What ClubCorp's IPO Says About The Golf Industry

Brendan Mohler analyzes ClubCorp's decision to go public to raise $300 million to reduce debts and the rough going to date despite the company having a model that might help keep the country club sustainable.

While the details of ClubCorp's debt are somewhat vague (though a portion probably results from the overall stagnancy of the golf industry), one thing is for sure: ClubCorp needed to raise at least $160 million in net proceeds in order to pay a bond redemption. The initial price range for a share of ClubCorp ($16-$18) did not spark the demand expected, so the company was forced to sell more shares at a lower price ($14) in order to acquire the capital needed.
 
ClubCorp has a lot of assets, but the company has not shown significant profit growth, and thus its stock is not an enticing buy. According to Francis Gaskins, Director of Research for Equities.com, ClubCorp's top-line revenue has only grown four to five percent in the last few years, which is more of an indicator of increased prices rather than the type of growth that excites investors.

USGA Prez Liked That FOX Execs Were Not Golf Experts

The Onionesque revelations have only begun on the USGA's massive sellout to FOX Sports.

golf.com's Michael Bamberger praises the USGA for making a "populist move" by outbidding NBC by about $20 million per year.

Here's the best revelation from Bamberger, who directly quotes USGA President Glen Nager saying something other than what appears in the USGA press release. In other words he spoke to the President and what came out was a little scary.

Glen Nager, the president of the USGA, who worked on the FOX deal with Davis and another USGA executive, Sarah Hirshland, said on Thursday afternoon that golf wants, and needs, to reach those football fans and NASCAR fans and baseball fans and soccer fans. Sean Hannity fans, no doubt, too. Nager liked the fact that the FOX executives were recreational golfers and not golf experts. The USGA was looking for something else.

"We have golfing sophistication," Nager said.

Such sophistication that they rolled out an expensive slow play messaging campaign, now openly mocked by two-time US Open winner Lee Trevino, yet they chose not to address slow play at their most prominent championship by using their very-own and proven-successful time par system (once again). The campaign was undermined immediately to sophisticated golf fans.

What FOX brought, among other things, was a boffo proposal to promote the U.S. Open, the other championships and to help make golf more of the mainstream sporting culture.

Nager also thought highly of convicted lobbyist Jack Abramoff.

Also interesting that Bamberger names Executive Director Mike Davis as a key member of the FOX deal negotiating team. And that NBC and ESPN don't know mainstream but FOX Sports does.

And then there was Bamberger's analysis of who FOX will put in the booth. For those elated that they won't have Johnny to kick around any more, Nager feels your pain. Seems Johnny fits into the populist concept.

This will not be an easy job to fill. Nager did not rule out the possibility of Miller following the USGA to FOX.

As Bamberger notes, that's not happening after Miller's spot-on reaction to the news. And if you really believe Johnny is that important, why didn't you just re-sign with the NBC/Golf Channel?

Since it became clear Nager was going to be USGA President, I've listened to USGA insiders, some past committee members and fanboy types insist his appointment would be disastrous because he's relatively new to the sport of golf. I disagreed, thinking a fresh perspective would be a positive. But who knew we'd get someone so willing to appeal to the lowest common denominator that he'd be willing to alienate two very powerful media companies and potentially millions of serious golf fans for the almighty dollar?

"TaylorMade-adidas Golf Posts Record First-Half Sales"

Another billion-dollar first half of the year for Taylor Made-Adidas.

For Immediate Release...

