If the golf I&B industry shrunk?

[TEPaul]

I'm not certain what the gross revenue of the golf I&B manufacturering industry is today but what if it shrunk to half of what it is today and what would that do to golf itself? Would it hurt it? Would it shrink golf too? Is there more competition in the I&B golf industry today than there's ever been or less competition? Are golf I&B prices inflated beyond what they logically should be with today's competition?

I've no idea what the answers to these question are but from viewing golf for the last 50 years it appears the I&B manufacturing industry is far more powerful within golf today than it used to be--perhaps too powerful. Do you think it's become too powerful?

[paul cowley]

...good morning tom  ....and as it is early and i guess i am a  little slow , but what does i & b stand for [irons and balls?].........

[Brad Klein]

Roughly $3-5 billion out of a circa $25 billion golf industry. There's less compeition since there are fewer manufacturers of balls and other equipment. Ironically, the clubs have gotten so good that it's difficult to convince folks to whom you just sold the latest and greatest equipment that they need a new set every two years. The result is that a lot of the club market involves specialty clubs (driver, utlity wood, lob wedge) rather than whole sets.


 

[Tim_Weiman]

Tom Paul:

I do think I&B manufacturers have become far too powerful in golf today.

Think of what they are doing: creating clubs and balls that encourage and possibly require clubs to make costly modifications to their golf courses. One private club representative put it this way: “We have to modify our course to be considered for major USGA events”.

What more needs to be said? The I&B manufacturers are perhaps the leading culprit fueling the golf technology arms race, a never ending series of adjustments and counter adjustments that accomplishes nothing other than making the game more expensive.

I said many times that we need to think about the essence of the game. Fundamentally, the game of golf consists of the BALANCE between player skills, the equipment used and the configuration of the playing field. This balance should be achieved at the lowest possible cost, a point that seems lost when you listen to those silly Titleist ads about how golf architects don’t want to adjust golf courses in response to new, “improved” technology.

This whole thing is amazing to me. My professional career has been spent in two major industries: petroleum and information technology. In both cases, trying to achieve the lowest cost solution to business problems was at the heart of supplier/customer relations.

But, when it comes to golf, suddenly consumers go brain dead. Just recently I started a thread about a private club considering a $2-3 million dollar renovation essentially because 2-3% of the members felt the back tees at 6,700 yards weren’t long enough.

So, I made a suggestion. Why doesn’t the club offer to purchase and provide circa 1980’s steel shaft persimmon wood drivers so that this very small group of members can enjoy the challenge they are apparently seeking? In the meantime, the rest of the members could save a few million dollars.

You should have seen the look on their faces. Honestly, Tom, it was as if nobody ever made such a suggestion to them. That’s incredible. These are all very smart business people well trained in the art of identifying the most economic solution to business problems. Why didn’t they think of such a thing? Why even consider placing a big tax (assessment) on 300-400 members, just to accommodate maybe ten members?

So, yes, there is a problem with I&B manufacturers having way too much power. They have corrupted the very way we think about the game.

[A_Clay_Man]

Why should golf (all of a sudden) ignore fundamental desires to improve?

The downside of some physict doing his job, to the best of his ability, is that a few courses are subject to the possibility of having someone shoot too low on their hallowed ground?  

It's all way too subjective.

And as Tim points out, for what, 2-3 % ?

I see an upside. Maybe all those snooty clubs that do become obsolete will have to open their hallowed halls to the likes of me or even worse. Whats so wrong with that? Kind of like hand-me-downs.

 Why isn't it time for more golfers to be exposed to some of golf's past great venues?

[Tim_Weiman]

Adam:

I would be cautious about using the word "obsolete". That is all about being a victim of groupthink, a process whereby intelligent people lose sight of how pointless the never ending golf technology arms race is.

The private club I mentioned doesn't have an "obsolete" golf course. Instead, they face a choice:

a) spend a few thousand dollars to accomodate a small elite group of members

b) spend a few million dollars to accomodate a small elite group of member

Let's hope good sense can prevail and that this whole notion of the course being "obsolete" can be exposed as an obvious fallacy.

[A_Clay_Man]

Obsolete was a nother groups word.

 No course will ever become obsolete to the majority of golfers. Maybe the absolute value of "low" will change, but to only a select few.

[Dan King]

Tim_Weiman writes:
Think of what they are doing: creating clubs and balls that encourage and possibly require clubs to make costly modifications to their golf courses. One private club representative put it this way: "We have to modify our course to be considered for major USGA events".

