Over the Green

Just before Christmas PING’s CEO John Solheim made his proposal public calling for the USGA to adopt rules mandating three classes of golf balls – one that would go the same distance as today’s, one 30 yards less and one 30 yards more.

Recreational players presumably would have their choice (does anyone think they will pick the 30 yards less ball?) and tournament organizers could specify which was to be played as a “condition of competition.” In particular the PGA Tour with all those long hitting superstars would use the 30-yards-less-ball in an effort to contain their mighty blows. MORE…

The golf media is filled with similar headlines; some variant of, “Tiger Woods Clinches President’s Cup.”
Phooey.

In fact and just as accurately it could be said by only winning one match of the five in which he participated, he contributed to the Internationals point total.

Let’s face it, Woods played poorly and was fortunate to be on a team that played very well, but then isn’t that the idea of a TEAM format?

Give kudos to Mickelson, Furyk, Mahan and Toms plus even maybe Watney for beating the opposition. Additionally the Internationals really never got it together, as they never seem to do in these matches and contrary to some of the media voices leading up to the contest.

Bottom line – great play by four or five Americans and lousy play by just about all the Internationals was the reason we won…not because Woods made his one single point on the final day.

The King and the Mouse
The Walt Disney Co. (NYSE:DIS) and Arnold Palmer Golf Management have signed a 20-year agreement to have the King’s company mange and promote Walt Disney World’s five golf courses located at the suburban Orlando, Fla. resort. Disney’s deal with Palmer takes the Mouse completely out of the very competitive central Florida golf market substituting an ongoing lease payment from Palmer Golf.

Disney has had a long standing business strategy of leasing hotel, restaurant and concession locations to outside companies. As part of the lease agreements lessees are contractually required to provide services and products meeting standards set by Disney.

As part of the new deal over the next two years Palmer and his course architects will take on a renovation of the Disney’s Palm course.

Arnold Palmer Golf Management, based in Addison, Texas, is owned by Century Golf Partners and the Disney courses will be added to the 70 private clubs in its portfolio. They will be promoted within the Palmer Golf network with a website and in the “Kingdom Magazine” published by the company.

Walt Disney World, which attracts about 50 million visitors per year, has been pulling back from operating golf courses at the resort since it became apparent there were too many courses and too few golfers in the Orlando area. The first move in implementing that policy was back in 2007 the well regarded Eagle Pines course (Pete Dye 1992) was closed. The land is now a residential development that upon build-out will have 450 multiple-million dollar homes.

The Waldorf Astoria hotel also operates a golf course on Disney property, a Rees Jones design opened in 2010.

The PGA Tour’s Children’s Miracle Network Hospital Classic played on Walt Disney World’s Palm and Magnolia courses for 41 years, is part of the Tour’s Fall Finish. There is no word what affect if any the deal with Palmer Golf will have on the Tour stop though Palmer does already have a Tour event annually at his nearby Bay Hill golf course, the Arnold Palmer Invitational.

Golfsmith to South Korea
Golf retailer Golfsmith International will open retail outlets in the fastest growing golf market in the world, South Korea in partnership with GOLFZON Co. which specializes in indoor golf simulators.

Golfsmith says profits from this venture will be reinvested back into retail operations in the United States.

The majority of golf in South Korea is played on indoor simulators and GOLFZON with 4,000 screen commands 84% of the market. Plans are for GOLFZON to operate Golfsmith stores at the simulator locations.

Tiger’s moves
Tiger Woods has moved to his new $54.5 million home built on the ocean on Jupiter Island, Fla. and reports in the Palm Beach Post say his company ETW Corp. will move as well.

Woods lived formerly in the Isleworth development outside Orlando and according to public records he has not sold his home there. ETW Corp. will occupy space in an office building formerly the headquarters of Greg Norman’s companies.

If the true test of a man’s intelligence is how much he agrees with you Michael Johnson, equipment writer for Golf Digest, is a genius.

