Featured Golf News
Is There a Light at the End of the Tunnel for the Golf Industry?
It's been a tough couple of years for the golf industry. Equipment sales are way down and participation numbers haven't been too healthy either. But the message that golf may at last have turned the corner rang out clearly at this year's PGA Merchandise Show.
Heartland Consumer Products LLC of Lakewood, Ohio, was not an official exhibitor at this year's PGA Merchandise Show in Orlando, but that didn't stop President and CEO Tom Donelan from leaving town with a virtual address book full of new business contacts and having taken plenty of orders. Able to set up in a corner of the booth bought and paid for by sister company Gameplan Creative, Donelan was displaying a nifty little device known as the DrizzleStik, a 36" tall umbrella that fits in your golf bag, extends to 54" and opens up to prevent rain from damaging your clubs. This is a product his company purchased from its previous owners, Harbro, about a year ago.
With one sample and just a few square feet of space in which to demonstrate it, the odds of much interest were going to be limited at best. And never having experienced the mother of all golf trade shows and, therefore, not being fully aware of how many people can cram into the Orange County Convention Center at any one time (40,000 individuals and 1,000 exhibitors from 76 countries), Donelan was prepared for a quiet three days. He was in for quite a shock.
"It was absolutely amazing," he says. "Incredible really. The networking opportunities were endless and I got the chance to meet some of my best customers face-to-face for the first time."
Donelan, 40, is the type of guy who prefers doing business face-to-face. Energetic and passionate about the company he runs alongside Executive Vice President Greg Heslin, Donelan is a successful entrepreneur who happily goes that extra mile, like showing up at an industry convention a thousand miles from home without really knowing what to expect. It's no surprise then that Heartland Products, and the DrizzleStik in particular, performed so well in 2009.
"We had a great fourth quarter when our golf business was up 50 percent primarily because of a very wet fall and winter in the Midwest," says Donelan. "For the year overall, we were up at least 10% compared with 2008."
A golf company . . . up 10% . . . in 2009 . . . during the worst recession to hit the U.S. since the Great Depression? Anyone who keeps the books for any commercial enterprise will know those figures are fairly atypical.
With a national unemployment rate reaching 10 percent by December last year, and nearly 16 million Americans out of work, 2009 was, as predicted, a fairly miserable year all-round. And though golf has, historically, been in the enviable position of being among the last industries to arrive at the point of recession but one of the first out, it would be wildly inaccurate to say the game hasn't suffered.
One only need look at statistics released recently by golf research company Golf Datatech of Kissimmee, Fla., to see just how badly the game is feeling it. One of several depressing figures the company published was the 10.5 percent by which dollar sales for golf equipment (balls, woods, irons, wedges, putters, shoes, gloves and bags) at "green grass" (on-course) stores plummeted in 2009.
The situation was worse at off-course stores. Last year, just under $1.6 billion worth of golf equipment was sold on Main Street - 11.5 percent less than in 2008, and roughly 18 percent less than in 2007. Driver sales were down 17 percent in '09 compared with a year before, fairway wood sales dipped 22 percent in just six months from June '08, and 30 percent fewer hybrids were sold in July of '09 than in January of '08. Every other piece of equipment (except wedges) reported a double-digit loss compared with 2008.
Among the manufacturers hit the hardest was Callaway, whose annual net sales dropped 15 percent, from $1.1 billion to $951 million (on a currency-neutral basis, net sales would actually have been $987 million, a decrease of 12 percent). Gross profits fell alarmingly from $487 million to $344 million, a 29 percent reduction which, the company says, could be attributed in part to "heavy discounting in the marketplace as a result of the economic environment." (Though most people probably didn't have the money to purchase one, 2009 was clearly a good time to be buying an FT-9.) "The economic and market conditions in 2009 were without a doubt the most challenging in recent history," Callaway's President and CEO George Fellows said in a press release dated January 26th.
With sales figures like Callaway's, the numbers of rounds played in the U.S. down a percent from 2008, more golf courses closing than opening, and influential manufacturers like TaylorMade and Nike choosing not to exhibit, show-goers probably had little hope the 2009 event would amount to much.
But golfers and the golf industry appear capable of making the best of a bad situation, so instead of empty aisles, a visible lack of innovation, a load of dreary speeches about how desperate things had become, and an impending sense of doom, there was, in fact, a palpable sense of resilience and expectation in the corridors and halls of the OCCC that was somehow missing in 2008.
