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Golf Equipment Chronicles 2008 (Part 7)

“Hot List” for Underdogs

by Leith Anderson

I received a present in the mail at the beginning of June. It was an autographed copy of Barney Adams’ new book, The WOW Factor. If you need a reminder, Barney Adams founded Adams Golf. I sat down and read it cover to cover in one day. There aren’t any books that chronicle the history of the golf equipment industry, so piecing together an understanding of what happened, “when” and “why” is only done a snippet at a time – spoken history from sales reps and industry executives who haven’t pickled their memories. The WOW Factor is a little bit autobiography, a little bit business advice and a little bit industry history. For me, it filled in a lot of blanks. Highly recommended.

The gist of the advice given in The WOW Factor is that it’s only when a customer exclaims “WOW” – for whatever reason: product performance and customer service are the two most likely candidates – that you have a chance to be truly successful. “WOW moments” are very rare. For Barney Adams, there was only one in forty years – the invention of the Tight Lies fairway metal.

Luck, chance and serendipity play a huge role in any business career. But there is an underlying characteristic of successful entrepreneurs – character and passion. There would be no Adams Golf today if it weren’t for one of Barney’s friends. When times were bleak, his friend Clyde Smith sent an unsolicited check for $230,000 just in time to save the company. Barney didn’t ask him for the money. It came as a miracle. Sending the money was an act that recognized character and passion. Barney Adams is a man of extraordinary character and passion.

The last section of WOW presents a broad brush analysis of golf equipment and the golf industry. It is not optimistic. By now, the reader understands that the Adams story is about unusual dedication, sacrifice, timely advice and luck. Fueled by the extraordinary success of the Tight Lies fairway metal – exploding sales from $1 million to $35 million in three years – the company made a successful Initial Public Offering (IPO). Had the IPO happened a month or two later, it would have been too late. It is only because Adams stuffed the treasury with investor money that the company has been able to survive ten years of decline in the golf industry. Barney Adams invokes a moment of silence for the hundreds of golf companies that failed since 1992. He knows he was lucky. This is a tough business.

What does the future of the golf equipment industry hold? Will there ever be another Adams? Or, will the only equipment companies that survive be the monster multi-national corporations that make their profits selling golf balls, shoes and shirts? That is the logical conclusion from Adams’ story line.

The Golf Equipment Chronicles “Hot List” for Underdogs

“What wins on Sunday, sells on Monday” has been the marketing mantra of the golf industry for fifty years that I remember. I should know, I bought my brand new Wilson Staff irons in 1964 because I was an Arnold Palmer fan.

That’s an expensive way to market golf clubs. “Value” is created by television exposure. Any player with an outside chance to make the highlight reel on the Golf Channel commands six figures for an endorsement contract. Top players receive contracts that run into the millions, and in Tiger’s case, the tens of millions. Then, if your player wins, you have to “congratulate” him with full page ads in National publications. More millions. It takes a big, rich company to pay those bills.

The Adams Golf sales strategy – also successful for Orlimar – was direct sales and infomercials. That door is closing. A half hour slot on the Golf Channel can cost $10,000 today – an exponential increase from the years when Adams made its name on television – earning daily returns of three and four times advertising cost. Very few companies have products that produce enough sales to be profitable at the new pricing levels. Most hopeful new companies burn their investors’ money with a “flash in the pan”.

Personalities are important. Who would buy a putter from Titleist if it weren’t for Scotty Cameron?

I’ve chosen five companies that deserve your support – the “Underdogs”. These are companies that have a good story, passion and character. They are all being severely tested in a difficult environment. Hopefully, you will find the stories interesting and give their products a test. This is not a charity case. If their products don’t perform, don’t give them your money. But if they do, there’s a little karma credit in heaven for those who bet on the underdog. My recommendations might make that process a little more efficient. The underdogs need customers more than the big guys.

Adams Golf

Barney Adams’ namesake. The company that he spent forty years building. The IPO finally gave him a little money for his retirement. Well deserved.

Adams is challenging the “big guys”. So far, the company strategy has been disciplined and focused – concentrating on the Senior Tour and niche products. Sales have grown steadily, now topping $100 million. It’s a fair question how a $100 million company can be classified an “underdog”. I think that the rest of 2008 and 2009 will be a make or break period for Adams Golf. Here’s why:

Adams is making a serious push to create a PGA Tour presence. To supplement the venerable duo of Tom Watson and Bernhard Langer they signed Aaron Baddeley and “bad boy” Rory Sabbatini to endorsement contracts. Those are big bucks bets. But in a world where a company is hoping that endorsement contracts and Sunday exposure will create a bond that leads to sales, I wonder if Baddeley and Sabbatini have the charismatic personalities that make golfers love them – and buy the clubs they use.

