2017: Year "Ultra-Premium" Became Part Of The Golf Industry

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In David Dusek's year-end equipment industry wrap for Golfweek, he considers the role PXG and other influences have had in convincing golfers to buy more expensive equipment.

Dusek writes:

“PXG has livened the ultra-premium market again, and all the other guys are (upset) because that used to be their golfers,” said Tom Olsavsky, Cobra’s vice president of research and development. “So now they are saying, ‘We can do that as good as (PXG) can,’ and we’re seeing them offer expensive irons and expensive drivers. Fifteen years ago that was the after-market business, and they made tons of money because it was a better product and people were willing to pay for it.”

In 2017, Callaway released the Epic and Epic Pro irons priced at $2,000 for an eight-club set, as well as the Epic Star driver, which retails for $700 and was previously available only in Japan. Xxio brought the $850 Prime driver to the U.S. market and said there was plenty of demand for it, while Titleist re-released the C16 iron set for $2,700 and debuted the J.P. Harrington line of custom-fit wedges for $500 each.

It will be interesting to see if 2018 brings more of these clubs into the bags of professionals and what impact that has on in the industry. So far PXG is the only brand to have players using these ultra-premium clubs, but could we see the others start having players adopt the pricey stuff?

Wally Uihlein Shifts To The Get-Off-My-Lawn Phase Of His Career: USGA Has No Evidence Of Escalating Costs

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In a letter to the editor, Acushnet CEO Wally Uihlein railed against the USGA claims of cost increases in golf due to distance advances. Be careful what you wish for Wally!

Dylan Dethier at Golf.com reports on the response to Brian Costa's story Saturday.

"Is there any evidence to support this canard…the trickle down cost argument?” Uihlein wrote. “Where is the evidence to support the argument that golf course operating costs nationwide are being escalated due to advances in equipment technology?"

Let's see, off the top of my head there are studies underway on multiple fronts, golf course operators who can point to increased insurance costs due to safety issues and the simple common sense wave realizing the absurdity of an expanding footprint.

"The only people that seem to be grappling with advances in technology and physical fitness are the short-sighted golf course developers and the supporting golf course architectural community who built too many golf courses where the notion of a 'championship golf course' was brought on line primarily to sell real estate," he wrote.

Easy there Wally, short-sighted developers sell golf balls too.

And his jab at Bridgestone did not note the irony of his letter's intent, which would be a similar commercial motive, no?

"Given Bridgestone’s very small worldwide market share and paltry presence in professional golf, it would seem logical they would have a commercial motive making the case for a reduced distance golf ball," Uihlein wrote.

BTW watched this the other night and really is a special film. Warning, bad language! Racially insensitive comments!

Bridgestone CEO: Standardize The Ball For Pros

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We'll ignore all of the business motives momentarily and just take in the first-ever CEO suggestion of a tournament ball in golf.

The comment came during a Golf.com interview with Ryan Asselta where Bridgestone CEO Angel Ilagan said the time has come.

"As it relates to the Tour...there needs to be something to standardize [the ball] because the guys are hitting it way too long," Ilagen says.

This marks the first time the chief executive of a ball company has called for a dialed-back ball. 

And he offered this:

"I think there is an option to have a ball that is played on Tour, and a ball that is played casually," he said, adding that he gives a standardized ball a 50-50 chance of appearing on Tour in the near future.

There is the very reason possibility Bridgestone has made such a ball, perhaps even for the governing bodies to use in their studies and that it could be the basis for a competition ball concept.

That said, the standardized ball concept mentioned by Ilagan would not be relegated to one manufacturer, meaning brands with more market share and golfer loyalty would still be likely leaders in what sales there are for such a ball.

Lawsuit Alleged Sexual Harassment At Bandon Dunes, Kemper

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Bandon Dunes and parent company, KemperSports, are center of sexual harassment lawsuit reported on by Sara Roth of NBC's affiliate station in Portland, KGW.

The case centers around Bandon Dunes GM Hank Hickox, who was quoted in 2015 praising the woman who ultimately filed the suit after she was named hospitality professional of the year.

Roth writes:

Court documents show the allegations aren’t just limited to the golf club in Bandon, Oregon. Two employees claim the alleged misconduct has been pervasive for years at the corporate office. Top executives are accused by the lawsuit of not only condoning the behavior but also participating in sexually inappropriate conduct themselves

The video report:

Kemper's spokesman, in a story by Golf.com's Sean Zak, says the Bandon suit has been withdrawn but would not say it had been settled.

In a statement to GOLF.com, KemperSports' director of communications B.R. Koehnemann, wrote, "The article that was written yesterday refers to a case that has been withdrawn. On Friday, November 10, 2017, Ms. Hamblin acted to dismiss the lawsuit. The court was informed and the case was removed from the docket. When informed of the alleged inappropriate behavior at Bandon Dunes, the Company took decisive remedial action, and Mr. Hickox is no longer employed by KemperSports or Bandon Dunes. Independent outside counsel has been retained to further investigate the situation."