TaylorMade-adidas Golf Posts Record First-Half Sales Despite Late Start to Golf Season

Footwear and Iron categories grow double digits to lead the charge to over $1 Billion through Q2

CARLSBAD, CALIF. (August 8, 2013) – TaylorMade-adidas Golf (TMaG), the largest and most profitable golf equipment, apparel and footwear company in the world, announced today, Q2 sales of $454M (EUR 348M).  Despite unseasonably poor weather across the globe leading to a late golf season start, TMaG reports sales of $1.012B (EUR 771.077M) with currency-neutral, year-over-year growth of +2% for the first half.  What’s even more impressive, this is the second year in a row that TMaG has recorded more than $1 billion in sales through the first six months.  Sales increases were led by the iron and footwear categories, which each saw double-digit growth YTD of +16% and +18% respectively.  Regionally, the U.S., which accounts for more than half of TMaG’s global sales, posted YTD year-on-year sales growth of +8%.

 “Reaching over $1 billion in sales for the first half of year, while taking into consideration the slow start to the season, proves consumers demand the superior performance and innovation that goes into our products,” said Mark King, CEO and President. “We never stop striving to push the limits for the golfer and I believe that’s why our numbers continue to be so strong.”

Leading the Q2 charge was the stellar growth in the footwear and iron categories.  Footwear was driven by the success of the ultra-light family of adizero products, including adizero tour and adizero sport for both men and women.  The adizero franchise has broken numerous company sales records throughout the first half of 2013 that have stood since 1999, when the adidas Golf brand was formed.  Ashworth also experienced a strong Q2, and the combined dollar-share of the adidas Golf and Ashworth brands for June 2013 was 19.3%, up from 17.0% last year.

Analysts: Callaway A Bargain

Bloomberg's Brooke Sutherland talks to analysts about the relative "bargain" Callaway appears to be as CEO Chip Brewer attempts to turn the company around.

Thanks to reader cpmy for the tip.

The Callaway brand and the Carlsbad, California-based company’s foothold in golf equipment could lure Nike Inc. (NKE), said Grace & White Inc., which also sees Kering SA, owner of the Cobra brand, as a potential buyer. Private-equity firms also may be drawn by the chance to carry out Brewer’s turnaround plan on their own, said Gilford Securities Inc.

In golf, Callaway is “the biggest, best-known brand name out there available for an acquirer,” Casey Alexander, New York-based director of equity research and a special-situations analyst at Gilford, said in a phone interview. Even after the rally, it “can still be considered quite a bargain today.”

Bloomberg: As Golf Goes So Goes The Economy?

That's the premise of Bloomberg reporter Nikhil Hutheesing's story which says the economy is improving based on the numbers in golf.

Well, when people retire, some want a house on a golf course with open views and plenty of green, even if they aren't golfers. There’s your existing-home-sales data. When the economy is improving, golfers spend more on golf clothes, golf vacations, greens fees and the like (consumer spending). And as demand picks up, more golf courses, and homes, are built and old ones spruced up (housing starts).

Right now, golf is pointing to an economy that's out of the rough (click here for a closer look at the golf economy). Steven Ekovich, managing director of the National Golf & Resort Properties Group, a division of real estate investment firm Marcus & Millichap, says financing is returning to the industry. He estimates that the number of distressed assets has fallen by 65 percent since 2009 and says that investor sentiment is improving.

"As the economy heals, we expect to see course values go up this year for the first time in six years," he says.

One reason things are looking better: Lenders that were saddled with loads of distressed debt in golf courses when the housing market plummeted have unloaded much of that debt, in part by selling courses. The pace of sales of 18-hole championship-length golf courses slowed from 86 in the first half of 2012 to 55 in the first half of this year. That means the courses that made it through this period are financially healthier, Ekovich says.

NY Times Profile Of Casey Wasserman

Brooks Barnes files an NY Times Businss profile of 39-year-old Wasserman Media Group head Casey Wasserman, who has amassed 1300 clients, at least $150 million a year in revenue and significant clout, may be contemplating a bid for IMG.

And there was this:

Mr. Wasserman, who is married with two young children, works from an office near U.C.L.A. But he conducts much of his business in the field. Last month, he flew to Philadelphia and hung out around the putting green at the Merion Golf Club, where the United States Open was about to begin.