Adams is sponsoring the Long Drivers Association (LDA). They produced a couple of driver heads for exclusive distribution through the LDA. That’s a strategy that has confounded other companies. The LDA has traditionally been the home of component drivers, manufactured specifically for long drive competition – designed not to break. Callaway and Cobra each took a pass at proving that their drivers were best by sponsoring the LDA. They both gathered their remaining chips and went home. It’s a tough business.

Adams is also sponsoring the “Big Break”. That’s the most popular show on the Golf Channel so it must come with a hefty price tag. But if Adams’ big bets don’t pay off, the company will continue to languish in golf industry purgatory – public companies with stock that doesn’t appreciate.

Here are a few recommendations for Adams products: The Company established its reputation on Tour as a “hybrid” company. The Idea Pro and especially the Tour version – the “Peanut” - are the weekly leaders in club count. My all time favorite utility design is the Peanut. It is compact and contoured to fit my eye. The sole grind is radiused – helping make better contact from tight fairway lies and digging the ball out of the rough. Better yet, Adams makes the heads available to a few select custom golf shops so they can be fitted with the high performance shaft of a player’s choice, SST PUREd and set to perfect flex and swingweight. You’ll pay around $250 for the Tour version – decked out.

The new Adams “Pro” drivers are also very good. They have a top line reminiscent of the classic Taylormade 510 TP – featuring a very deep face. The shape is “squarish” – paying homage to the current trend toward “high moment of inertia” (MOI) styling. If you close your eyes, the sound will make you think that you’re playing persimmon. They were a value at $349.

Breaking news: On June 15th, Adams reduced the price of the “Pro” to $199 with a Graphite Design YS-Q shaft. The shaft alone started the season at $200 as an upgrade so the Pro is a fabulous bargain. The “story” is that Adams has discovered a new driver – one developed for the Long Drivers Association (LDA) that delivers higher ball speed and is being played by PGA Tour Pros who don’t get paid by Adams. They say “five or six MPH higher ball speed – and point to Charles Howell III. They’re trying to “clear the decks” to make room for the new introduction in October. That’s not unusual. Most companies drop prices at the end of the season. The Adams move is just a month or so early.

The “story behind the story”: Despite their sponsorship of the LDA, Adams is not a driver company – at least not yet. The new drivers were not selling through at retail so the company took a proactive move to flush the channel when there was still time. This is a very weird situation. Adams actually makes very good drivers. Last year the BTY and BUL were top performers. (They ended up on markdown for $89.) The new “Pro” drivers are also very good. My recommendation? For $199, find a dealer who can get you a “Pro” driver in one loft higher and one flex stiffer than you normally play. The Pro head is a low trajectory head and the Graphite Design YS-Q shaft plays a little squishy. At $199 it’s a great gamble and you don’t have much to lose.

Adams is working hard on irons. For 2008, one of the best “game improvement” designs is the A3 – which comes in a rare, low offset shape. It made the Golf Digest “Hot List”. I think it’s a good choice for low-index players who are looking for a little forgiveness.

The Adams Idea Pro forged irons are also a credible product – a little oversize with a classic profile. If you’re thinking about a set of forged irons just for kicks – they can be purchased at bargain prices while the market waits for the next generation – the Idea Pro Forged “Gold”. There is also a new “A4” model in the works. Pictures have begun to show up on Internet forums.

The new irons are the “Idea Pro Gold”. These were reputedly designed with the advice of Tom Watson. Unlike the earlier version, these come with a bright chrome finish which is more durable and a little more mainstream than the gold satin finish in the original versions. At press time, they were just shipping so we don’t have any testing results to report.

Nickent

Another company that made its mark by focusing on niche products and saving marketing dollars by staying away from the PGA Tour is Nickent. Nickent, guided by a brilliant marketing strategist – Jon Claffey – dominated the Nationwide Tour with their utility clubs. Now, thanks to the success of some of their early supporters – Jeff Quinney leading the pack – Nickent is gaining notice in the “Big Show”.

Personalities matter – especially when it comes to equipment designers. Players want to know that their clubs come with a pedigree. John Hoeflich – the man in charge of product design at Nickent – has a long track record with Tommy Armour, Titleist and Taylor Made. Some of the best selling classic iron designs are on his resume – the Tommy Armour 845, the Titleist DCI and the Taylor Made RAC CB. Hoeflich is not afraid of radical designs. Nickent irons to date do not appeal to my personal taste. They’re just a little too “space age”. We’ll wait and see about 2009. My guess is that next year’s styling will have a little more of a “classic touch”.

Nickent has chosen drivers as their next battleground. The “Tour Spec” 460 cc model is one of my absolute favorites – earning a place in my bag for almost two months last summer. Nickent brought out one of the first exchangeable shaft systems – the “Evolver” driver – legal for play in USGA Tour events. The Evolver has been a Tour winner – David Mathis on the Nationwide Tour – helping to bring credibility to the concept of “shaft for the day”.

