Callaway Granted Permanent Pro V-1 Sales Injunction

Golf World's E. Michael Johnson reports a stunner that could have huge implications...or not?

The United States District Court in Wilmington, Del., has granted Callaway's request for a permanent injunction to stop sales of Acushnet's current line of Titleist Pro V1 family of golf balls, effective no later than January 1, 2009.

In its ruling today, the Court also rejected Acushnet's request to overturn the jury's December 2007 verdict which found that Callaway Golf's golf ball patents were valid and infringed by Acushnet's Titleist Pro V1 family of golf balls.

But...

Key to the ruling, however, is the phrase "Acushnet's current line of Titleist Pro V1 family of golf balls." Although the court's ruling would appear to indicate that some inventory of Pro V1s currently on shelves may have to be stopped, the Acushnet Company, parent company of Titleist, said it will file an appeal and that it does not expect the ruling to have a material adverse impact on its results.

“Everything was going along pretty well, even this summer, and then it was like someone turned the switch off Sept. 1.”

Bill Huffman does an excellent job making anyone in the golf business want to slash their wrists  leap off a bridge consider alternative business models. Actually, he very thoroughly considers the plight of Arizona golf and the sudden downturn in play, talking to SunCor Golf VP Tom Patrick. Thanks to reader Steven T. for catching the story.

This was interesting:

Still, and despite ridiculously low green fees already popping up lately in the West Valley, Patrick doesn’t expect a price war to break out. That’s because costs for rye seed are way up, water has never been more expensive, and maintenance costs are running through the roof after a mass exodus of undocumented workers back to Mexico.

“If people don’t come out to play, the courses will just go broke,” Patrick predicted. “In fact, that’s why so many are up for sale right now, even being foreclosed on — and you’re going to see more of that.”

Case in point: Starfire Golf Club in central Scottsdale went on the auction block this week for $8.5 million.

In another statement on the economy of Arizona golf, Royal Dunes, the former all-men’s club in Maricopa originally named Southern Dunes, completed its foreclosure on Wednesday when it was returned to lender Duane Young of Palm Springs, Calif.

Rumor on the street is the course is going to shift from private to public. (And, yes, women will be able to get a tee time there for the first time.)

“The golf industry is like everybody else,” Patrick said. “Things are not good, and until the banks loosen up some money, it’s going to get worse.”

Meanwhile, Patrick said, the golf industry is bracing for that perfect storm.

“You’re already seeing it,” he said.

“In places like Las Vegas, which really is getting hammered, they’re cutting back on everything, even the size of the courses by taking out turf.”

Well that's not such a bad thing.

JT Joins Callaway Staff; Agents Worldwide Groan

Set against the backdrop of the economic crisis and word that players will be seeing far less lucrative endorsement deals, I would love to listen to how agents spin this one with their clients.

By the way, that's Justin Timberlake, not James Taylor (I know my demo!).

"Zuback showed up with 29 Cobra drivers from which to choose."

Jim Achenbach attended the RE/MAX World Long Drive Championship and noticed that nearly every contestant used a Pinnacle and Cobra driver (you go Wally!).

But for those of you feeling guilty about your driver collecting, just consider this level of neurotic behavior:

Winner Jamie Sadlowski and the other three match-play finalists in the Open Division used Cobra driver heads. Furthermore, Dan Boever, the Senior Division champion, hit a Cobra driver.

Five-time world champion Jason Zuback, eliminated after making the Elite Eight, was another Cobra user. Zuback showed up with 29 Cobra drivers from which to choose. That’s right – 29.

“Well, there are some slight differences in all of them,” said Zuback, still on the mend after having four hernias repaired in the vicinity of his abdomen.

Sure those hernias aren't related to lifting a bag filled with 29 drivers?

"The next thing you know, there's a master community with a fence around it."

Mina Kimes considers the issues facing real estate developments and the country clubs anchoring the facilities, focusing on a recent shuttering at Palmira in Florida. Not much surprise here...

Commercial real estate, a sector that's lagged behind the rest of the industry in experiencing the credit crunch, is about to get hit hard, according to a recent PricewaterhouseCoopers survey. One finding: investors believe that sales of homes in golf club communities will be near abysmal next year which, in turn, will hurt club memberships.

"The courses are owned by people who leveraged them up, and they're going to feel the pain," said Susan Smith, the director of real estate at PwC.

