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American FootGolf League gets seal of approval from golf course owners group

Golf purists might object, but FootGolf, the relatively new hybrid soccer/golf sport, is here to stay and is growing to the extent that it has received what is tantamount to a seal of approval from the National Golf Course Owners Association.

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Last week, the NGCOA announced that it has recognized the American FootGolf League as the governing body for the sport of FootGolf in U.S.

“Some people think we’ve been drinking the Kool-Aid or doing something strange,” Mike Tinkey, deputy CEO of the NGCOA, said. “But what we’ve found since 2013 is that FootGolf has grown virally in our membership. It’s bringing in new customers, a lot of millennials, families and women, and they’re spending money. And their ancillary spend is very strong. It’s sort of energized a lot of facilities.”

The American FootGolf League was officially recognized, Tinkey said, for its history — it introduced the sport in the U.S. - and for “its support for owners,” Tinkey said. “We felt its heart in the right place and it provides tools to help owners understand it.”

It was welcome news at the American FootGolf League, obviously. “Our relationship with the NGCOA further validates the sport of FootGolf and the role of the AFGL in growing it in the United States,” Roberto Balestrini, founder of the league, said in a news release. “We’ve got great relationships with many of the leading golf course operators already and look forward to continuing to expand and introduce FootGolf to new golf facilities in 2015.”

The entry cost for FootGolf is relatively low, Tinkey said, “from under $3,000 to $5,000. And it’s bringing in tens of thousands of dollars up to a hundred-thousand dollars in one case at an 18-hole facility.”

There are two types of owners — those who would like to see the FootGolf players segue into golf and those who don’t care.

“I think in the main we’re interested in studying, as an association, whether there is a crossover to some form of traditional golf. I think we’ll be looking at that.”

Haggin Oaks in Sacramento is among those courses that have embraced FootGolf, as reported here.

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Business

Chinese investors buying up Myrtle Beach courses and 'they come with cash'

Myrtle Beach, S.C., renowned as a destination resort for golfers, has been attracting a different golf clientele: Chinese investors buying up its courses.

The Sun News reported recently that Chinese investors have bought 13 courses in the area, paying $47 million for them.

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International World Tour Golf Links

“Absolutely it’s a good thing,” John Draughn, a commercial sales broker for Coldwell Banker in Myrtle beach, said. Draughn has brokered some of the sales. “The alternative, in my opinion as a real-estate professional, is that you don’t want these things going to seed. We’ve had one or two down here go to seed.”

Myrtle Beach courses appeal to Chinese investors for a couple of reasons, Draughn said.

“A lot of these guys are coming out of New York and New Jersey and are buyers of commercial property,” he said. “Their kids are going to Harvard or Yale and such, and they understand the east coast. And Myrtle Beach is affordable and nice.

“One or two of these guys are just fanatical about golf. The man who bought Crown Park Golf Club [Shengwen Lan] played in the [Myrtle Beach] World Amateur a couple years ago.”

The Classic Golf Group sold its three courses — Founders Club of Pawleys Island, Indian Wells Golf Club and Burning Ridge Golf Club — to a group of Chinese investors for about $11 million.

“As far as selling a golf property now it depends on the purchaser, whether they can even get financing,” Ed Jerdon, a partner in the Classic Golf Group, told the Sun News. “The Chinese, they came with cash, and they continue to buy.”

Cokie and Steve Roberts, who write a weekly syndicated column for United Media, note that it isn’t golf alone enticing Chinese investors.

“The potential impact of this trend goes far beyond refurbished courses and rescued jobs,” they wrote. “Many Chinese investors want to establish footholds for their families in America, and have also bought at least 100 private homes in the area.

“A recent Barclays survey of China's wealthiest families found that almost half want to move abroad. According to the Wall Street Journal, 78 percent cite ‘better educational and employment opportunities for children’ as their main reason for emigrating.”

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Business

Two key players separately attempting to raise capital to revive Back9Network

Is it possible the Back9Network has a future after all, despite having ceased operations only 15 days ago?

It does seem a long shot, but two key players are, separately, attempting to raise capital to resurrect the fledgling golf lifestyle network, the Hartford Courant reported on Tuesday.

One is the founder and former CEO, as well as the largest shareholder, Jamie Bosworth, who if successful, might “offer him a door back into the CEO’s chair,” the Courant wrote. Bosworth, who resigned under pressure last summer, said he is attempting to raise between $30 million and $40 million, “which will allow us to produce the type of content that excited both investors and the golf lifestyle industry.”

The other is Bosworth’s replacement as CEO, Charles Cox, who is working with company executives who have “a couple of groups that have shown interest, and we're trying to push them to get to the finish line as quickly as possible,” he told the newspaper.

