June 28 – United States Golf Association (U$GA) shares fell on news of an organizational shakeup and a less than appealing U.S. Women’s Open leaderboard.
Shares declined $1.82, or 7.5 percent, to $22.37 at 4 p.m. in New York Stock Exchange composite trading, the biggest drop since February when USGA CEO Walter Driver announced a delay in planned staff benefit cuts, breaking an earlier shareholder pledge to trim unnecessary expenses.
Wall Street found little to be enthusiastic about when the Far Hills, New Jersey-based governing body of North American golf said in a statement today that the position of Championship Agronomist would be "eliminated" to help cut 3% of the organization’s 2007 projected $5 million deficit.
Shareholders expected deeper cuts from the 63-year-old Goldman Sachs executive and soon-to-be-retiring USGA President Driver, who was brought in to create a leaner USGA while promising to boost shareholder value.
One analyst, citing a leaderboard topped by Angela Park, In-Bee Park, Jee Young Lee, Karine Icher, Amy Hung, Jiyai Shin, Joo Mi Kim and Shi Hyun Ahn but minus draws like Michelle Wie or Annika Sorrenstam virtually guaranteed weak television ratings for this weekend’s U.S. Open on NBC.
“Who are these people, I mean?” said Chad Upside, a New York-based analyst at Slash & Gouge, who is revising his “dump” rating on USGA stock to “unload as fast as you can.”
“And it doesn’t get much better next week with the Senior Open, hardly a positive cash flow opportunity.
“Simply put, they have taken a bigger hit than we thought they would.”
Upside says resistance from the USGA Board to trim fat off the company bone or to simply eliminate its staff must change “immediately because these rising staff and championship operation costs may not reverse when interest rates come down.''
Despite nearly $300 million in cash reserves, Standard & Poor's Rating Services in London revised its USGA outlook to “yikes” from “eh” and said the governing body has failed to deal with its “restricted capacity to manage through a more testing market environment.” S&P retained the organization’s C+/C-1 counterparty credit ratings.
Golf has its drawbacks. It is possible, by too much of it, to destroy the mind. WALTER SIMPSON