Jump to content
IGNORED

TaylorMade-adidas Golf Company to acquire Adams Golf


Note: This thread is 3270 days old. We appreciate that you found this thread instead of starting a new one, but if you plan to post here please make sure it's still relevant. If not, please start a new topic. Thank you!

Recommended Posts

Everyone seems to being looking at this very negatively - I think people's view of TM as such an aggressive marketing machine is coloring their perspective.   But I'd offer a counter opinion that looks more objectively at the financial and business implications, and I feel this could be good for both companies and for golf.     For reasons I'll outline below, I fully expect TM to keep the Adams brand and I think we'll see that brand grow further in the market.

First, Adams is a very small player in this market.   With $96M in annual revenues, they were very limited in developing new products.  Their R&D; budget for last year was just under $3M, which works about to be about a dozen engineers at fully burdened labor rates.   But that assumes unrealistically they have no other R&D-related; costs, so in reality they probably only have 7-8 development engineers.        Contrast that with Callaway, who's R&D; budget for the year was about $130M.       Taylormades' is no doubt higher than Callaway as well, so Adams was going to be severely limited in their ability to compete at a technology level.

Related to the R&D; is the ability to protect one's developments through patent protection, and again Adam's is severely disadvantaged going forward.    A quick search of the USPTO's data bases shows literally hundreds of patents by Callaway and Taylormade, against perhaps a few dozen for Adams.    The cost of prosecuting patents is significant, probably upwards of $15-20k each, and if Adams was to grow its IP portfolio at a competitive pace they would probably be spending upwards of $1M per year just in patent costs.

Also related to patents has been the argument that TM bought Adams because of patent threats.    I doubt that is correct, as Taylormade already controls many of the key patents related to manufacturing metal woods.    All of the golf companies are constantly involved in cross licensing of their respective patents - the different companies have all staked out claims in certain categories of products, and essentially none of them would be in business without all the cross license agreements (an example - did you know the adjustable sole plate on the R11 is actually a Callaway patented concept?).     If Adams was trying to assert patent rights on the velocity slot idea (which by the way I could not find in the patent database except for on the crown of the clubhead), then TM could easily bury Adams with cross claims on all the metal wood manufacturing patents.

This acquisition is good for Adams because they simply didn't have the resources going forward to effectively compete for all the above.   At this point in time they are profitable, but as a small niche player they were likely going to find themselves squeezed out of the market in the next 3-5 years.   Selling now is good timing as the brand is currently strong and they are profitable, allowing them to extract a higher sales price for the company.

Financially, this also makes good sense for TM.    When a company reaches a large size, it becomes very, very difficult to keep up a growth rate through organic growth, i.e. creating and selling more internally.    It is pretty easy for a $10M company to find a $1M opportunity to grow an additional 10%, but it is very difficult to find 10% growth opportunities when you're a $1B company - those $100M opportunities just don't come along very often.     But shareholders are not satisfied with a quiescent company with stagnant sales - they demand continual growth.   Hence, companies like TM will seek to maintain growth with acquisitions.     In TM's case here, they've found a profitable company with a good brand, and one that helps fill out the different market niches where TM is not very strong.    Financially, this acquisition will be accretive - it adds directly to TM's revenues and earnings.     TM can also consolidate a lot of the SG&A; costs both companies face as well as R&D;, further helping earnings.

Another thing that makes this good for both companies is that much of retail is a battle for shelf space.    An example is the shampoo business - those hundreds or different shampoos cluttering a grocery store's shelves are made by a small number of companies, but they create different versions to gain more shelf space - the more space they control the more leverage they have in the retail channel.    A retailer won't give up its precious shelf space for just more of the same - the need differentiation to draw in the customers and create greater choice.    TM could come up with even more lines of clubs on their own, but the retailers would balk giving TM more space directly, but with Adams they have what appears to be a completely separate product line.    Why this is good for TM and Adams is they can now use their combined leverage to secure better promotion and pricing from the retailers.    This is good for consumer as well, as it can result in better pricing and special offers for both brands.

TM has a lot of market power in the industry which Adams has never had and would never achieve.    Adams is a good brand name and plays well with various market segments, and with TM behind it they now have the power to get that brand into retail and distribution channels that would otherwise not happen.

Because of all this, I see this as a good move for both companies and one that offers potential benefits to the golf consumer as well - the Adams brand will continue to survive but will have better resources behind it to grow beyond what it could do by itself.    That's a very good thing.

  • Upvote 4
Link to post
Share on other sites



Originally Posted by Clambake

Everyone seems to being looking at this very negatively - I think people's view of TM as such an aggressive marketing machine is coloring their perspective.   But I'd offer a counter opinion that looks more objectively at the financial and business implications, and I feel this could be good for both companies and for golf.

Whats good for business and whats good for golf dont go hand in hand though.  Less competition is never a good thing for the consumer.

Link to post
Share on other sites

I read that TM sees itself as being for 0-4 HI players and markets for the top of the pyramid and that the purchase of Adams was for the game improvement/senior players. This is a joke...right? What arrogance. Adams (IMO) make far superior "player" irons than TM (MB2 and CB3s better quality and way better looking than TM tour preferred). I see TM as a company targeting the masses with big plastic/neon graphics. Adams is an innovative company that thinks of the golfer first--why they seem to have 7-9 different iron sets at the same time--it would make more money if your advertising led consumers to believe that RBZ clubs are for everyone, but Adams has a more custom/tailored approach to business.
Link to post
Share on other sites



Originally Posted by uttexas

I read that TM sees itself as being for 0-4 HI players and markets for the top of the pyramid and that the purchase of Adams was for the game improvement/senior players. This is a joke...right? What arrogance. Adams (IMO) make far superior "player" irons than TM (MB2 and CB3s better quality and way better looking than TM tour preferred). I see TM as a company targeting the masses with big plastic/neon graphics. Adams is an innovative company that thinks of the golfer first--why they seem to have 7-9 different iron sets at the same time--it would make more money if your advertising led consumers to believe that RBZ clubs are for everyone, but Adams has a more custom/tailored approach to business.



