SBJ/October 5 - 11, 1998/No Topic Name
Biz woes reach golfers
Published October 5, 1998
Pro golfers who are renegotiating their club endorsement contracts this year may find themselves in a financial sand trap.
Following a trend that saw sneaker companies slash endorsement contracts, major U.S. golf club manufacturers suffering from sagging sales are cutting back on the number of golfers they pay to carry their clubs.
Although they are still preparing their budgets for 1999, officials at Callaway Golf Co., Cobra Golf Inc. and Taylor Made Golf Co. said the number of golfers with pro endorsement contracts is likely to be lower next year.
"Everybody is cutting back," said Pascal Stolz, vice president of marketing for Cobra Golf. After years of escalating pro golf endorsement contracts, the economics have turned, and "it is definitely a buyer's market" for the golf companies, he said.
Agents who represent professional golfers say that not only are fewer contracts expected, but the dollars being offered at companies across the board have been cut this year. Typically, pro golfers are paid $50,000 to $5 million a year to endorse golf clubs.
Jim Furyk, who is ranked No. 7 on the PGA Tour money leaders list, "is unlikely to continue" his endorsement of Callaway clubs, said Fred Fried, Furyk's agent and executive vice president at Integrated Sports International.
Furyk has received several "firm offers" from other golf club manufacturers and probably will sign a deal that pays him more than his Callaway contract, Fried said.
But for lesser-known golfers who are farther down on the money list, times are likely to be tough, said Fried and other golf industry sources.
"Some of our guys are going to take cuts this year," Fried said.
Cricket Musch, manager of the tournament players division for Karsten Manufacturing Corp., the maker of Ping golf clubs, said the company has informed a couple of its 17 players that "we won't, unfortunately, be able to do a deal next year."
Mike Galeski, tour director for Callaway, which has endorsement contracts with 72 pro golfers, said he will not finalize his staff until the end of this year. But he added, "I expect our staff for next year will be smaller than this year."
Debbie Hall, tour director for Taylor Made Golf, said she has not finalized plans for the number of golfers she will have on staff next year. She said she is likely to cut the staff from about 35 this year to about 30 next year.
Taylor Made has had major success this year with its endorsement contracts. Two of the company's golfers, Lee Janzen and Mark O'Meara, won major tournaments. That helped it move up from the No. 2 to the No. 1 seller of a single driver in the United States.
But even though the company has increased its market share, sales at Taylor Made, as at other major golf manufacturers, are down, Hall said.