Assessing Risk-Reward Of Rory McIlroy Changing Golf Equipment Supplier

Golfer Rory McIlroy, following a split with equipment maker Acushnet's Titleist brand, risks changing the tools of his trade "when there seems to be no competitive reason to do so,” according to Bob Harig of ESPN.com. McIlroy has “played excellent golf the past two years,” and Harig asked, “Does he want to mess with that kind of success?” It is believed McIlroy will sign an equipment deal with Nike, whose designers “would make clubs as near as possible to the specifications that suit McIlroy, but there is a long list of players who suffered through adjustment periods after switching to another manufacturer” (ESPN.com, 10/30). ESPN.com's Darren Rovell asked, “When the numbers come out, how is the golfing public to believe that McIlroy made the switch because Nike was better?” Nike’s strategy with Tiger Woods was to “announce that the terms of Tiger's deal don't require him to play with a Nike ball or clubs.” That move “worked to some extent, though it backfired slightly when Tiger had trouble with the driver.” Rovell: “Would the same type of clause have to be written into McIlroy's contract? Perhaps.” There also is the "question as to how much Nike will get and what terms the company insists on.” With a player of McIlroy's caliber, it is “usually the whole deal -- head to toe with no other branding” (ESPN.com, 10/30). 

BATTLE OF THE BRANDS: The AP’s Doug Ferguson wrote, "Still to be determined is how any deal with Nike would affect the rest of McIlroy's deals,” including endorsements with Dubai-based Jumeirah Estates, Oakley, watchmaker Audemares Piguet and Spain-based Banco Santander. Nike “typically prefers a clean look for its athletes, with rare exception.” Woods and Anthony Kim had “separate endorsements for their golf bags.” McIlroy's split from Titleist marks “the second time in the last 10 years that Acushnet, which has a history of fiscal prudence, has not stood in the way of a No. 1 player going after big money.” Woods had an equipment deal with Titleist when he turned pro, but "left for the Nike golf ball in 2000 and then the Nike golf clubs in 2002.” Phil Mickelson “won his first Masters with Titleist in 2004,” and the company “let him out of his contract later that summer to sign a lucrative deal with Callaway” (AP, 10/30). GolfChannel.com's Rex Hoggard said of Titleist, “They’re a brand company. ... They don’t market the player and I think this kind of dovetails with that, and they’ve done it before." Hoggard: “Nike isn’t about selling equipment at this point in time. They’re an apparel and footwear company, and they're also a philosophical difference from Titleist. Titleist always goes out and sticks with the brand” ("Golf Central," Golf Channel, 10/30). ESPN.com's Harig wrote Woods has been “the face of Nike golf ever since the company got into the golf business more than a decade ago.” It is “sometimes forgotten that when Woods signed his first deal with Nike in 1996, the company did not even make golf clubs or balls.” The idea of Woods and McIlroy "battling on the back nine of a major -- both with swooshes splashed on TV screens and Internet sites -- has to make Nike officials salivate” (ESPN.com, 10/30).

MISSING IN ACTION: HSBC Group Head of Sponsorship Giles Morgan said he was "disappointed" that McIlroy and Woods are skipping this week's WGC-HSBC Champions tournament. The AP’s Justin Bergman reported McIlroy and Woods “chose to play in a lucrative, head-to-head exhibition event in the Chinese city of Zhengzhou on Monday, a day after competing in tournaments in Shanghai and Malaysia.” Instead of playing in this week's event, McIlroy "is in Bulgaria to watch his girlfriend, Caroline Wozniacki, play in the WTA's Tournament of Champions, while Woods is making a trip to Singapore for corporate commitments.” Morgan said, “If they're in China and there's a World Golf Championship, this would be a good event to be at.” Morgan added that “both golfers apologized to him privately for missing the event” (AP, 10/31). Morgan said, “I feel strongly that the top players should be here. We look forward to seeing them in January at the Abu Dhabi [HSBC Golf] Championship, but I believe that golfers have a responsibility to their sponsors. Without the sponsors there isn’t professional golf. And I speak on behalf of the industry.” In London, Peter Dixon writes, “It seems there are no favours to be had at this level of the game. Woods has been paid millions of dollars by HSBC to play in its events over the years, but this week he is dancing to a different sponsor’s tune” (LONDON TIMES, 10/31).