The Local Knowlege


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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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.


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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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.

(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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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.


“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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Gear & Equipment

TaylorMade to debut R15 drivers tonight

In the era of the global marketplace, there are no secrets anymore, and news embargoes of product launches seem to be about as effective as leaving a bowl of chocolate-chip cookies in a room full of kindergarteners and asking them to wait.

Hence, it comes as no surprise to anyone that TaylorMade will be unveiling a new driver tonight at a special New York City media event at Golf & Body in Manhattan. The R15, which from all previously published accounts and leaked details from TaylorMade’s Japan website, appears to feature movable weights in the familiar sole track made famous by the company's highly popular SLDR driver, which was launched in 2013. 

The weights appear to slide in a track towards the front of the sole. The SLDR driver emphasized a “low forward” center-of-gravity location aimed at reducing spin and improving the efficiency of energy transfer at impact by placing the center of gravity more in line with both the center of the clubface and the club’s loft. 

Based on the images, the club will be offered in both black and white head styles. TaylorMade first introduced its drivers in white in 2011 with the R11 and RBZ models. It moved off that color in mid-2013 with SLDR, but returned to special limited edition white versions of the SLDR this summer. 

Tom Kroll, TaylorMade product evangelist, described the company's position on white this way last summer: "We still as a company strongly believe in the performance and technology of white and the contrast of a white crown with a black face, and how it aids alignment and the entire aspect that white represents. I think we’re definitely standing behind that. It’s a part of our culture, and people have come to associate TaylorMade with white." 

More details on TaylorMade’s plans with R15 are expected from tonight’s event. Stay tuned. 
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Nike Golf names Jordan Brand exec new president

Nike announced today that Daric Ashford will become President of Nike Golf.

Ashford is currently vice president, general manager of Jordan Brand for North America and is a 21-year Nike veteran. Daric has held senior management positions across retail and sales within the Nike brand. Jordan Brand is a subsidiary of Nike dealing primarily in basketball shoes and athletic apparel. PGA Tour player Keegan Bradley has famously been testing and helping design a Jordan Brand golf shoe, in consultation with the company's namesake and founder, one-time basketball player and full-time current golfer Michael Jordan.

There were no details about Ashford’s golf expertise, although those familiar with him call him an avid player. One example: He was listed as a participant in the 2014 Michael Jordan Celebrity Invitational Pro-Am.

“Daric’s leadership has helped to deliver strong revenue growth and expand the Jordan Brand. His proven track record, along with his experience in global categories, makes him ideally suited to leading the golf business,” said Jayme Martin, Nike’s vice president and general manager of global categories.

Ashford takes the helm of a golf brand whose two preeminent endorsees Tiger Woods and Rory McIlroy are regarded as two of the top three favorite golfers in the game, according to a recent survey by industry research firm Golf Datatech. McIlroy is currently the No. 1-ranked player in the world. The Nike brand also counts 2014 U.S. Women’s Open champion Michelle Wie in its stable.

Over the last six years, sales for Nike Golf have remained steady while still trailing top brands like TaylorMade-adidas Golf, Callaway Golf and Acushnet. Sales were $725 million in May of 2008, and $789 million through the fiscal year ended May 2014. The 2014 numbers were about equal to 2013’s figure of $792 million. 

Ashford replaces Cindy Davis, 52, who announced her retirement in October. Davis had led Nike Golf since 2008.

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Watch The Caddy Girls get turned down on ABC's "Shark Tank"

For the second time in a month, golf played a large role in ABC's "Shark Tank." This time, however, there wasn't as happy of an ending.

Meghan Tarmey went on Friday's episode to pitch her business, The Caddy Girls, which she started while she was still a cheerleader at Costal Carolina University in 2005. As you can probably gather from the name, it's a group of female caddies that golfers can hire to make their rounds more entertaining.

Related: Watch a putter company's emotional sales pitch on "Shark Tank"

Tarmey came on the show asking for $100,000 for a 20-percent stake in her company. However, she did not walk away with a deal, getting turned down and then turning down a $100,000 counter offer for half of her business. Here's the clip:

It wasn't all bad, though. Tarmey was praised by the Sharks, even by the show's tough guy, Kevin O'Leary, for her pitch. And the appearance on the show has already sparked a lot of interest in her company. Tarmey told she had received about 50 independent investment offers by noon on Saturday.

