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Home Daily Golf Briefs Daily Pulse for May 11, 2017



Web Street Golf Daily Pulse
VOLUME 7, NUMBER 93                                                         
Thursday, May 11, 2017

ANY IDEA WHO SAID THIS? “I feel like I've played really solid golf over the last year and a half, two years, and I find it odd that I've dropped from 1 to 6 with three or four wins and a lot of really good finishes, including some good wins in Majors. So I guess I need to play less because my divisor is too big.”

BRAIN TEASER: Can you name the last time win by Jason Day on the PGA TOUR?

$OLD! adidas announced it has finally entered into a definitive agreement to sell its TaylorMade, Adams Golf and Ashworth golf brands. The new owner of the assets is a newly formed affiliate of KPS Capital Partners, LP. The price was US$ 425 million, which is approximately half of its 2016’s annual sales of 892 million euros. The funding of the transaction is half in cash and the remainder in a combination of secured note and contingent considerations. The terms and value support the argument that adidas was highly motivated to unload TaylorMade.

The transaction, which is subject to customary closing conditions, is expected to close later this year. Once completed, the transaction will trigger adidas to record a non-operational loss in the high-double-digit to low-triple-digit million euro range, which will be reported in discontinued operations as part of the adidas’ 2017 results. This further supports just how motivated (some could argue desperate) adidas was to wash its hands clean of the golf business. For comparative purposes only, Callaway Golf a chief rival of TaylorMade, reported 2016 sales of $871 million. It has a market capitalization of $1.22 billion based on its May 10th closing price of $12.79 per share. The Acushnet Company, owner of Titleist and FootJoy, had 2016 sales of $1.7 billion. Its market capitalization stands at $1.49 billion based on its May 10th closing price of $19.96 per share.

“TaylorMade is a leading global golf brand with an exceptionally strong market position. We would like to thank all TaylorMade employees for their many contributions to our company and wish them all the best for a successful future under their new ownership. At the same time, we welcome all adidas Golf employees who will be integrated into our adidas Heartbeat Sports Business Unit,” said Kasper Rorsted, CEO of adidas AG in a prepared statement. “Within our long-term strategy ‘Creating the New’, our focus is clearly on our core competencies in footwear and apparel and on our two major brands adidas and Reebok.” 

adidas took over the TaylorMade brand in 1997 when it bought French equipment maker Salomon for $1.4 billion. The company acquired Ashworth in 2008 for $72.8 million and then Adams Golf in 2012 for $70 million. In March of 2014, TaylorMade-adidas Golf  proclaimed itself the largest and most profitable golf equipment, apparel and footwear company in the world. In 2013, TMaG posted full year sales of $1.7 billion, a far cry from where it is today, which is, once again supported by the selling price.

TaylorMade-adidas Golf’s 2016 annual sales were 892 million euros, down 10 million euros from 2015. Fourth quarter sales were down 12.3% from the prior year. According to its parent company, adidas, growth at TaylorMade and adidas Golf was more than offset by sales declines at both Ashworth and Adams Golf. Last week, the company reported 2017 first quarter sales were up 7% coming in at 275 million euros. adidas has refrained in recent years in providing TaylorMade’s bottom line results.

It remains to be seen just what KPS Capital Partners has purchased with TaylorMade. Does it have a vision of restoring the brand to what it once was in terms of historical revenues? Or will it continue to experience a contraction in sales volume? In some ways, it can be argued due to the timing of the purchase, it is the equivalent of catching a falling knife. It remains to be seen whether it will draw further blood by self inflicted wounds or ultimately become a weapon.

TaylorMade has an embarrassment of riches in terms of its TOUR staff, which on the surface suggests there may be a belt tightening at some point from its new owners. Dustin Johnson, Jason Day, Justin Rose, Sergio Garcia were joined this year by Tiger Woods and Rory McIlroy. Back in January, the company announced Smylie Kaufman, Paul Casey, Nick Watney, Seung-Yul Noh and Kyle Stanley also belong to the TMaG family. The TOUR budget has to be easily north of $50 million annually. Recently reports peg McIlroy’s deal at $10 million alone. If that were in the ballpark, then $50 million would seem to be too low. Taking that into account, the new owners will be tasked with turning the business around from the bottom line up otherwise the investment made will have been a waste. Its doubtful that all of these deals can or will be renewed. For more on this be sure to read the next issue of Web Street Golf Report.

ANTE UP! Rory McIlroy signed a deal with Nike Golf at the start of 2013 that was worth $100 million over five years. In 2017, he agreed to a 10-year contract extension to wear Nike shoes and apparel estimated at $100 million. His new equipment deal with TaylorMade is also for 10-years and believed to be valued for another $100 million. Between his friends at Nike and TaylorMade he will have earned $300 million! Through the Wells Fargo Championship, McIlroy has earned $35,489,212 in career PGA TOUR earnings. Wonder why the golf business has its challenges? Consider the off course economics and the math is challenging at best for those tasked to make a return on the investments!

ITS ONLY MONEY! PXG (Parsons Xtreme Golf) has introduced a line of 100% milled wedges that will run you $650 a piece. You would think we’re living in a pre-2008 economic world. Good luck!

For those who remain intrigued and price is of no object to them, the PXG 0311T milled wedges are available in a Sugar Daddy, Zulu, Romeo and Darkness sole designs. The Sugar Daddy, currently played by Lydia Ko, serves as the one-size-fits-all wedge, according to the company. It incorporates a moderate initial angle with a blended sole design. It can be used effectively from a wide variety of turf and sand conditions, allowing the golfer to use it for virtually any shot necessary.

Romeo, inspired by PXG’s Tour professional Ryan Moore, incorporates a mild initial angle with minimal heel relief, allowing the lead edge to stay close to the ground. This creates an extreme amount of bounce when the face is open, making it ideal for playing from high rough or soft sand.

Zulu, inspired by Zach Johnson, incorporates a steep initial angle with aggressive heel and toe relief. This type of wedge is conducive to playing from tight turf or firm ground, PXG said, as it keeps the lead edge close to the ground from both a square and open-faced position.

The Darkness wedge was inspired by PXG’s founder, Bob Parsons. The sole design incorporates a moderate initial angle with moderate heel relief, coupled with a slightly larger head size for forgiveness. Darkness is part of a special collection of black clubs and gear that feature a skull insignia and the number 26, representing the 26th Marine Corps Regiment that Parsons served with during the Vietnam War.


RISK/REWARD: As if the TPC Sawgrass didn't have enough water at The Players Championship. The biggest change to the Players Stadium Course for this year was the par-4 12th hole, which used to have trees on the right, huge mounds on the left and a flip wedge into a small green surrounded with bunkers. For 35 years, it played at 358 yards and was the easiest par 4 on the course. Now it's READ MORE>>>

REBOOT: "For a moment, I lost the desire to be world No.1; I was mentally burnt out. Now, I'm in a rebuilding stage to try and get back to the top," he said. "I would do anything in the world to get back because there's no better feeling than being the best." READ MORE>>>

ANSWERS: “I feel like I've played really solid golf over the last year and a half, two years, and I find it odd that I've dropped from 1 to 6 with three or four wins and a lot of really good finishes, including some good wins in Majors. So I guess I need to play less because my divisor is too big.”--Jordan Spieth.

Jason Day won three times in 2016: Arnold Palmer Invitational, WGC Match Play and THE PLAYERS, which was his last victory on the PGA TOUR.