"We've done hundreds of trade shows, but I've never seen traffic and sales at our booth like we experienced this week," said Steve Mann, President and CEO of Dawgs Golf which manufactures lightweight, flexible golf shoes. "Ours is a new product, so we didn't know how it would be received. But this show was absolutely fabulous. We picked up six international distributors, talked to 30 or 40 PGA professionals and retail buyers, and signed up countless new accounts."
Sundog Eyewear's Gary Makar was delighted with the level of interest the ground-breaking new Mela-Lens attracted. "We were extremely pleased with our booth traffic and also the numbers of orders we wrote," he said. "From our standpoint, this year was more about the quality of the attendees than the quantity. The people that were there came to do business. Our distributors were very encouraged by the results."
Then there was Tour Edge's marketing director Jay Hubbard, who was similarly surprised, not to say excited, by what he saw. "Like a lot of companies, we came into the show watching our expenses carefully and not knowing what impact the economy would have on attendance and business written at the show," he said. "But I would say it was an overwhelming success. There was a good flow to the show, and a great buzz all week."
And Steve Boccieri, President and CEO of Boccieri Golf which makes the Heavy Putter as well as its offspring, the Mid-Weight and Lite-Weight series of putters, also chimed in. "It may have been a little smaller than in recent years in terms of the number of companies exhibiting, but two things gave us great hope," he said. "First, our booth was busier than in past years, so we know people are purchasing. Second, the caliber of attendees was stronger than in past years. We saw decision-makers, directors of golf and general managers. The show was a long way from what it was in the 1990s, but the industry is recovering slowly and surely."
Indeed, recovery seemed to be the major theme of this year's show with everyone from PGA of America President Jim Remy to Callaway's George Fellows to Heartland Products' Tom Donelan expressing hope for the new year. "Golfers love technology and innovation," said Remy during the PGA's State of the Industry presentation. "We believe those that didn't buy the new putter or driver last year will be anxious to buy it this year. So we are cautiously excited about going forward."
And while Remy spoke of his cautious excitement, both Fellows and Donelan went for cautious optimism. "We are cautiously optimistic that the economy and the golf industry will begin to recover in 2010," said Fellows, whose company estimates sales in 2010 will improve to somewhere between $990 million and $1.05 billion, and whose gross margins for the year will improve to approximately 42 percent to 44 percent due to a strong product offering and fewer discounts in the shops.
"I'm very cautiously optimistic," says Donelan emphasizing the "very," probably in light of the fact he has somewhat less spare cash than Callaway with which to make mistakes. "We shall need to be judicious, and we're certainly not to the point of being bullish. But we will have one or two new products this year, including a 20-inch version of the DrizzleStik which will fit in a golf bag's side pocket. We expect our golf business to grow by 20 percent."
One company rejecting the cautious excitement and optimism in favor of unreserved confidence is Boccieri Golf which, rather than consolidate its recent successes, launched the very well-received Heavy Wedge in Orlando, and later this year will plow ahead with plans to introduce a set of irons and a driver to the range.
"We continue to work on future lines despite the recession," says Boccieri. "Irons are in the works and a driver is a strong possibility by 2011, barring unforeseen circumstances. Five years ago, when we started, we knew jumping into the ultra-competitive driver market would have been a sure recipe for failure. We also shied away from growing too quickly. Instead we focused on developing game-enhancing putters. Now we feel the time is right to capitalize on our momentum."
Boccieri Golf certainly has more than its share of that right now. And Tom Donelan's Heartland Products is set fair for a good 2010. So too, if this year's PGA Merchandise Show was anything to go by, is the rest of the golf industry.
Well, better than 2009 at least.
Tony Dear is an Englishman living in Bellingham, Wash. In the early 1990s he was a member of the Liverpool University golf team which played its home matches at Royal Liverpool GC. Easy access to Hoylake made it increasingly difficult for him to focus on Politics (his chosen major) and, after dropping out, he ended up teaching golf at a club just south of London where he also made a futile attempt at becoming a "player." He moved into writing when it became abundantly clear he had no business playing the game for a living. A one-time golf correspondent of the New York Sun, Tony is a member of the Golf Writers Association of America, the Pacific Northwest Golf Media Association and the Golf Travel Writers Association. In 2009, Tony won first place for Editorial/Opinion in the ING Media Awards for Cybergolf. The article (http://www.cybergolf.com/golf_newsa_euros_take_on_the_2008_ryder_cup_matches) that impressed the judges was the one about Europe's Ryder Cup team and Captain Nick Faldo's decision to pick Paul Casey and Ian Poulter rather than Darren Clarke.