In his June 20 online column he lays out the case against the USGA’s illogical and unfortunate reasoning when it came up with the ban of U-shaped or square grooves. The argument is similar to that made by this writer for over two years.

The Association concluded by mandating grooves with smaller cross section on irons of more than 25 degrees loft touring professionals and top amateurs would have to throttle back their tee shots to avoid hitting the ball in the rough. Smaller groves are less efficient imparting spin to a ball when the grass is of medium length as in the rough. The 1,000 or so elite golfers this change was aimed at therefore would have a harder time stopping their approach shots on the green.

Their logic continued that since there would be a “penalty” for hitting the ball in the rough the elites would then be forced to use a club less than a driver from the tee in order to keep the ball in the fairway. From the fairway they would be able to put the correct spin on the ball with the new grooves so distance could be controlled and it would stop close to the pin.MORE…

Let’s be clear, Padraig Herrington’s two infractions of the Rules of Golf resulted in two penalties: two strokes and don’t bother to show up tomorrow.

A pretty stiff sentence for a ball that rolled a couple of dimples forward while he was retrieving his marker but didn’t roll quite the same number of dimples back after the coin was gone. Harrington of course didn’t see the ball had not returned to its original spot and was correctly penalized two strokes for hitting a ball not in its original position. Then, and also correctly, since the two stroke assessment was not determined until after he had left the scoring tent, according to the Rules of Golf the future Hall of Famer was disqualified from the European Tour HSBC Classic in Abu Dhabi for having signed what now was an incorrect scorecard.

The villain in this and the Camilo Villegas DQ at the Hyundai Tournament of Championship two weeks ago has been made out to be the television viewers who called in the errors. In both cases (but there have been many over the years) someone called or emailed officials to report what they had witnessed. Perhaps it was revealed after running the episode several times in slow-motion from recordings made on their digital video recorders but nonetheless there are a couple of things clear; Harrington and Villegas broke the Rules of Golf and neither did it with the intent of gaining an advantage.

The fans that reported the rules breaches are not villains. They may be puffed up with their own importance or delighted inflicting pain on those rich toursters or whatever, but they aren’t villains. They are part of the game or at least the professional game that’s shown to millions weekly on television.

Golf is the only sport where the spectators are part of the playing field and routinely determine a competition’s outcome be it getting struck by a wayward shot or calling tournament brass to tattle on an infraction no one on site could have seen. But that’s the situation anyone faces entering the play-for-pay arena to win money and gain fame.

So be it.

What isn’t really fair is only a few get that kind of armchair scrutiny because they are the ones, i.e., the top stars and tournament leaders, on television. The rationalization is, fan scrutiny is an opportunity cost to be the next Tiger Woods.

The second reason the villains in this little golf drama are not the guys salivating into their salsa at the prospect of catching Phil or Kooch messing up is, the rules are the rules. There is little wiggle room or interpretation for circumstances or intent. (This of course is not true, just look at the quad-annual Decisions of the Rules of Golf revision last November: 28 new Decisions, 51 revised Decisions and one withdrawn Decision for more than 1,200 entries). The problem for amateurs or professionals is there are too many often obscure and arcane rules. Let the professionals and elite amateurs deal with that though.

What’s much more important is the state of the rules is such that 99 plus percent of the rounds played do not follow them. Almost all amateur golf certainly could be described as ‘casual rounds’ and many of these scores are posted into the handicap system thus becoming part of another of golf’s shibboleths. Because the scores are from rounds that didn’t follow the Rules they are not reflective of the player’s skill not to mention they shouldn’t be used to figure a handicap.

It might be something obvious as a mulligan or “breakfast ball” off the first tee or conceding a putt even though it’s a medal not match play round or how the old, “Well, I guess that one’s out of bounds so I’ll just drop a ball here” line.

Whose fault is it? Certainly the player for not caring he or she is violating the Rules but also the USGA for having created a monstrous mess putting even well intentioned recreational players in violation sometime in every round they play.