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The Back9Network debuted on Sept. 29 on DirecTV and was on the air fewer than five months. In January, it eliminated 35 full-time positions and delayed payroll payments to some employees.

What remains to be answered is whether there is room for two golf networks. We posed that question to Cox last September. His answer:

“I wouldn't have left a nice safe career at ESPN if I didn't think so. I think it's a no-brainer channel offering. You've got the only sport you can play until you die. You've got a 70-billion dollars annual consumer spend around the lifestyle. Look at other [sports] genres that have a lifestyle around it. There's only one, outdoors, hunting and fishing, and they've got several channels.”

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Business

Back9Network suspends operations, cites 'temporary shortfall in capital'

The beleaguered Back9Network announced on Monday that it has suspended operations, the latest setback for the golf lifestyle network that debuted Sept. 29 on DirecTV.

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No one at the Back9Network is speaking publicly and only this statement was issued:

“Due to a temporary shortfall in capital, Back9Network has suspended its operations. Management and the board of directors are planning next steps and will continue their efforts to secure long-term, operating capital. The company will keep the public informed with any new developments.”

This is the latest and most serious setback for the network. Last month, it eliminated 35 full-time positions, according to the Hartford Business Journal. Ten days earlier, the Hartford Courant reported the network had “delayed payroll payments to some employees…but made the payments on Friday and remains on track in its growth strategy, a company official said.”

It has been available only on DirecTV, meanwhile campaigning unsuccessfully to get other cable operators to add it.

It also had sued its founder and former CEO Jamie Bosworth, who had resigned in August of 2014, though the suit has been withdrawn with the parties "agreeing to resolve differences in binding arbitration," the Courant reported.

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Business

NFL owner, golf enthusiast eyes purchase of Rees Jones course in S.C.

Even as golf promotes the idea that the game is open to all comers, it still requires wealth at the ownership level and few are wealthier than Robert McNair.

The billionaire owner of the Houston Texans and an avid golfer, McNair is leading a group interested in purchasing the Golf Club at Briar’s Creek in John’s Island, S.C., which filed for bankruptcy last week. The club listed assets of $1.56 million and liabilities of $37 million, according to the filing.

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A founding member of Briar’s Creek, McNair, and his group are seeking to purchase the club’s assets for $11.3 million, and to “invest another $2 million into a new debt-free private club,” the Charleston Post and Courier reported.

Golf Digest named Briar’s Creek, a Rees Jones creation, the best new private course in 2002 and recently named it the seventh-best course in South Carolina.

McNair, 78, who has a home in nearby Kiawah Island, is worth $2.4 billion, according to Forbes magazine’s latest ranking of the 400 richest Americans.

The USGA’s Golf Handicap and Information Network (GHIN.com) shows that McNair plays to a handicap index of 8.7, He is a member of Pine Valley (N.J.) Golf Club, the Quarry at La Quinta (Calif.), the Everglades Club (Palm Beach, Fla.), River Oaks Country Club (Houston), Lochinvar Golf Club (Houston), the Kiawah Island (S.C.) Club, Castle Pines Golf Club (Castle Rock, Colo.) and the Floridian (Palm City, Fla).

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Business

Japan manufacturers endorse non-conforming clubs

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The Japan Golf Goods Association, the trade organization for golf equipment manufacturers in Japan, today announced that it would support the distribution of non-conforming golf equipment. 

“JGGA believes that it is desirable for the stimulation of the golf market to have a wide variety of golf equipment available in the market from which all types of golfers may choose in order to find one that really fits their respective purposes and needs, hoping that more and more golfers will enjoy playing golf as a result of such improvement in the golf equipment market,” an English translation of the JGGA statement reads.

“From this point of view, JGGA has left it to the judgment of each member company whether to manufacture and/or sell golf equipment that doesn’t fully conform to the specifications set forth in the Rules of Golf promulgated by R&A.”

A recent study by Golf Datatech and Yano Research Institute of Japan, the world’s two leading organizations studying the global golf retail market space, Japan is the No. 2 country in golf sales in the world with 24 percent of the global golf market. The JGGA sponsors the Japan Golf Fair, Japan’s version of the PGA Merchandise Show, which will be held Feb. 13-15 in Tokyo.

In its statement the JGGA acknowledges that an influx of non-conforming equipment “could create confusion among golfers and tournament organizers. JGGA considers it very important for the healthy development of the industry that all relevant parties make efforts to prevent consumers from buying nonconforming equipment without knowing that it is nonconforming, and to avoid any confusion or trouble due to the inability of tournament organizers to determine the conformity of each equipment at the tournament site.”