Yeah because we all know the RBZ irons were designed for pros, right?

Link to post
Share on other sites

  • Moderator

The guy that is the most happy right now is Chip Brewer who was the Adam's president and CEO since 2002 and helped get Adams Golf to where it is today.  He was recently named Callaway Golf CEO but I'm assuming he kept his Adams stock, says 175,000 shares Here

Link to post
Share on other sites
Awards, Achievements, and Accolades



Originally Posted by uttexas

I read that TM sees itself as being for 0-4 HI players and markets for the top of the pyramid and that the purchase of Adams was for the game improvement/senior players. This is a joke...right? What arrogance. Adams (IMO) make far superior "player" irons than TM (MB2 and CB3s better quality and way better looking than TM tour preferred). I see TM as a company targeting the masses with big plastic/neon graphics. Adams is an innovative company that thinks of the golfer first--why they seem to have 7-9 different iron sets at the same time--it would make more money if your advertising led consumers to believe that RBZ clubs are for everyone, but Adams has a more custom/tailored approach to business.


While I'm sure that's true in reality, the market perception is probably otherwise. Other than tour quality hybrids and LD drivers, does the average consumer associate Adams with anything other than beginners and/or seniors?

Link to post
Share on other sites



Originally Posted by sean_miller

While I'm sure that's true in reality, the market perception is probably otherwise. Other than tour quality hybrids and LD drivers, does the average consumer associate Adams with anything other than beginners and/or seniors?



Id say the average person considers Adams to be old man golf clubs.  Which is a shame because Adams makes some quality stuff.

Link to post
Share on other sites

I never considered them old man golf clubs but until I got more serious about golf I never considered them in the top tier, and would often confuse them with Cobra.  They do seem to lack a real identity as they market their SGI iron/hybrid sets heavily but then they have some of the best low handicap level hybrids on the market.  I've never tried their forged irons, but most people that own them seem to think highly of them.

Originally Posted by TitleistWI

Id say the average person considers Adams to be old man golf clubs.  Which is a shame because Adams makes some quality stuff.



Link to post
Share on other sites
Awards, Achievements, and Accolades

Note: This thread is 3270 days old. We appreciate that you found this thread instead of starting a new one, but if you plan to post here please make sure it's still relevant. If not, please start a new topic. Thank you!

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



  • Want to join this community?

    We'd love to have you!

    Sign Up
  • Support TST Affiliates

    TourStriker PlaneMate
    Golfer's Journal
    Whoop
    SuperSpeed
    FlightScope Mevo
    Use the code "iacas" for 10% off Mevo and the code "iacasfeb21" for 10% off SuperSpeed.
  • Posts

    • yeah, this "carpet" runs around 11 in one direction and 10 in the opposite, so it's faster than most greens I play on, but I'm just working on the consistency of my motion so it works. It's definitely nice to have
    • Bulking up doesn't necessarily lead to lack of flexibility or inability to hit the golf ball. Even when people complained about Tiger bulking up, he was no where near as big as professional body builders and didn't inhibit his golf swing.  I think people would have to go really far with bulking up before it becomes a detriment to their ability to swing a golf club. 
    • Day 58 (Mar 05 2021) - 1-2-3 drill with putter this morning.  1 pace from cup - single ball, make it into the putting green cup and move to 2 paces out, now I have to make 2 balls in a row before moving to 3 paces out and of course 3 balls have to be made before I get to 4 paces which for my short stride is the limit of the green.  Focused on keeping head still and not "looking" - target point a spot on the mat about 18" in front of the ball.  Followed this up with going with 8 balls in a row from each position before moving to the next (why 8 - its all the "real" golf balls I have in the house, may scarf another 4 from the used ball pile in the shop to give an even dozen to work with).   Makes me jealous that the hall at the house (which is where I work as well) is not fully carpeted as it is about the same length.  Then again - the hardwood floor can offer challenges when putting with the plastic ball - like putting on ice.....
    • Basically golf requires you to be flexible and strong, not necessarily bulked up. Rory or DJ have the ideal build for golf
    • I wonder if anybody will actually aim to drive the green on #6.  Rory is long enough to get there, considering he outdrove Bryson today.  I just think the risk is too high if you get it wrong. Onto another topic. I believe Rory can actually win this tournament and in doing so be the favourite to win another major at Augusta.  His game is peaking well enough
  • Today's Birthdays

    1. Chiss1978
      Chiss1978
      (31 years old)
    2. dzclarkcpa
      dzclarkcpa
      (50 years old)
    3. Egdewrg
      Egdewrg
      (72 years old)
    4. fasted
      fasted
      (53 years old)
    5. feashasts
      feashasts
      (29 years old)

×
×
  • Create New...

Important Information

Welcome to TST! Signing up is free, and you'll see fewer ads and can talk with fellow golf enthusiasts! By using TST, you agree to our Terms of Use, our Privacy Policy, and our Guidelines.

The popup will be closed in 10 seconds...