Recent articles have already predicted that the end is near for the game and the industry. Everyone to your battle stations, entomb yourself in a bomb shelter or withdraw all your savings and buy a new driver because life, as we know it, is over.
On the heels of the latest news reports that Nike is closing its club/ball/bag businesses because they aren’t profitable comes word word that Golfsmith is considering restructuring plus, we’ve all known for a while that adidas is looking for a buyer for TaylorMade.
Because major equipment manufactures have studied their financial statements and concluded they cannot make a profit, this apparently means that not enough people are entering the world of golf to replace those who are leaving and the entire future of the game is now at risk.
Let’s face it, the purchase of a new driver is close to the same price as a refrigerator, making it a durable good.
The stock market uses the sale of durable goods to determine the health of the whole economy, so if the sale of drivers goes down the whole country is facing economic hardship or so it would seem.
As golfers, we have been down this road before.
No one likes to see a business fail. Investors lose money, pension funds are weakened and individuals become unemployed.
However, from a golfer’s point of view, there will be some great discounts on new equipment but generally, the loss of a few equipment suppliers isn’t going to change anything.
First of all, there are too many now and the majority of those who are closing shop didn’t capture enough market share to sustain themselves.
Using Nike as an example, how many sets of clubs would they have to sell worldwide to offset the endorsement money they pay to Tiger Woods and Rory McIlroy? Add in numerous other touring professionals who receive money to play Nike equipment.
Strangely, I don’t know one person I have ever played with who had a Nike driver.
The reaction to Nike, TaylorMade and Golfsmith by people who know nothing about the golf industry will immediately be that golf is losing popularity and Tiger Woods’ career might be over.
Neither is true.
Golf is growing and Tiger has little to do with Nike’s decision to fold its tent. The truth is that Nike entered the equipment manufacturing business with the thought of dominating the market. They produced products of quality and at fair prices, but even in Tiger’s greatest days Nike could not break through the barriers imposed by Titleist, TaylorMade, Ping, Callaway and Cobra.
They simply could not gain ground on these well-established companies.
Golf, like most other businesses subscribes to the 80/20 rule, that being that 80 per cent of the sales are made to 20 per cent of the players. It is a very limited, sophisticated, loyal contingent and it is not changing much in size or demographics.
Companies trying to increase market share must do so by taking it from their competitors. Nike never really put a dent in their competition.
Everyone knows that TaylorMade created advancements in design and technology at rates faster than the speed of light, but went too far by changing to a newer model several times a year. Every time it released a new driver, making last month’s $400 purchase obsolete, it also alienated all of the previous buyers.
Several questions come to mind among which I’m sure you are wondering is who will pay Tiger Woods big money when his career may be over? Next, did Rory save enough of the huge amounts he was paid over such a short time frame to not have to worry about the future?
Where can I buy discounted Nike equipment?
Assuming the sky isn’t falling and if my favorite course hasn’t been sold for development, what time do I want to play?
That’s the big question for the people still left who, despite popular opinion, still do exist.