at address, through the stroke and at impact. This contrast prompts golfers to better align putts, which is critical since just one-degree off line can cause a golfer to miss a 12-foot putt. The design also promotes concentration during the putter stroke and helps maintain consistency at impact.

“We set out to design a distinctive and highly effective alignment system for a blade putter,” said Rollinson. “The human visual system is both sensitive to contrast and very good at complex tasks such as edge detection. We utilized both of these skills to create a very effective alignment aid that helps golfers putt more consistently, and sink more putts, too.” The Versa line of putters will be available at $169.99 (US).

MIND YOUR ELDERS: Hands up if you’ve ever heard of the Society of Seniors? Me neither! Nevertheless, Callaway Golf has and it’s there intention to benefit from a new found relationship. The company said it has reached a three-year partnership with the organization, which classifies itself as the world’s strongest and most vibrant collection of senior amateur golfers. Considering the game’s participants are largely made up of aging baby boomers, the arrangement makes some sense. READ MORE>>>

WEB GEMS:

THE ANSWER IS BLOWIN’ IN THE WIND: As expected, Monday at the PGA Tour's season opener figures to be filled with anticipation at the Tournament of Champions. Not because of who might win, but whether they might actually start this tournament. READ MORE>>>

NO REGRETS: “The decision to stop, although it was difficult to come to, was becoming more and more obvious. Everything was getting harder and the scar tissue was getting thicker. It wasn’t just the golf but the travel, too. More and more I wanted to be at home with my family. I knew I had done the right thing when, about a month after I stopped playing, I put my head on the pillow and didn’t have a single golf thought going through my head. That was the first time in maybe 15 years I could say that. It was such a relief.” READ MORE>>>

GROWING: The LPGA Tour has a new tournament this year that will be played in The Bahamas. READ MORE>>>

NEW TERRITORY: “I've never defended a title before so this is another first for me. I know there's going to be a lot of hype around the event but that's just one of the things I will have to deal with.” READ MORE>>>

NO END IN SIGHT: "I'm not a guy who can just say no. You are retired for a long time and I tell you what, I'll still be playing competitive golf when I'm 70." READ MORE>>>

ANSWERS: “It's been a while since I've been given 2 breakfast balls.”--Rickie Fowler on his Twitter account regarding the 2013 Hyundai Tournament of Champions.

The last 54-hole event on the PGA TOUR was The Barclays in 2011 (won by Dustin Johnson). The last 36-hole event on the PGA TOUR was the 2005 Northern Trust Open (won by Adam Scott). In the event the Tournament of Champions is a 54-hole tournament, it will stands as an Official win, including 100% FedExCup points and money and official world golf ranking points. The winner would also get into 2014 Hyundai tournament. If the event is only 36-holes, it would be considered an unofficial win and only 75% of the official FedExCup points/money and OWGR points would be awarded. The champion would not get into 2014 Hyundai event.

THE INFORMATION CONTAINED IS BELIEVED TO BE RELIABLE, BUT IT IS NOT GUARANTEED. THE OPINION EXPRESSED IS THAT OF TERRY MCANDREW AND SHOULD NOT BE CONSIDERED A SOLICITATION TO BUY OR SELL SECURITIES IN ANY OF THE COMPANIES DISCUSSED WITHIN THIS NEWSLETTER. CONTENTS OF THIS NEWSLETTER MAY NOT BE REPRINTED OR REBROADCAST WITHOUT THE EXPRESSED WRITTEN CONSENT OF TMAC GOLF