Woolson predicts that the number of golf community foreclosures will continue to rise next year - and developers too will feel the pain. "I've made a lot of money over the past eight years selling golf courses that weren't making money," he said. "The developers see profits when they sell the last 25% of the development - if the market comes to a halt before then, they're in trouble."

Titleist Returning To PGA Show; Large Men In White Teaching Shoes Will Once Again Roam The Floor!

Doug Ferguson reports the wonderful news, which frees me to end my PGA Show boycott as well...oh wait, you said it's still going to be in Orlando? Scratch that...

Titleist is returning to the PGA Merchandise Show in Orlando, Fla., for the first time in seven years. Titleist executive vice president Jerry Bellis said the return is due to the PGA shifting the show's emphasis to a more educational platform.

No manufacturer left behind!

"That means, on the apparel front, adidas will be working for Callaway in a licensee-licensor relationship."

The only reaction I had to the Taylor Made-buys-Ashworth news was that it probably made a John Ashworth-led revival of the company he started less likely, but as Robert Lohrer explains on the Styled-To-A-Tee blog, it adds to the bizarre world of Carlsbad corporate antics:

While both adidas and Ashworth are co-habitants of Carlsbad, Calif., it seemed that another giant golf company and Carlsbad mainstay, Callaway Golf, would be an ideal suitor for Ashworth. Callaway's apparel, said to be about a $60 million business at wholesale, has been successfully licensed for several seasons to Ashworth.

That means, on the apparel front, adidas will be working for Callaway in a licensee-licensor relationship.  Monday's deal, however, will likely mean that Callaway will have the right to review its contract.

"Semel's clamoring for a platform so he can get back into the spotlight"

Peter Lauria in the New York Post says that former Yahoo CEO Terry Semel is trying to put together a bid for IMG. Thanks to reader John for this.

One of these sources said Semel recently sat down with Forstmann and his bankers at Goldman Sachs, who have been working with IMG on various initiatives since last summer, to gauge their interest.

Earlier this year, Semel and a few Yahoo! defectors launched Windsor Media Capital with what one source described as "significant financial support from large investors."

Sources said Semel thinks he can transform IMG - which has a sports, entertainment, and media division and serves clients Tiger Woods, Gisele Bundchen and "The View" co-host Elisabeth Hasselbeck - into a media and content company and also bolster its digital operation.

You know when I think of IMG, those are the two names I associate alongside Tiger's.

For Semel, the pursuit of IMG could help repair a reputation that tarnished during his years as Yahoo! CEO. Indeed, many Yahoo! insiders quietly blame Semel for making the Web giant vulnerable to Microsoft's current takeover attempts.

"Semel's clamoring for a platform so he can get back into the spotlight," said one source, referring to his low profile since he left Yahoo! last year.

Aren't we all clamoring for a platform?

Sources said there are two main obstacles to an IMG deal: price and Forstmann's infatuation with the business.

People close to IMG say Forstmann sees the agency as a "play toy" that allows him to rub elbows with celebrities.

And to have them caddy for him.

They said it would take a rich offer - north of $3 billion - to entice him to sell.

Sources were unanimous, however, in saying $3 billion is a "very aggressive price," especially considering the low margins on the sports side of the business. They said a more realistic price would be less than $2 billion.

However, despite Forstmann's reluctance to sell, he may face investor pressure to do something with IMG.

Sources said investors in the Forstmann Little fund that acquired IMG four years ago for $750 million are pushing for some kind of a deal. However, other sources denied that was the case, likening the prized agency to the fund's purchase of Gulfstream, which was held for a decade.

Now, if I bought a Gulfstream for $750 million with someone else's money and those people knew they could get $2 billion for it, I'm sure they'll pass!

Some Good News For The Golf Industry?

Dan Piller of the Des Moines Register talks to Todd Gray, SVP of Wells Fargo's financial leasing business who says "golf, as an industry, is healthy. It's just become more competitive."

"Golf is a lagging economic indicator," he said. "Whatever the economy is doing, golf will feel it the next year. If people feel less economically secure, they'll be less likely to put out money for a club membership or want to play at more expensive daily fee courses. If they're feeling flush, golf will benefit."

Gray's perspective comes from calling on more than 4,000 golf courses across the nation, selling and managing Wells Fargo's leasing credit business under which courses lease their fleets of mowers and turf equipment, as well as golf carts.