Then you have to ask the key question, will Nickent have the money to compete at the next level. CEO Michael Lee seems to have a deep pool of private investors. Will Nickent have the profitability to be the next golf equipment company that completes an IPO and fills the treasury with “real money” to join the ranks of Titleist, Taylor Made and Callaway? This is a great story – very good products and a company that deserves your support. My underdog Hot List? The Nickent Evolver driver and the 4DX utilities.

MacGregor Golf

To say that MacGregor Golf is a company suffering from a severe identity crisis would be a gross understatement. But an identity crisis is better than being out of business. Of the “Big Four” from the 50’s and 60’s – Hogan, Wilson, Power Built and MacGregor - MacGregor is the one that still has the breath of life. Callaway is folding up Hogan. The Finns own Wilson and are reviving the company as a “European” brand – essentially abandoning the American market. Power Built is invisible behind the Chinese curtain.

From a business perspective, you would think that there is valuable “brand equity” in a venerable old name. That was surely what Barry Schneider thought when he bought the company and pumped a reported $50 million into returning MacGregor to its former glory – when Nicklaus and Norman played MacGregor. It’s interesting to note that MacGregor was much more successful in Japan than its homeland. That may have been the source of Schneider’s confusion – assuming that MacGregor clubs that sold in Japan – with that fussy Japanese styling – would surely be a hit in the American market. That was – to be polite – a bad decison.

Along the way, Schneider brought in Greg Norman as a business partner – merging Norman’s business into MacGregor. But the Great White Shark loves sashimi. When the performance of the combined company didn’t make projections – Norman engineered a Boardroom revolt – gained the support of the other investors and “dismissed” Barry Schneider. Greg Norman is now the Chairman of MacGregor Golf.

So, where does the company stand? The first move was a “back to basics” release of classic forged irons. That is a strategy that makes a statement, but not a strategy that will save the company. By most reports, forged irons comprise a little over 10% of the total irons market. It won’t matter if you have great forged irons, Titleist, Taylor Made, Callaway, Mizuno and the dozen other companies with forged irons in the marketplace are going to make sure that the sales of forged irons will be symbolic – nothing that can sustain a company.

The surprise of the MacGregor product line is their “game improvement” styles. There are three models in the line: The MT – a “pocket cavity” design with little offset. The MT is in the same ballpark as the Mizuno MX-25 but it will be more appealing to the low index player looking for a little help from his irons.

The MT “Mid” is a little larger, slightly deeper pocket cavity, slightly wider sole with a little more offset. I think it’s pretty much in a class by itself. As a low single digit index player myself, I could see playing the MT Mid in my long irons in a mixed set. It’s still early in the game, but the Mid has been the most popular model and those players who have chosen it have reported back that they seem to have gained a little distance and they like the feel.

The final model in the lineup is the MT OS – an oversize head size with a wide sole that will be a good competitor to the Big Bertha line of irons.

So where is MacGregor going? The new company ethic is “loose lips sink ships” so you can’t do much more than guess about the strategy for next year. The few moles that I know inside the company seem to think that the 2009 MacGregor will bring back a taste of the Japanese styling, leave the current forgings alone and who knows what else?

If you want to bet on an underdog – you can’t do much better than MacGregor. Here’s my pick: try out the Don White wedges. MacGregor has gone above and beyond with their selection of wedges, lofts, bounces and finishes. If you want you playing partners to take a close look at your bag – go with the black oxide finish. Then, if you have the game, extend the set with the Pro-M irons in black oxide.

Miura

In 1957 Katsuhiro Miura founded his company to make forged irons. Fifty years in the golf club business has earned the respect of the industry. For many of those years, Miura made its way in the Asian market. More recently, they worked as contract manufacturers for Titleist, Taylor Made and Maruman – among others. The bottom line on Miura is that most knowledgeable players think that they make the best forged irons in the world. It will never be confirmed, but the rumor is that Tiger Woods is playing Miura irons with a Nike “swoosh”.

The Titleist “T Stamp” from the early 90’s were forged by Miura – when Tiger was on the Titleist staff. They are one of the top classics today. Occasionally, sets surface on eBay – sometimes in new condition – because they were frequently bought as collector’s items. A pristine set can sell for $1500 and up – a price higher than almost any new set of irons – except Miuras. The Taylor Made “RAC CB’s” are another classic that has held its value well in the used market.

Four years ago, Miura decided to “go it alone” in the American market. They needed help. Help was available from Bill Holowaty – a former hockey star and avid golfer. He established worldwide distribution from Calgary, B.C. Canada. The idea behind the change in strategy was obvious. Sell direct, get more money and establish the Miura brand on its own in the worldwide market.