John Strege at GolfDigest.com also reviewed the story and contacted Kemper President Josh Lesnik, the subject of allegations in the lawsuit and reported on by Roth. When company failed to properly address Darla Hamblin's complaint, she soon learned from another employee of purported misconduct at KemperSports and the alleged company culture became part of the case.

“An incident did occur at Bandon Dunes." Lesnik said in a statement. "We handled it appropriately and effectively. Hank no longer works for us, and the staffer acted to dismiss the lawsuit. Any allegations about me are false, and our Board of Directors has launched an investigation that will find the truth.”

Bloomberg: Golf Course Deduction Currently Safe But Facing Increased Scrutiny In Trump Era

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As Republican tax reformers are eliminating many write-offs, the current House version of a new tax bill currently includes the long-controversial deductions for golf course owners promising never to develop their land. While the "loophole" has come close to being closed, it's getting new attention with President Donald Trump's ownership of golf courses using the deduction in ways that contradict the spirit of the law.

Dan Wilchins and Prashant Gopal, reporting for Bloomberg, present a balanced picture, including the important counterpoint to arguments for eliminating the deduction and the relatively small amount of revenue that would be generated by closing the loophole.

In some cases, the tax benefit can make sense. There are communities where golf courses are some of the only open space available. Without the easements, an owner might be tempted to sell out to the highest bidder, which might develop housing on the space, said Sylvia Bates, director of standards and educational services at the Land Trust Alliance, a conservation group.

But in practice, the deductions that land owners take for golf courses are enormous compared with the conservation value, said Ruth Madrigal, a tax lawyer who worked on conservation easements for the U.S. Treasury department during the Obama administration. A developer can build homes and a nearby golf course, get a conservation easement on the links and claim a deduction that can pay for the entire development, she said.

They're Back...Sort Of, The Costco Kirkland Is Back In Some Form

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Thanks to all who sent the GolfWRX post identifying the latest Costco "Kirkland" ball to be offered for sale, just as the CEO promised in January. The original drew great attention and reviews and after selling out, has become a much-demanded cult classic.

While they are billing it as the same ball with "Hot List" branding, the current iteration is only for sale to Costco members, with a 2-order-per-membership limit and no certainty the latest ball is the same as the last (given that it was likely a one-off production run of old Taylor Made cores).

Nonetheless, it spices up discussions about the ball, adds more intrigue to the lawsuits and whether this is a legitimate contender in the golf ball market, as some originals proved to be, or just an occasional stunt.

Here they are Costco members...

Bridgestone CEO: Tiger More Valuable As An Endorser Than He Is As A Player

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Catherine Campo at CNBC summarizes Bridgestone CEO Angel Ilagan's assertion that Tiger "on board" is spurring growth for the game and Bridgestone.

More fascinating is Ilagan's assertion that Tiger is better endorsing than playing.

"He actually has more power as an endorser than he does as a player," the CEO said.

He added that Woods is "the Michael Jordan of golf" and "the single golfer who's had the greatest impact of bringing consumers into [the game]."

Ilagan's suggested that as long as Woods is around (on or off the green), the golf industry is safe.

"I think the industry is in a little bit of panic, although it really need not be," he added.

All of the delusional talk can be viewed here...

Bridgestone bets on Tiger from CNBC.

 

Acushnet Announces Retirement Of Wally Uihlein, Effective January 1, 2018

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Big news out of Fairhaven as the longtime leader of the Acushnet family of brands is retiring at year's end.

David Maher, the current top lieutenant at Titleist, will take over January 1, 2018.

For Immediate Release:

Acushnet Holdings Corp. Announces Retirement of Wally Uihlein, President and CEO, effective as of January 1, 2018

David Maher appointed President and CEO

FAIRHAVEN, MA – September 25, 2017 - Acushnet Holdings Corp. (NYSE:  GOLF) (“Acushnet”) announced today that Wally Uihlein, President and Chief Executive Officer, has notified the Acushnet Board of Directors of his plan to retire, effective January 1, 2018.  Uihlein started with Acushnet in 1976 and has been the senior golf executive since 1995.  Uihlein will remain on the Acushnet Board of Directors and also become Advisor to the Chairman.

Acushnet also announced that its Board of Directors has appointed David Maher, Acushnet’s current Chief Operating Officer, to succeed Mr. Uihlein as President and CEO, effective upon Mr. Uihlein’s retirement.  Mr. Maher, age 49, joined the Company in 1991 and was appointed Chief Operating Officer in June 2016.  Prior to that, Mr. Maher was Senior Vice President, Titleist Worldwide Sales and Global Operations from February 2016 to June 2016 and Vice President, Titleist U.S. Sales from 2001 to January 2016.   