Wearing aviator sunglasses and chewing cinnamon gum, an asthma inhaler tucked inside a trouser pocket, Mr. Wasserman warmly greeted clients like Kyle Stanley and Rickie Fowler. United States Golf Association officials pulled Mr. Wasserman aside to ask for help with a new ad campaign. Perhaps one of his young players would participate? After some banter that took place outside of my earshot, Mr. Wasserman said brightly, “We will see if we can make it happen.”

Study: California Golf A $13 Billion Industry

The SRI International prepared 52-page California Golf Economy: Economic & Environmental Impact Report, commissioned by Golf 20/20 for the California Alliance for Golf has issued its findings.

The report says golf in the Golden State provides "$13.1 billion of overall economic activity that supports more than 128,000 jobs, $4.1 billion of wage income, and more than $346.6 million in charitable giving on an annual basis."

With 921 separate golf facilities, golf in California is an industry that generates more direct economic activity than movie theaters, fitness/recreational sports, greenhouse/nursery crops, and amusement/theme parks.  It brings visitors to the state, spurs new residential construction, generates retail sales, and creates demand for a myriad of goods and services ancillary to the industry.  Almost unique among participatory sports, golf gives back through direct charitable activities and support of non-profit organizations dedicated to youth and education. Contrary to the 
perceptions of some, golf consumes less than 1.2% of the total water used to irrigate crops, accounts for less than 1% of the total fresh water consumed in the state, and generates significantly higher economic returns per acre-foot of water than most other water-intensive industries.

Taylor Made's First Quarter '13: Up 13%

Some rather huge numbers in a down golf economy.

For Immediate Release:

TAYLORMADE-ADIDAS GOLF REPORTS STRONG Q1 2013

Global Industry Dominance Continues with Strong Metalwood, Iron and Footwear Growth

CARLSBAD, CALIF. (May 3, 2013) – TaylorMade-adidas Golf (TMaG), the largest and most profitable golf equipment, apparel and footwear company in the world, today announced strong Q1 2013 results of $559 million (€423 million), representing  an increase of 13% on a currency-neutral basis. Additionally, TMaG recorded significant currency-neutral, year-over-year growth in nearly every category in Q1, including metalwoods (+8%), irons (+35%), balls (+21%), and footwear (+23%).  Regionally, the U.S., which accounts for approximately half of TMaG’s global sales, enjoyed the strongest market growth with sales up +21% year-over-year.

TMaG’s ongoing success is a direct product of the company’s expanding global dominance in the golf equipment, footwear and apparel industries, as evidenced by numerous recent achievements:
•       The R1 driver holds the No.1 position in U.S. sales.1
•       RocketBladez irons, launched to market last November, is far and away the top-selling iron in the U.S.2
•       RBZ and RBZ Stage 2 fairway woods and Rescue hybrids currently rank No. 1 and No. 2 in U.S. sales.3
•       TaylorMade is the No. 1 driver and fairway wood brand on the world’s six major professional golf tours: PGA, European, Champions, Japan, LPGA and Web.com.
•       adizero footwear, launched in January, is having remarkable success around the world, making it the best-selling golf shoe in company history.

Additionally, TMaG’s acquisition of Adams Golf last year offers a significant opportunity for future growth.  Adams has increased its presence on the PGA TOUR by adding Robert Garrigus and Jeff Overton to a Tour Staff that already includes Aaron Baddeley, Tom Watson, Bernhard Langer, Kenny Perry, Yani Tseng and Brittany Lincicome.  Adams is the No. 1 hybrid brand on the PGA, Champions, and Web.com Tours.
 
TMaG’s first quarter success is all the more impressive given that an unusually cold spring in the northern United States has delayed the start of the golf season for hundreds of thousands of golfers, stunting equipment sales significantly.
 
“Last year was our best ever in terms of sales, so to start this year with a 13% increase over last year’s first quarter is very satisfying,” said Mark King, CEO and President.