The JGGA is advocating that products be clearly marked as nonconforming, although it has not indicated what specific efforts or product labeling will be made. Its main motivation seems to be to cater to golfers seeking more enjoyment without performance limits imposed by the rules.

Several U.S. manufacturers contacted for this story have either declined comment or not returned inquiries. The R&A also has not returned an e-mail request for comment.

U.S. manufacturers have not embraced non-conforming equipment, and while the JGGA's Japan Golf Fair routinely has nonconforming equipment on display, no major U.S. company has introduced non-conforming equipment to date. Smaller companies have introduced non-conforming clubs and balls, like Hireko, which last year introduced a 515 cubic centimeter driver called the Juggernaut (above). After much talk about non-conforming equipment at the last two years' PGA Shows, fueled largely by former TaylorMade CEO Mark King who launched a grow-the-game, alternative rules golf initiative Hack Golf last year with great fanfare, there was very little discussion on the topic this year. 

This news from the JGGA clearly reopens the discussion.

“For the most of amateur golfers, nothing give[s] more pleasure than long driving distances and control of a golf ball on the green with a back spin as professional golfers do,” the JGGA statement reads. “That is why quite a few of golfers are still using and wanting nonconforming golf equipment and why nonconforming golf equipment is still available on the market in response to such demand. Some golfers may be using or buying nonconforming equipment without knowing that they don’t conform to the Rules.”

What’s not clear is just how much advantage non-conforming equipment might provide for amateur or recreational golfers, or whether there's expressed interest in playing clubs that don't adhere to the rules. A 2014 survey by Golf World suggested less than a quarter of golfers surveyed would be interested in "a nonconforming driver that promised an extra 15-20 yards." John Spitzer managing director for equipment standards of the USGA told Golf World last year, “To think nonconforming clubs would somehow increase participation, I don't see that. It's not 1,000cc drivers or a ball that goes 30 yards farther that's going to grow the game."

But it is clear that there are certain elements within golf equipment manufacturing willing to go down the road of selling clubs outside the rules. In that stame Golf World story, Bob Philion, president of Cobra-Puma Golf, told Golf World, "There is a sense of urgency in the industry, whether from our competitors or the PGA of America, to be less intimidating and more fun. Do I think nonconforming drivers will be out there in 10 years? I do. Three years? I do. I think the street signs for the game aren't positive enough for someone not to try it." 

The JGGA’s statement clearly is endorsing manufacturers be free to take a more relaxed approach to the rules.  It concludes, “Through a variety of actions and initiatives, JGGA is committed to providing a market environment where all golfers are able to choose and use the most appropriate golf equipment for every situation.” 

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Equipment

Callaway Golf makes profit in 2014, best year since 2008

xr-driver-sole-b.jpgIn the nearly three years since Chip Brewer took over the reins as president and CEO of Callaway Golf, much has been made about the company’s comeback. Belts were tightened, product innovation grew and sales numbers were up. Indeed, general consumer perception was changing along with the company’s re-emerging presence in the professional ranks, too. Thursday, the company put those changes in the clearest perspective.

For the first full year since 2008, Callaway Golf made money. In a year that had been in many circles troubling for the golf industry, Callaway announced that full-year income for 2014 increased by five percent to $887 million, up from $843 million in 2013. Its gross profit of $358 million was the highest since 2010, and fully diluted earnings per share were $0.20 versus a $0.31 loss in 2013. 

“When looking just at the currency neutral basis you can see that we’ve made nice progress,” Brewer told investors on the company’s fourth-quarter earnings call Thursday. “What we’ll continue to need to do is basically the things that we’ve been doing in operational improvements and revenue growth. On a currency-neutral basis I believe this was and is trending on a very positive basis.”

Among the highlights for 2014 were increased sales in woods (8 percent), irons (12 percent) and golf balls (4 percent). The company saw also sales increases in all regions of the world, including an 11 percent gain in Europe. 

Still, the company is cautious about its 2015 forecast, suggesting that operating costs will increase due to spending on tour support and marketing. But the big drag will be weakening foreign currency. Callaway is forecasting a decrease in net sales based solely on unfavorable foreign currency exchange rates. Still, on a constant currency basis, Callaway is forecasting an increase in net sales to a high end of $920 million, or as much as 5 percent, including an estimated growth of 5-6 percent in core channel business. 

Brewer also said Callaway increased its investment in the driving range/entertainment franchise TopGolf to $50.4 million. “We continue to be excited about the prospects of that business, and we think that’s going to be a positive for the shareholders of Callaway Golf,” he said. 

Brewer also touted the company’s newly launched XR line of clubs and Chrome Soft ball and noted golfers’ acceptance of higher-priced products.