Why should this be considered the "implement and ball" manufacturers fault?

Seems to me like they are doing the exact thing they went into business to do, build a better product. In this case, within the rules as defined, but still they should always be looking to improve.

If someone here is to blame it should be the regulating body not the manufacturers. They are the ones that apparently have inferior regulations.

And from your above quote, shouldn't the blame for the modifications to courses be because the USGA forces it of those that want to be considered? Or perhaps the problem lies with the powers that be at the course, who bow to the pressure of the USGA.

We are blaming the wrong entity, the lone force that is just doing what they are suppose to do.

Dan King

The real revolution is not distance. Distance balls have been available for two decades, but tour professionals gave that up for the feel and control. Now, they don't have to give that up.
 --Dick Rugge

[Tim_Weiman]

Dan King:

I'm on record with numerous posts over the past few years holding the USGA primarily responsible for the golf technology arms race.

But, those Titleist ads demonstrate a blatant lobbying effort that I believe is bad for the game of golf. Thus, it is time to begin questioning the infuence of manufacturers.

If they are creating golf clubs and balls that encourage golf course owners to believe they need to spend millions of dollars modifying their golf course, obviously the manufacturers aren't really building a "better product".

At the club I mentioned above, each member is looking at an assessment of around $10,000 just because of the assumption that a small elite should play with the "improved" equipment rather than going back to equipment circa 1980s to find adequate challenge.

The whole logic of the golf technology arms race needs to be examined. Making the game more expensive isn't good for golfers.

[TEPaul]

I guess I shouldn't have asked the question about who thinks the I&B manufacturers arre too powerful. How about the question of what effect would it have on golf if the gross revenues or at least gross product of the manufacturing industry shrunk to about half of what it is today? I'm sort of stunned by that manufacturing show that just took place in Orlando. Does golf really need all that STUFF?

[A_Clay_Man]

Tom- The BWT allows for all that stuff. Personally, if I were golf, I would just want better stuff.

[Willie_Dow]

Tom

When you read behind the lines of the Jerry Tarde thread, some of the economics are already taking down the I&B growth.  It is just a question as to how far the slide will go.

Consolidation thru acquisition has it pretty much down to Callaway, Titilest, TaylorMade and Ping, I think.  Everyone in that business is pushing hard for a shrinking market.

Higher prices with a lesser buying power makes selling even harder.  Comments like Callaway made: "We have a problem.
The rulemaking bodies simply and as a matter of fact, don't care about the business of golf, not grow the game."

I like Tim's analysis.

Willie

[TEPaul]

Willie:

Frankly, I got the idea for the questions in this thread from Geoff Shackelford's book "The Future of Golf...".

It seems to be Geoff's feeling, and I couldnt agree more, that the regulatory and administrative bodies of amateur golf (USGA and R&A) should not be in the business of "growing the game of golf"---they should only be involved in protecting the game of golf from being corrupted by attempts to grow the game in destructive ways to the best interests of the game of golf itself!

Geoff's little treatise of the 2008 business merger of the USGA with the I&B manufacturers is one of the funniest little satires I've read in a long time!

[Willie_Dow]

My iUniverse order was shipped today, and I am looking forward to another read.

Maybe Prestwick can get my Willie Dow mashie out of the trophy case for my trip to Wales in September.  Got any Haskell balls?

We could start a new market!

[Eric Pevoto]

With the state of the golf industry, it's interesting to compare the hard-goods and soft-goods sides.  

From my impression, the clothing manufacturers have focused on bringing better quality for the same money.  Companies have simplified their offerings in the interest of managing their inventories.  The push is back toward the old Pickering type of merchandising.  Much more simple for the golf professional or buyer as opposed to sorting through several "collections." and such.  

Many professionals glaze over with the prospect of buying clothing for the shop, and it's a business that's become a lot more complicated in the last several years.  Hopefully, this is a sign that things are beginning to simplify.  It could also be a reflection of the expectations of the customer changing.

Hard goods, on the other hand, while there has been a lot of consolidation, have not shown any similar signs.  I began playing golf in 1980 and I remember well that there were basically 3 major manufacturers: Hogan, Wilson, and MacGregor.  They basically were all that was sold in on-course golf shops.

Product cycles were much slower back then.  In the past several years, the product cycles have grown so short, any sort of successful buying has become much more complex.  I think Geoff Shackelford, in his latest book, alludes to the effects of golf manufacturers becoming publicly traded.  Overly short product cycles are one.  This has to add cost to the product, not only from an r & d perspective, but in being able to manage inventory costs.