His frequent and lengthy trips around the country are hard on his own 12-handicap game, but give him a perspective on the health of the business, he said. Gray recently completed a five-week stint for the U.S. Golf Association helping members become more business savvy.

"Golf’s omission from the federal relief package served as a wake-up call to industry officials"

Golfweek's Gene Yasuda reports on the golf industry delegation convening upon Washington to talk up the sport and help Powell-Tate justify even more lobbying fees. A couple of items stand out:

Industry executives also made the trip to Capitol Hill to ensure their sport wouldn’t be overlooked as it was during the 2005 natural disaster that left New Orleans in ruins. Golf’s omission from the federal relief package served as a wake-up call to industry officials, who concluded many in Washington knew little about the game’s economic, environmental and societal value.

“That was a public relations black eye for golf,” said Steranka, who spearheaded the legislative initiative. “Golf has never been more a part of America’s popular culture, but what is not understood and not appreciated is the tremendous economic impact of our industry and the scale of our environmental management practices.”

Somehow I think had golf been part of the federal relief package, that would have been a public relations black eye.
 

The environmental stuff sounded better:

At a conference at the National Press Club, Steve Mona, former CEO of the Golf Course Superintendents Association of America and new chief executive of the World Golf Foundation said: “Golf has been involved in what we would term the ‘green movement’ for 2 1/2 decades.”

He provided little-known facts such as:

• Golf course irrigation accounts for 0.5 percent of the 408 billion gallons of water used per day in the U.S., as estimated by the United States Geologic survey.

• On a typical 18-hole course of 150 acres, only six acres – dedicated to tee boxes and greens – are considered intensively maintained.

• Nearly 30 percent of 18-hole courses are involved in a formal, voluntary environmental stewardship program.

"Rather than becoming the hit it seemed destined to be, Sonartec – almost inconceivably – has halted operation."

Adam Schupak pens an exhaustive autopsy of Sonartek's demise.

National Geographic To Expose How They Paint That Little Black Line On A Pro-V1

Courtesy of our faithful readers in Fairhaven Greater New Bedford:

TITLEIST GOLF BALL OPERATIONS TO BE FEATURED IN SEASON PREMIERE OF NEW SERIES ON THE NATIONAL GEOGRAPHIC CHANNEL

Who Knew? With Marshall Brain Debuts March 13

Fairhaven, MA (March 6, 2008) ? Viewers of a new National Geographic Channel series, "Who Knew? With Marshall Brain," will journey into the world of product design, manufacturing and testing in a weekly one-hour series beginning Thursday, March 13, 2008, at 9 p.m. EST.

The season premiere will include a visit to the Greater New Bedford, Massachusetts facilities of Titleist, the world's leading manufacturer of golf balls, where host Marshall Brain explores the research, development and manufacturing operations of Titleist golf balls.

Quick, factory workers: take down those Spalding-patented ball specs!  The television crews are coming! The television crews are coming!

From the mixing of a combination of ingredients that eventually form the cores of a golf ball, to the stamping of the legendary Titleist script on the covers, each of the unique processes that go into making the #1 ball in golf are featured in the segment videotaped at Titleist's Ball Plant II.

But we don't get to sit in on a marketing meeting where we hear PR gurus brainstorming "creative," figuring out how to get Vijay to say as little as possible in a 30-second spot? Boo...

Following his visit to Ball Plant II, Brain [SP.] then visits Acushnet Company's Manchester Lane Test Facility where, with the help of Titleist engineers, he examines the aerodynamics of the golf ball and explains why it flies theway it does.  The fast-paced 15-minute segment is one of three separate features in the one hour program.

Naturally, this is a show The Golf Channel should have done, oh, ten years ago. Even a technophobic crank like me is fascinated by how things are made. But that might deprive us of Road Trip: Myrtle Beach...sorry I brought it up.

UAE Dubai Prepping Bids For Future Open, Ryder Cup Venues

Thanks to reader Edward for the story, broken by The Observer's Richard Wachman:

United Arab Emirate Dubai is teeing up bids worth at least £400m for three premier Scottish golf courses: Turnberry, Gleneagles and Loch Lomond.

