It is "not clear" how Nike’s player contracts "will work going forward" in the wake of the brand's announcement that it is transitioning out of the golf equipment business, according to Mike Stachura of GOLF DIGEST. Nike will still produce golf footwear and apparel. Traditionally, players with Nike deals "have been head-to-toe deals with no other visible logos." Golf equipment startup PXG Founder Bob Parsons said that with the exception of current signee Zach Johnson, his "guiding principle is 'No hat, no deal.'" It "seems unlikely that most other equipment companies would want to yield the front of the hat to the Nike Swoosh, either" (GOLFDIGEST.com, 8/4). Blue Giraffe Sports CEO Bobby Kreusler, who represents Nike-sponsored golfer Jhonattan Vegas, said that his plan for now is to "move forward with Nike as the apparel sponsor for Vegas, though finding a club sponsor could prove challenging." He called Nike's exit from the equipment business "shocking and extremely disappointing." GOLF.com's Peter Bukowski noted Nike, like many equipment manufacturers, "preferred full coverage deals." If other equipment companies "insist on similar agreements that could leave clients like Vegas in a difficult position." Kreusler: "With TaylorMade moving away from Adidas it may not be as much of an issue, but it will be a challenge. There’s no way around that." Nike-sponsored golfers Brooks Kopeka and Tony Finau said that they "planned to continue playing their Nike equipment." Club manufacturers will "likely be lining up to sign" Tiger Woods and Rory McIlroy. Mizuno "openly wooed Nike athletes on social media," and Cobra Puma "half-joked they're ready to 'pounce'" (GOLF.com, 8/4). ESPN’s Michael Wilbon said Nike “seemed committed to this but Nike Golf is Tiger Woods. There was no Nike Golf before Tiger Woods” (“PTI,” ESPN, 8/4). CNBC’s Scott Wapner: “The only reason they’re getting out of the golf equipment business is because Tiger Woods is no longer playing like the Tiger Woods we all know” (“Power Lunch,” CNBC, 8/4).
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Molinari and other Nike endorsers said they
were caught off guard by the news |
CAUGHT OFF GUARD: GOLFWEEK's David Dusek wrote, "Less than 24 hours after being told of Nike’s decision, none of the players Golfweek spoke to at the Travelers Championship had a plan for changing gear." Golfer Francesco Molinari, who signed with Nike when he turned pro in '04, said that he "had no idea the news was coming." Golfer Patrick Rodgers said, "I envisioned myself playing Nike equipment as long as I played. Obviously it’s a pretty big shock." Golfer Russell Henley said that he is "obligated contractually to wear Nike apparel and footwear, but he does not know if there is an exact date when he can change his clubs and ball." A Nike spokesperson said that the Nike PGA Tour van will "continue to appear at events through the end of the season." It would "not be surprising to see some Nike players begin using equipment from other manufacturers at the Safeway Open starting Oct. 13 in Napa, Calif" (GOLFWEEK.com, 8/4). Kopeka said, "Their stuff was unbelievable. The drivers, the irons, it's probably the best stuff that I've played with. So it is disappointing. But I feel like I'm good enough that I can play with just about anything" (HARTFORD COURANT, 8/5). ESPN’s J.A. Adande said of Nike, “They were not great at making golf clubs, they weren’t very popular. So now they can focus on doing what you do well” (“Around The Horn,” ESPN, 8/4). GOLFCHANNEL.com's Matt Ginella wrote because Nike is a publicly traded company, it was "required to keep employees and ambassadors in the dark until something like shutting down a branch of their portfolio is public information" (GOLFCHANNEL.com, 8/4).
RIPPLE IN STILL WATER: GOLFWEEK's Jason Lusk wrote other manufacturers "stand to gain the few extra bites that Nike relinquished." After a period in which Nike’s competitors have "struggled and/or began their own transitions, that should be welcome news" (GOLFWEEK.com, 8/4). GOLF DIGEST's Stachura wrote Nike's overall market presence at 3% or less in woods and irons "does not leave a gaping void in the landscape, especially with the company's continued commitment to footwear and apparel." Parsons: "This is not like a TaylorMade exiting the business" (GOLFDIGEST.com, 8/4). The N.Y. POST's Lisa Fickenscher writes Americans are "losing interest in playing golf -- and it's taking its toll on business." Golfsmith, a 150-store golf specialty retailer, has hired investment bank Jefferies to "solicit potential buyers" and professional services firm Alvarez & Marsal to "help it restructure" (N.Y. POST, 8/5). Compass Point Research & Trading Senior VP/Research Analyst Casey Alexander said it is a "slight negative" in the short term that Nike equipment "has to get flushed out of the market." It is "an opportunity for the guy who plays three to four times a year to buy something real at a low price, which takes away from the efforts of the rest of the biz." The equipment business has "held pretty steady over the years" in the $4-4.5B range. Having a 5% market share company "get carved up by others doesn’t signal the end" (GOLF.com, 8/4).
MARKET WATCH: Jefferies analyst Randal Konik said Nike's exit from the golf equipment business is "a 'major share gain opportunity' for Callaway and should help accelerate the company's recent momentum." THE FLY notes shares of Callaway Golf "are rising," and while it is "already the U.S. market share leader in overall clubs, it is second in drivers and woods behind Adidas' TaylorMade, which presents opportunity during this transition period" (THEFLY.com, 8/4).