The cost of these products has not fallen.  As companies like Spalding/Hogan tried to shore up their debt problems before eventually being sold, there were deals to be had.  That really can't be said for the others.  

One notable success has been Cobra under Titleist.  They offer great quality at relatively reasonable cost and it has done very well.  That's a good sign.

Thankfully, the manufacturers have limited the types of golf balls offered.  Just a few years ago Titleist sold a dozen types of ball.  They've cut that in half.  

The golf show in Orlando has seen Taylor Made, Titleist, and Ping all discontinue their participation.  Those companies each spent millions specifically for the show.  Their explanation is that they can better use that money building relationships with professionals and buyers at the local level.  It's got to be a much more efficient use of the money and probably provides savings for them.  

The golf industry is badly in need of simplification and this slow-down might help in that regard.  The state of the game is daunting thought because I make my living in golf, but one of the best ways to increase participation is to make the sport and its equipment more affordable.  I'd rather sell a dozen clubs at a lesser margin than three at inflated prices.

[TEPaul]

Willie:

If you can find an old haskell ball to play in Wales you just may be the first golfer I know to be able to enact this odd section of rule 5-3;

"If a ball breaks into pieces as a result of a stroke, the stroke shall be canceled and the player shall play a ball without penalty as nearly as possible at the spot from which the original ball was played (see Rule 20-5)."

[Steve Lang]

 

I've seemed to play with my short sticks for about 7 years, then upgrade.. From MacG, to Spalding, to Golfsmith, to Hogan, to Wilson, to my Titleist DCI's, which I reshafted the heads 3 years ago.. instead of upgrading.. and they look/feel right.. versus all the others I've had,, so why should I buy anything new off the rack with so many used clubs out there and clubmakers wanting to launch monitor me into new realities of accuracy and flex?

I say let the I&B bubble bust..  survival of the fittest.  There'll still be places to play..

[Doug Siebert]

Thankfully, the manufacturers have limited the types of golf balls offered.  Just a few years ago Titleist sold a dozen types of ball.  They've cut that in half.  

But probably because prior to the Pro V1, balls were a tradeoff, so you needed more kinds.  Now there are a few kinds of high end balls that vary mainly in spin and/or how much swing speed you need to have for it to be the longest ball for you, plus some cheaper balls for people who don't want to pay Pro V1 prices.

[TEPaul]

Eric:

What effect do you think the PGA of America as an organiztion has had on the general cost of golf or equipment? And what do you personally feel about the pro shop? Would you prefer to own the pro shop or would you prefer the club to? What do you feel the thinking is out there amongst your fellow club professionals in that regard? Here's one for you---would you like to see the golf professional and the PGA of America own and run handicapping and handicap service providing?

[Mike_Trenham]

My father is a longtime PGA Club Professional.  He tells me that in the 1960's and until the invention of the two piece ball, his members would on average purchase 3 balls for each round they played.  

In addition, adjusting for inflation the cost would be close to $50 a dozen, so equal to PROVIs today (for those loyal to their PGA professionals ).  Golf Ball sales were a big part of his income as a PGA club professional.  

Lets say that number is a bit high even double, so 1.5 balls around.  Those balls were so soft they could be cut on a chipshot.  It took work to have and maintain a decent collection for your shag bag.  So I don't think that number is far off.  My shag bag today is overfilled with balls that would have been still in play years ago.

The NGF says last year there were 500MM rounds played in the US.  Golfweek 1/24/04 page 23 says the industry sold 20MM dozen balls or 240MM balls.  

Thus golf balls have gone from lasting 6-12 holes to 36 holes.  And there are very inexpensive options <$20 a dozen that make the equation even more dramatic in terms of declining cost per round.

This may be the only part of the game with a declining cost per round.

[Steve Lang]

 

Of that sleeve of balls bought in the pro shop.. I wonder how many were still in play or more importantly still in the bag at the end of the round or used just for putting via the ol' pocket shuffle?

When play is slow we hawk for balls, and i must collect a bucket or so each year of low mileage pills..  of course we find a higher quality ball at the tpc than our other courses.. but finding a dozen balls or more in a round tells me that balls are the least concern for most golfers either because of the lost and found factor or its just all relative to the overall price of the game.. it once was great impact to loose a ball, now it is almost nothing..

[Eric Pevoto]

That's a great point concerning the relative cost of golf balls these days.  No doubt the solid ball is much less expensive to produce than the old wound ball.  Don't ask why the ProV is more than the others of similar construction!