Even Jack Nicklaus agrees they should be rewritten, making that point in a recent interview. The Rules of Golf are too complicated…way too complicated, with penalties disproportionate to the infraction, such as being disqualified for the ball moving when you didn’t see it and the movement was caught after the round and you had signed your card.

The attitude of amateurs towards the Rules of Golf is not disrespectful but that they are pretty much irrelevant most of the time.

Rewriting, simplifying and clarifying the Rules of Golf need not do a thing for Padraig or Camilo – they’re pros expected to know and live by the Rules – but could make them more relevant and more enjoyable to the typical amateur.

As 2011 approaches three golf stories from 2010 will have an impact in the New Year and beyond.

First is the comeback of Tiger Woods. Fans, other Tour players and certainly golf businesses want the former world’s number one player, in words of the Golf Channel, “on the first page of the leader board.” As has appeared here in previous columns, golf needs a winning and personally engaging Woods.

It is self-evident also Woods needs golf even more.

Next, the spin-off of Acushnet Company by Fortune Brands may set the equipment business on a new course. Several possibilities exist for new ownership of the world’s largest golf equipment company and golf’s iconic brands, Titleist and Foot-Joy.

Acushnet could become part of another golf company. A move in that direction would most likely mean anti-trust scrutiny, maybe lawsuits or other entanglements and lots of ‘fooling-around.’ Probably enough fooling-around that any competitor would think twice (or maybe three times) before raising their hand to make a bid.

The makers of the market dominant golf balls and golf shoes could go to someone outside the industry. Acushnet has been and still is very profitable and thus attractive though the golf industry has at best only modest growth prospects. In fact, Acushnet does have some of the characteristics prized by an avid golfer named Warren Buffett, so Berkshire Hathaway might even be a candidate.

However the most likely deal is using private money and perhaps even Acushnet CEO Wally Uihlein is putting together the necessary billion to billion and a half. Presumably the idea would be to either keep Acushnet private or take it public to recover the investment. Proven, profitable management would stay in place and there would be a minimal impact on the equipment business competitive landscape. But the most important factor, for the company and the golf industry, would be continuation of Acushnet’s decades-long commitment to product quality and innovation.

Lastly David Fay, executive director of the United States Golf Association retired. He became USGA’s leader shortly after the Ping/Karsten Solheim law suit fiasco over the association’s ruling concerning iron grooves and ends his tenure with the disappearance of the so-called ‘great grooves controversy’ as the USGA mandated the end to box grooves.

Fay had some credible achievements during his 21 year leadership such as seeing the U.S. Open booked on courses the public could actually play (i.e., Bethpage State Park’s Black Course) and putting the finances of the organization on very firm ground. In fact, there is lots of money in the bank to fund a variety of programs “for the good of the game” though some critics question why a not-for-profit organization whose stated purpose is to determine the rules of the game and conduct a national championship needs all those millions.

The new USGA executive director will take on a major question. He or she may continue down the path placing evermore restrictions on golfers and their equipment or allow the game to continue to evolve and grow as it has for over five centuries while embracing appropriate new ideas. That’s a big task.

Titleist may be sold
Acushnet Co., makers of the top rated and best selling Titleist Pro V1 golf balls and FootJoy shoes, could be part of a corporate shedding by parent Fortune Brands (NYSE:FO). Rumors have both Callaway Golf (NYSE:ELY) and Nike (NYSE:NKE) as potential purchasers of Acushnet, the world’s largest golf equipment company.

The equipment business has not been doing well in recent years with insiders citing a shrinking golf base in the U.S. and a collapse of formerly high growth markets in Asia. Acushnet reported third quarter operating income down 43 percent ($5.5 million) for the three months ended Sept. 30 and down from $9.7 million for the third quarter 2009. Sales were $265 million down $13 million quarter over quarter. Compared to last year Acushnet sales were up about 2 percent to over $1 billion had operating income of $115 for the nine months, an 85 percent increase over 2009.