In the past, Miura has been known for their “players’ blades”. The Tournament Blades are the signature model. A little more forgiveness has been supplied by the “202’s” still a compact size but in a cavity back model. Then there’s the 301 which is another compact cavity back iron, a little thinner in the neck and taller in the toe.

But the news for Miura in 2008 has been the new “MC 102” – presumably standing for “mid size cavity. It’s exactly that, a little bigger, a little deeper cavity with a little more offset. It’s the closest thing to a “game improvement” iron that Miura will probably ever produce. It has been a top seller in 2008 – opening the Miura line up to players looking for the Miura feel but not willing to struggle with players blades.

If you’d like a recommendation that doesn’t cost you big bucks, take a close look at the Miura wedges. In the last couple of months, Miura has brought their precision in head weight and grinding to wedges. The sole grind is pretty traditional but can now get your Miura wedges with high or low bounce. That’s my recommendation. If you want to try one Miura product, buy a wedge and go from there. Miura wedges cost around $225 at most shops.

While you’re thinking about a custom wedge, think about a custom shaft. Our current favorite at the Golf Lab is the Aerotech 125 – a graphite and steel fiber combination that gives great feel and it’s stable enough so you never know you’re playing graphite. If you want to keep ball flight down, the way to do that is with the True Temper Tour Concept or the Project X. If you’re thinking about a “Tour Trick” skip the stiff as a pipe wedge Dynamic Gold Wedge shaft and use an eight iron shaft instead. That will give you a little more feedback and you might find it helps your touch. Tiger is known to go with a slightly softer shaft in his wedges.

Scratch Golf

There is such a thing as a “golf nut”. To me, that’s a term on honor and endearment. I consider myself to be a card-carrying golf nut – I’m sure that Golf Equipment Chronicles readers over the last seven years would agree. The head “golf nut” at Scratch Golf is Ari Techner. Not only is Ari a certified nut, he has assembled a team of like-minded nuts. It is an unusual team for its dedication and passion.

Scratch started life as a wedge company. The differentiator was to provide forged carbon steel wedges with custom sole grind options. Scratch spent a lot of time analyzing golfers’ swings - classifying them as “digger” “sweeper” “slider” – and offering appropriate custom sole grind recommendations. The fact that Scratch wedges are forged in Japan – by the Ishihara foundry – allows the company to make a startling claim: “The number #1 forged wedge” on Tour. That’s kind of a trick question because the wedges that are the most popular on Tour – Vokey and Cleveland – are cast.

As is the case with many small companies, Scratch is focusing on the Nationwide Tour where they don’t have to pay for endorsements. A steadily increasing number of Nationwide Tour players are making their way to Eugene, Oregon to get custom fitted for their Scratch wedges. Custom options include unique, one of a kind sole grinds to suit any whim, custom stamping of initials and good luck symbols and a range of finish options. If you hanker for a one of a kind wedge, you can get it from Scratch Golf.

The next venture for Scratch is to get into the forged irons. They have a couple of models that are pretty conventional classic shapes. What is different is that Scratch is offering their irons with the same sole grind options that they introduced in their wedges. That’s a good idea. It is a sure thing that one sole grind in irons does not fit all players.

The same custom options are available with the irons as wedges.

You want a recommendation? If money doesn’t matter, make a trip up to Oregon and sit at the shoulder of master grinder Jeff McCoy. You’ll get pure custom, decked out to suit your desire. It will only cost you a little over $1000 for a set of three.

If money does matter, pick up a Scratch “SFU” grind 58* wedge. The “SFU” are the initials of Stan Utley – the “other short game guru”. Stan Utley recommends not filling your bag with wedges. Just get a really good 58* wedge and learn to do everything with it. You might get your “SFU” grind wedge at a custom shop that works with scratch so you can choose a shaft that gives you the feel and ball flight that you’re looking for. A custom Scratch wedge, custom shaft, SST PUREd ™, will cost around $200.

The Only Way to Know For Sure

This article spotlights some pretty cool golf clubs. I hope that you will give an underdog a shot. Keep in mind, there’s only one way to know for sure if a certain golf club, with a certain shaft and certain specifications will work for you - and that’s by taking the exact club to the range or the course and hitting it yourself. It helps to have the choices narrowed down with a custom fitting, but there’s nothing better than walking out on your course with a pocket full of the balls you play to see how your clubs perform.

You’re Invited to a Morning at the Muni

Most weekday mornings in the summer, I’m at the Palo Alto Muni for nine holes with customers. The best deal is the $28 special that includes a cart and a very good breakfast at Don’s place. There’s nothing like working up an appetite and then looking forward to a plate of corned beef hash and poached eggs. If you want to join me, give the Golf Lab a call the day before to make sure it’s happening. I’ll see you there.

Leith Anderson is a Partner in the Golf Lab, Palo Alto, CA.
He will answer any and all questions about club fitting and club making. Contact: Leith@calgolftech.com. Or by phone (650) 493-1770