At French Creek, I've had a very minimal shop to date, but at my prior facility golf balls were roughly a quarter of the shop's revenue.  We didn't sell a sleeve per round, more like one every three rounds.

Mike, your dad is one of the great, old-guard professionals in the section.  His work on the history is significant and should be applauded.  Tell him hello.

The PGA's role in the cost of equipment?  Surprisingly, in the campaign to grow the game, there has been no call that I know of to provide more affordable equipment.  In light of Mike's statement concerning the price of golf balls relative to the 60's, similarly I'd like to look at club prices today relative to history.  

The PGA, in an effort to help the local professional deal with trade-ins, has recently set up avenues for the pga professional to easily list used clubs on ebay.  There are other similar web outlets.  It's an interesting way of helping us deal with the shorter product cycles and it allows us to keep the prices in the shop closer to suggested retail.

Should the professional own the shop?  Well, with few exceptions around the country, the northeast is the last bastion of the professional-owned golf shop.  

It could be argued that the move toward facility-owned shops has added complexity.  It's safe to say most professionals cannot afford to provide the varied and large inventories expected at large resort and ccfad type shops.  I think these types of shops have changed the expectations of consumers.  

It's obviously a case-by-case situation, but I'd like to see more professional-owned shops.  At very least the professional should get a substantial portion of the shop's profits.  

I could be wrong, but it's my impression that part of the change has been from golf shop as a service to members/customers to golf shop as a significant revenue stream (Geoff's MBA-speak  ) The facilities snapped up those shops from the professional because there was substantial money to be made.  

As the business contracts, might we see a move back to professional-owned shops?

As for handicapping, it's often a source of income for the professional.  Other than an opportunity to revamp the system, I can't think of a reason to change from the regional association.   I'm not sure there'd be any change in cost, do you?

[Lou_Duran]

Steve,

A couple of years ago, a friend and I were paired with a young Russian telecom sales guy who spent nearly 3/4 of his time on the course with a phone glued to his ear.  He was playing brand new ProV1s, and it got to the point where he was one-arming the ball while craddling the phone between his shoulder and ear.  Needless to say, he was spraying the ball all over the place, and lost well over a dozen over the round.  We ignored his rude behavior, but I was tempted to go back out after we got done playing to find some of his fouls.

I think that you're right, that the cost of balls is not meanigful to a lot of people.  A guy I used to play with had the habit of heaving his ball into a water hazard after finishing a hole poorly.  He actually threw one of my balls away once after a sunk a putt that apparently had some meaning to him.

Today you can buy on eBay a Titleist driver like Tiger was using for $50 (with a graphite shaft), a good set of cavity back irons for under $100, a well balanced putter for $25, a set of wedges or metal fairway woods for $50.  For under $300, you can get a full set of quality clubs, balls, bag, and shoes.  My point being that the extensive marketing, keen competition, and short product cycles are not necessarily making the game more expensive.  It is the consumer who keeps pulling the new merchandise of the shelf, and it is the consumer who will ultimately decide when enough is enough.

To the extent that there appears to be excess capacity at this time, it seems to me that unless the # of rounds played and # of golfers increase, that the I & B industry will stagnate, consolidate, and likely decline.  This can't be good for the game or the economy, nor the consumer in the long-run.    

[Bill Gayne]

I think the current state of the I&B industry is causing the number of people to play the game/sport to shrink. Historically improvements in manufacturing technology coupled with performance has resulted in lower cost, greater availibility, and has made a difficult game easier to play. For example the transitions from the feathery to gutty to haskell to todays modern ball. With each step performance improved and manufacturing improved which drove down cost and increased distribution. Clubs were similar in that you went from custom clubs to mass produced irons.

The improvements in today clubs and balls are purely performance improvement. The changes are not resulting in efficiencies in manufacturing driving down cost and making it less costly to get in the game and compete on a level field. The performance improvements have resulted in a dramatic increase in price to the player. Who wants to take up a sport which requires a fairly substantial investment in equipment to just get on a level playing field? In the short run the manufacturers are making more money because they are selling more and more expensive equipment to those already in the game. But with the price points in the new technology they aren't using the technology to grow the overall game.

Bill

[Tim_Weiman]

Bill:

I remember paying about $225 for a set of three Powerbilt persimmon woods in the mid 1980s and later hearing that manufacturers were shifting to metal woods to lower production costs and final prices for the consumer.

Seems like that whole point has been forgotten.