So at least Acushnet is making a profit. Callaway Golf, contrasting to Acushnet’s core ball business (over 50 percent market share) has not seen their basic business of metal woods expand in the face of dominant competition such as adidas’ (PINK:ADDDF) TaylorMade Golf. Callaway had more than a 10 percent loss in the most recent quarter and lost 1.6 percent in 2009 so unless they find affordable financing they probably cannot afford a deal for Acushnet.

Nike’s golf business is built around Tiger Woods and particularly in the past year has not done well as they would like especially with the previously top ranked fan-favorite (see next item) golfer as spokesman. Nike most likely has the money and it would be a way to pair the competitive environment at the top of the golf equipment market from four players to three.

Tiger shut out
Tiger Woods, golf’s fallen idol, according to a story on Bloomberg.com still retains his attractiveness to tournament goers, at least in Australia. Playing to a fourth place finish in this past weekend’s Australian Masters, Woods the defending champion still drew large crowds whether watching him warm up or his amazing 6-under par finish in the last round.

It was almost one year ago; two weeks after Woods triumph at the 2009 Australian Masters and last tournament victory, his troubles came to light with the early morning car crash at the end of his suburban Orlando driveway. The victory last year was not without controversy though, since he received a reported $3 million appearance fee which was justified as having helped generate $34 million for the local Victorian economy. Total tournament purse was $1.5 million and Woods received the same appearance fee this year.

With this loss Woods also missed his last chance to win a sanctioned event on one of the world professional tours in 2010.

The Great White Shark & Lorena vs. The Golden Bear & Annika
With the 2016 Olympics being held in South America and for the first time in a century including golf, host city Rio de Janeiro needs a golf course worthy of the competition. Stepping up to win the bid to design the new Olympic course are a couple of interesting couples.

Jack Nicklaus has teamed with Annika Sorenstam while Greg Norman and Lorena Ochoa will co-design if they are chosen. No word if Arnold Pallmer will pair up with someone like Laura Davies or maybe Tom Fazio will look to Natalie Gulbis as a partner.

The siege of Troy
Nobody has ever said professional-level golf was easy as PGA Tour rookie Troy Merritt well knows. Trying to keep his Tour card for 2011 Merritt started the final week of the season at 121 on the money list seemingly a comfortable distance above the magic 125 spot to retain full playing privileges.

Sunday of the Children’s Miracle Network Classic at Walt Disney World Merritt lost ground in the marathon which becomes a sprint at the end of the year, but did manage to finish right on the 125 spot. He also went back home to Arizona with a million dollars from his one hole playoff win of the Kodak Challenge over Rickie Fowler and Aaron Baddeley.

Well, it’s official. Tiger Woods is no longer leader in points, no longer ranked as the world’s number one golfer. Lee Westwood is atop the listing after Woods’ fall from grace and the loss of his competitive game.

To add some perspective to this well reported event, Woods current reign lasted 281 consecutive weeks but since turning professional the number one spot has been his one week short of 12 years or to do the math, 623 weeks. Dominating would be the best way to describe it.

Englishman Westwood, since Woods’ last victory in the Australian Masters one year ago has also won once, the Houston Open for his second PGA Tour title. Not exactly dominating.

The problem is the rankings, which by definition take into account past performance, and with Woods having such a large lead (until his car wreck) it took the other very good world-class players this long to overtake him. But that aside the problem is the rankings themselves.

First of all the guy who is playing the best right now is the best player in the world, not because he won X number of times in the past but because he is playing the best today. Think of the way the NFL determines who is the best with the Super Bowl.

Our system does not name the best player just the one who has the most points accumulated based on some arcane computerized formula with adjustments for things like “strength of field.” However remember the real point of this rankings exercise; it is not about who is the world’s best player but all about the marketing of golf in general and the PGA Tour in particular. One shouldn’t get too excited about which golfer is at the top of the pyramid. It will change and all the media attention is a good thing.

At last…the end of the 2010 season. Well not really the end, but close enough. The golf world is ready to get on with the new year – new season.