It is understood that Dubai World, a state-owned business with interests in leisure, property, financial services and container ports, is in advanced talks to acquire the Turnberry course and adjacent luxury hotel from its US owner, Starwood Hotels and Resorts.

Turnberry, which is hosting the Open Championship in 2009, was put up for sale at the end of last year. Starwood is selling on condition it retains the right to manage the resort after a sale is agreed.

And...

A source in the Gulf says: 'Dubai is seeking trophy sporting assets. It wants to be behind leading golfing tournaments, which would help it to promote its own Dubai Desert Classic competition.'

Oh this ought to be fun.

"The typical worker has five years experience and makes about $250 a month -- a better wage than at a legitimate foundry."

I first read E. Michael Johnson's excellent Golf World story on club counterfeiting with great interest and even sympathy for the buyers who were duped. But upon further reflection and a closer reading of a few key graphs, I decided to sit down with this tragic tale, dimming the lights, burning candles and setting up an continuous Itunes loop featuring Roberta Flack's Killing Me Softly With His Song.

Why? Well, apparently now that the big four have outsourced all manufacturing to China and sold out the club pro first to non-green grass accounts and now the Internet, guess what? There are big consequences. And naturally, it's all someone else's fault.

Check out this:

At a typical counterfeit operation in China, it is not unusual to see young women sifting through castings while other individuals constantly work on grinding wheels, moving through the heads at a rapid rate. Another floor might contain those doing the cosmetic work, including paint filling, shaft painting and packaging. According to Golf Digest, the typical worker has five years experience and makes about $250 a month -- a better wage than at a legitimate foundry.

Yes, that's right. The counterfeiters pay better than the legit operations. And the counterfeiters are charging a lot less than the brand names.

Oh there's more:

The owners of such shops, some a front for organized crime, others no more than a mom-and-pop operation, can make upwards of $750 a week selling the counterfeits -- a much better life than grinding the toe and heel of the latest batch of 100-to-a-tray sand wedges for 10 hours a day. Although it would be easy to label China as an ever-expanding pit of deceit where no good brand is safe, the sad fact is counterfeiting offers a better way of life for those involved -- especially when the threat of being caught or prosecuted is minimal.

Again, isn't this the price of doing business in China?

This bit warmed my heart:

In an effort to stem the supply of phony golf products, the Golf Manufacturers Anti-Counterfeiting Working Group -- consisting of Acushnet, Callaway, Cleveland, Nike, Ping and TaylorMade -- was established in 2004. That golf's largest companies and fiercest competitors would come together speaks to the industry-wide dilemma. According to Rob Duncanson, moderator for the coalition, the group was formed to petition governmental authorities in the U.S., China and other countries jointly to enforce laws against counterfeiting of golf products.

 Because they surely have nothing better to do!

Some headway has been made, including several raids and criminal prosecutions, but it is a case of winning some battles while the war still is being lost.

I have an idea. Don't outsource and maybe this stuff won't happen?

Oh I forgot...those precious margins...

"That process could nullify Callaway's victory."

Golf Digest has moved Banal and Gawky's online shtik to the print edition where in the March issue they pretend to argue in cutesy fashion over issues. Their first conversation went nowhere over USGA ball testing, but this bit on the Pro V1 lawsuit was interesting related to the prospects of Callaway landing a big award from Acushnet, even if I don't really understand what this patent laws stuff is about:

Nearly two years ago, Callaway Golf sued Acushnet (parent of Titleist) in U.S. District Court in Delaware, claiming the company's Pro V1 infringed on its patented golf-ball technology (patents that Callaway acquired when it purchased Top-Flite in 2003). In December, a jury found in favor of Callaway. Now the company wants monetary damages and an injunction against sales of the Pro V1. The case is intriguing not just because it went to trial and ball category leader Titleist lost. The court's ruling contradicts U.S. Patent and Trademark Office actions, which initially found the disputed patents invalid and during an ongoing review again has found one patent invalid. That process could nullify Callaway's victory.

"I'm sure there's a constitutional law professor scratching his head wondering how this will play out," says David Dawsey, a patent attorney in Columbus, Ohio, and founder of the website golf-patents.com. "Both sides know the risks. It wouldn't surprise me if Callaway discounted what it perceives to be its value in this case by 50 percent [settles the case], knowing the patents could be declared invalid. Acushnet knows it faces the potential for a huge damage award. But there's really no predicting it."