Commenting on the announcement, Acushnet Chairman Gene Yoon said "We thank Wally Uihlein for his forty plus years with Acushnet and the terrific leadership he has provided during this time.  I am very happy that Wally will remain on the Board and also serve as Advisor to the Chairman.  Acushnet will continue to benefit from his extensive knowledge and experience in areas such as strategic planning, acquisitions, player promotion and golf equipment regulatory matters.”

Yoon continued "I also want to congratulate David Maher on his promotion to President and CEO.  During his twenty six years with the Company, David has demonstrated both the leadership and strategy skills that will ensure that Acushnet will continue to be one of the leading companies in the worldwide golf industry.”

Golf Datatech: Online Equipment Orders Up 50%

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Mike Stachura parses the latest Golf Datatech numbers for GolfDigest.com and spots a few interesting trends, including online orders increases but also points out some numbers that suggest retailers will still sell most golf clubs for the time being.

According to the survey, online shopping for golf equipment was up more than 50 percent over a year ago. In addition, half of the survey’s respondents say they go online daily to get information about golf. In a 2016 GPAU study, when answering the question where they were most likely to make their next golf equipment purchase, respondents said an online retailer 13 percent of the time.

PXG Suing Retailers Over Taylor Made Irons Sets Bizarre Precedent Worth Watching

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Having been rejected by courts in stage one of a patent fight over irons, PXG's Bob Parsons has taken his fight to the retailers selling Taylor Made's P790 irons, as multiple outlets reported.

From Mike Stachura's excellent Golf World analysis where he names Worldwide Golf (Edwin Watts, Roger Dunn), PGA Tour Superstore, Golf Galaxy and Dick's Sporting Goods as unsuspecting parties brought into the case by Parsons. But they apparently should not be shocked!

According to Allan Sternstein, professor of intellectual property and director of the IP and Entrepreneurship Clinic at the University of Arizona, “Those that infringe a patent are anyone who makes (manufacturers), uses (consumers), sells or offers to sell (retail outlets, golf shops, etc.) a product that falls within the scope of one or more claims of the patent. Accordingly, suing a retailer for patent infringement is totally appropriate under the law.”

Still, Al Morris, president of Worldwide Golf, said he was “blown away” when he learned Friday morning that he’d been sued by PXG. Morris was part of a team that successfully invalidated patents in a case filed by Max Out golf over clubfitting patents, a more than two-year struggle that cost Morris "hundreds of thousands of dollars" but ultimately culminated with victory in a review by the U.S. Patent and Trademark Office last month.

“I don’t understand it,” he told Golf Digest late Friday. “This shocks us. I think he’s doing a disservice to the industry. I just don’t get it.”

Chris Nickel noted this at MyGolfSpy:

By suing retailers, PXG is taking the road less traveled, but it is a road other have taken with some success. Strategically, the move might make sense, although it’s certain to draw the ire of the retail chains targeted, and likely the mainstream wing of the industry as a whole. The reality is these chains won’t ever be part of PXG’s business plan, so there’s no risk of PXG losing sales directly, and we suspect that PXG Founder, Bob Parsons, doesn’t much care what his competitors think.

It's stating the obvious: Parsons is going after retailers at a time they are struggling and yet still providing a more cost effective option for buying fitted clubs. Not everyone can afford the PXG experience and club, so feel free to think little of Parsons for dragging the good folks in retail into this fight. He certainly is entitled to protect his patents but if he cared about golf, he wouldn't drag the retailers into this.

Here is another angle worth noting: if we get to the "variable distance ball" or distance rollback stage where a product designed to be used on classic courses comes to market, patent wars may develop in an effort to slow down the manufacture and sale of such a ball.

Parsons may have set the stage for other manufacturers to go after retailers or even golf professionals who would sell a product designed to make a course more safe or to play as intended. 

What PXG Must Prove To Win Its Taylor Made Suit

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Golf.com's Michael McCann tries to decipher what PXG must do to prove its patent suit against TaylorMade says this will come down to a battle over "new" and "existing" designs.

The lawsuit referenced by Parsons was filed in the U.S. District Court for the District of Arizona and is embodied in a 277-page complaint authored by attorneys from the law firms Loeb & Loeb and Jennings, Strouss & Salmon. The complaint asserts that TaylorMade has infringed upon multiple patents related to PXG's "revolutionary iron," which purportedly contains "an expanded sweet spot, having an ultra-thin club face, and an elastic polymer material injected in the hollowbodied club head."

PXG contends that the design of TaylorMade's P790 irons copies patent-protected designs for PXG's clubs.