On the PGA Tour the number one ranked golfer was a no-show for the first three months, retained his top ranking while playing mediocre at best with no wins and just two top tens. The world’s number two was diagnosed with a debilitating disease, won the Masters and a few youngsters entered the winners circle.

The LPGA Tour despite losing one-third of their scheduled tournaments over the last two years, having the top player quit-the second in two years-and faced with increasing disinterest from American fans did get a big sponsorship from Wegman’s Supermarkets for the LPGA Championship and finally gets an event in Florida – the Tour Championship this Dec. at Grand Cypress Resort in Orlando.

PGA Tour commissioner Tim Finchem characterized 2010 as “interesting” and “eventful” while LPGA Tour commissioner Michael Whan, as reported on GolfWeek.com, “came in 2010 with significant fear.”

It certainly was an interesting year and no doubt there’s still fear in some quarters.

Private golf clubs are feeling the pinch from the economic hard times faced by members and prospective members with the concensus seemingly being private clubs will survive but that segment will never be the same again. This could also be said for the high-end resort courses however it’s better than evenmoney as business people feel fewer financial constraints (business will eventually improve!), entertaining and travel the biggest drivers of resort golf will return.

Across the board a lot of courses have gone out of business and others while still operating are in bankruptcy. It goes without saying every non-private course is looking hard to cut costs and grab a bigger share of what rounds are being played. The numbers from the National Golf Foundation, which track this kind of thing, are a lagging indicator but show a continued shrinkage of the number of courses.

According to the NGF at the end of 2009 there were 15,979 golf facilities broken down as 11,637 public and 4,342 private. During the year 139.5 courses closed (they calculate everything in 18-hole equivalents) and 49.5 opened for a net decrease of 90 courses. That’s the fourth year in a row the number of courses has gone down. It’s difficult to tell where the bottom is but it is clear there is still an over supply of golf facilities so more golf courses will close and there will be another net loss of golf courses in 2010. One industry veteran figures even after the declines of the last four years there are still 20% to 25% too many golf courses.

A bright spot though is with the long awaited upturn in housing construction perhaps on the horizon, residentail development golf course construction could get a boost. At one time developers felt all they had to do was build a course, stake some lots and the rest was easy and profitable. This part of the industry though will take a few more years to be truly healthly, just like the overall housing business. When residental developments with golf courses as an amenity are started again they are going to need a new business model to sell houses and it probably won’t be at the inflated inflated “golf course frontage” prices of the past 20 years.

Finally and continuing the trend of the of the last several years, the number of rounds played are down. It is significant the loss of players and therefore rounds played has continued and seems to be accelerating. The loss of players – over 5% in 2009 – is bad news not only for golf courses but also for club manufacturers, golf tourism and any of the allied businesses.

So on balance, a lot of golf people will be glad to see the end of 2010 even accepting the old saying, “The more things change, the more they stay the same.” Golf needs a big change. Increase the number of players and everything will take care of itself.

Acushnet along with its former subsidiary Cobra Golf (sold in May to Puma AG) are seeking an injunction and monetary damages against both TaylorMade Golf and PGA Tour star Camillo Villegas for the August 3rd announcement by TMaG that Villegas had signed an endorsement contract for 2011.

Villegas presently endorses Acushnet brands Titleist and Foot-Joy plus is under contract with Cobra Golf endorsing their clubs.

The legal filings by Acushnet and Cobra ask for an injunction to stop further public announcements by TMaG or Villegas concerning the 2011 deal plus unspecified damages as compensation for loss of Villegas as a product endorser for the next five months.

The world’s largest golf equipment company Acushnet, however evidentially did not feel constrained from repeated broadcasting of a spot for Titlist golf balls with Villegas in the cast during television coverage of the PGA Championship nor has Villegas been removed from the Cobra Golf web site.

Both companies said the basis for their respective law suits was with the TMaG press release destroyed the publicity value of Villegas.