“Given the strength of our product line for 2015, and anticipated additional improvements in our operations, we expect for 2015 on a constant currency basis not only sales growth and market share gains, but also further improvements in gross margins and profitability. Golf is a momentum business and fortunately momentum is now on our side." 

Callaway’s stock price was up 3 percent in trading this morning.
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Business

Back9Network eliminating 35 full-time positions, sues former CEO

The Back9Network, the new golf lifestyle channel that made its debut Aug. 29 on DirecTV, is eliminating 35 full-time positions, the Hartford Business Journal reported.

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CEO Charles Cox called it "a thoughtful strategy that will allow the network to remain competitive and produce engaging content while growing the golf lifestyle," in a statement provided the Hartford Business Journal.

Meanwhile, the network is suing its former CEO Jamie Bosworth, according to the Hartford Courant, which reported that he "expressed doubts about the company's ability to succeed to investors and potential investors while he was leading the company -- and continued doing so after he left, the company says in a Superior Court lawsuit against him."

The suit claims that the network sent him a cease-and-desist letter in October, but that "he continued to criticize the company's management and programming," the Courant reported.

Ten days ago, the Courant reported that the network had "delayed payroll payments to some employees last week but made the payments on Friday and remains on track in its growth strategy, a company official said."

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Business

Weather has been bad, but news has been good for golf industry

The notion that golf as we know it is dying has been put on hold by PGA PerformanceTrak data released last week.

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(Getty Images)

The pertinent numbers:

— Rounds per day open were up 1.4 percent year-to-date through November, 2014.

— Golf fee revenue per day open was up 2.2 percent year-to-date.

— Merchandise revenue per day open was up 2.6 percent year-to-date.

— Thirty-three states showed growth in rounds played per day open.

“The key metric is on a per day open basis. It’s an adjustment based on weather,” Mike Hughes, CEO of the National Golf Course Owners Association said. “The good news is that people are playing golf and spending money when the weather permits, but the weather is crap.”

The PGA PerformanceTrak, produced in cooperation with the NGCOA, continued to show that 2014 had the fewest days open in the past nine years.

Related: Has golf’s demise been greatly exaggerated?

“But the good news is more important,” Hughes said, explaining that “contrary to the constant drumbeat of negative comments,” the health of the game has improved over a year ago.

“Like any other discretionary income category,” he said, “as the economy continues to improve golfers will spend more money. As I tell people, golf is not racquetball. Golf has been around 400 years. There’s a reason for that. It has a particular attraction. That’s a great quality.”

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Business

There is optimism at Treetops Resort despite bankruptcy reorganization

The news, on the surface, was not good: Treetops Resort, once a highly-acclaimed golf and skiing destination in Northern Michigan, had filed for Chapter 11 bankruptcy protection.

Was it another sign of waning interest in golf, that this resort that ranked as high as 32nd in Golf Digest’s Top 75 Resorts in America could not meet its debt obligations?

Not so fast, says its general manager Barry Owens.

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“I started here in the fall of 2010,” Owens said on Tuesday. “In 2010, Treetops did 48,000 rounds on five golf courses. It was mind-boggling to me.

“In 2013, we did 96,000 rounds of golf. The growth was crazy. And it was very much across the board, things like food and beverage, merchandise sales and those types of things. They shot up dramatically. From 2010 to 2014, when we see this year completed, revenue will be up over 80 percent.”

The Detroit News reported that before debt payments Treetops lost $467,000 in 2010 but turned a profit of $1.2 million in 2013. During those years, room stays increased from 21,000 nights to 34,300 nights. In 2014, rounds totaled nearly 90,000.

Owens said the downturn in the economy in 2007 and 2008 was a contributing factor, but so were issues pertaining to marketing and mismanagement.

“When you hear that someone has gone through a reorganization through Chapter 11 you usually think a bank is involved,” Owens said. “There is no bank involved.”

Related: Has golf’s demise been greatly exaggerated?

Owens explained that the group of men who purchased Treetops in 2002 “had some challenging operating results” through 2010.

“During that entire period they operated at a negative cash flow, necessitating these guys to continue to make these contributions that added up to north of $25 million in mortgages,” he said. “These mortgages haven’t had any payments on them in 10 years, so the property has been unable to support that volume of debt. Basically they’re bankrupting themselves.

“For lack of a better term, I’ll call it legacy debt. When they first started here, our owners were frustrated with their investment. We’re fortunate that they’re all well off enough to keep it afloat through challenging times. Back in 2010, they were at wit’s end. But since the start of 2011, they haven’t had to put anything in and they’re excited about that. Now they see the potential.

“This is going to position us to make improvements, to add amenities, to start a real estate program. We don’t use the B word. We use reorganization, and we’re real excited about it. It’s a way to convert debt to equity.”

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