In the season premier of the show, putter manufacturer Kronos Golf struck a deal after an emotional presentation. But The Caddy Girls still have Kronos Golf beat in one area: calendars.

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Courses & Travel

Florida Historic Golf Trail features 'important chapters to our golf story,' Nicklaus says

It began several years ago, as a challenge within the Division of Historical Resources at Florida’s Department of State, to find creative ways to promote preservation and history.


“Me being a golfer, I try to incorporate that into anything I do work-related,” Scott Edwards said. “So I proposed the idea and it got accepted.”

The idea has come to fruition with the launch of the Florida Historic Golf Trail, 50 publicly accessible courses built before 1946 and stretching from Pensacola on the Florida panhandle (A.C. Read Golf Course and Osceola Municipal Golf Course) to Key West at the southern tip of the state (Key West Golf Club).

“We wanted to make sure all the courses are open to the public, that anybody could walk up and play any time,” Edwards said. “We chose the time frame from the turn of the century through World War II because that was a big part of Florida’s development and its national development.”

The objective, Edwards said, “is to promote these historic golf courses, but also telling Florida history through these golf courses.”

Arnold Palmer, who resides part of the year in Orlando, was enlisted to do a commercial for the project. Jack Nicklaus, a North Palm Beach resident, also provided an endorsement. “As a proud Floridian for close to 50 years, I know the state of Florida has its own storied history in our game,” he said. “The Florida Historic Golf Trail included important chapters to our golf story.”

A potential incidental benefit is bringing new players into the game, Edwards said. “That’s what the golf industry people have latched onto, that it’s a new way to grow the game. And if you’re a golfer and have been around the game, you love the history, and this is a great source of history.”

A scorecard has been developed, allowing players setting out to play all 50 to check off the courses they’ve played and input a score.

“Groups of people already want to go out and start playing these,” Edwards said. “It’s gone beyond what I thought it would. That’s what we want. We hope it drives tourism for them and get exposure they’ve never had.”

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Ian Poulter's Lake Nona home can be yours for a reasonable $1.3 million

Earlier this week, Ian Poulter took to Twitter to help sell his "old family home" in the Lake Nona development outside of Orlando. Perhaps, he's looking for a piece of the commission.

Related: LeBron James tops Tiger Woods as most valuable sports brand

The beautiful 3,700-square-foot home has four bedrooms, 4.5 bathrooms, a pool with a hot tub and a sweet looking entertainment room (If that pool table comes with the house, then the buyer is really getting a steal). Check out the video tour that includes soothing music that could have been taken straight from the "Friday Night Lights" soundtrack:

9743 Covent Garden Drive from Lake Nona on Vimeo.

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LeBron James tops Tiger Woods on Forbes' list of most valuable sports brands

Tiger Woods has lost his No. 1 ranking in another category.

On Tuesday, Forbes Magazine released its list of the world's most valuable sports brands and Woods slipped to No. 2 -- the first time he hasn't been No. 1 since 2007. LeBron James replaced Woods in the top spot with his brand valued at $37 million to Woods' $36 million.

Related: Golf Digest's list of the top 50 earners in golf

This list is different from Forbes' ranking of highest-paid athletes. Woods fell to No. 6 on that list earlier this year (Boxer Floyd Mayweather Jr. is No. 1) after holding the top spot from 2001 to 2011 and again in 2013. In the list Forbes released Tuesday, the magazine tries to evaluate how much a player's brand is worth by calculating how much more he makes off the court than the average of the top 10 in his sport.


While James' value increased $10 million in the past year, Woods' went down that amount, thanks in large part to the end of a 14-year relationship with EA Sports. Roger Federer ($32 million) is ranked No. 3 and Phil Mickelson ($29 million) takes the fourth spot.

Forbes ranked the top 10 brand values in four categories: businesses, events, teams and athletes. Woods' biggest endorsor, Nike, is the world's most valuable sports-business brand at $19 billion.

Related: Tiger's business ventures keeping him busy

James, like Woods, is a fellow Nike pitchman. He also happens to share a birthday (Dec. 30) with the 14-time major champion, although James is nine years younger. When they exchange gifts this year, we now expect LeBron to splurge more.

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