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Its highly likely very few have been paying close attention to the situation brewing inside adidas with regards to its golf division. In 2015 TMaG initiated a 15% reduction in its global workforce as part of an extensive restructuring program, which also involved the closure of one of its facilities in the U.S. On a currency-neutral basis, revenues at TaylorMade declined 13% last year, thanks to sales declines in most categories and in particular metalwoods and irons, the company reported. In 2014, TMaG sales plummeted by 28%. “Half way through last year we started analyzing future options for our golf business. We expect the strategic review to be concluded by the end of the first quarter of 2016,” Hainer expressed to the investment community in March.

As the company reported its first quarter operating results, it let it be known in no un-certain terms the golf business has to go. “TaylorMade is a very viable business. However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market,” said Herbert Hainer. “With its leadership position in the industry and the turnaround plan gaining traction, which is clearly reflected in the top- and bottom-line improvements recorded in Q1 as well as recent market share gains, I am convinced that TaylorMade offers attractive growth opportunities in the future. At the same time, the planned divestiture will allow us to reduce complexity and focus our efforts on those areas of our business that offer the highest return and where we can have the biggest impact in reaching our consumers and winning their loyalty for the Adidas and Reebok brands.” The company is actively seeking a buyer for the remainder of its golf business, which mainly consists of the TaylorMade brand, as well as the Adams and Ashworth brands. The Executive Board has decided to enter into concrete negotiations with interested parties aimed at a divestiture of parts of the company’s golf division.  A final decision including the detailed terms of a potential agreement is subject to approval by the Supervisory Board.

The rumor mill is now open for business. Many will speculate on the fate of TaylorMade with little to no information to substantiate it. Its somewhat fitting in today’s world after all. Nevertheless, a few points are worth highlighting. First and foremost, price is the critical element in the deal. John Guy, an analyst at MainFirst, has estimated that the TaylorMade, Adams and Ashworth brands could be worth roughly €470 million.

The second quarter is already underway and TMaG has seen its sales contract significantly from 3-5 years ago. While TaylorMade saw an uptick in its specific sales in its first quarter, it doesn’t make a year and therefore any interested party will likely wish for further visibility into the second quarter in order to price its offer accordingly. History has shown the second half of the calendar year is a cash drain and while the Germans would like to see this deal happen sooner than later, patience would be a wise first step. Therefore, its unlikely the seller can demand the price it believes its worth.

Keep in mind; adidas understand its golf assets better than anyone else. While the competition has intimate knowledge of TMaG from a competitive standpoint, it doesn’t have access to its financials or what it takes to make those numbers happen. The fact that adidas is willing to sell TaylorMade, thus reducing its exposure in golf, shouldn’t be overlooked.

The ultimate question is which TaylorMade are you buying? At one time, not that long ago, sales defied gravity. In the past few years, sales have spiraled downward? There are extenuating reasons for both scenarios, yet can or will TMaG return to its prominence? Who will lead the charge to the Promised Land, for the next owner of the company? This should go hand in hand with its future direction.

The equipment business has been having a tough time of it lately. Signs have appeared the overall size of the market has been contracting, which is worrisome to the next owner of the company and specifically the price ultimately paid. As noted in the May 2nd issue of the Web Street Golf Report, Callaway has been boasting hard good market share gains, despite seeing its revenues, including domestically, decline, again and again. Meanwhile Callaway booked a pre-tax gain of $18 million in the second quarter of 2016 on a partial sale of its investment in Topgolf. In 2015, Callaway made $14.5 million for the entire year! In 2014, it was $16 million from its ongoing operations! Going off those financial performances alone, business in general can be questioned. The next person to lead TaylorMade must have a vision for the company but also where it fits within the industry, which many insiders believe has reached a stage of maturity.

TaylorMade is a viable company and one that should sell. It likely won’t go for the highest price, but it leaves those that are currently working there in an unenviable position. No one will know for sure whether they have a job long term and it could force some to start looking in the short term elsewhere. The long and short of it (pun intended), is that it’s a major distraction for as long as it takes for a sale to be agreed upon. Golf has entered its selling season for equipment, even if the weatherman hasn’t been too kind to many parts of the United States. Execution is currently the name of the game and this could have an indirect damaging effect.