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Nike: Out of the golf equipment business


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Nike made a business decision. Golf equipment was a division to build brand loyalty. They made quality equipment, but at the end of the day, they didn't hit their target (which I am sure is high in the Nike company).  One thing Nike did count on is that if you bought Nike clubs, you were more likely to buy Nike hats, shoes, bags, etc.  In other words, you bought their bread and butter which is from the apparel division. 

Who knows, Rory may keep a swoosh on his chest even if he plays another brand. I think Under Armor is doing great with Jordan Spieth. 

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I think it's the loss of Woods not being around these days. Then there is that possibility he will never be back, which makes this a viable,  long term decision for them. I am also of the opinion Rory just doesn't move the needle as much as Nike would like, or needs. 

I don't own any of their apparel goods. That I know of anyways. Never really ever thought of buying any of it. 

I have set of of Nike irons that were given to me, but I never used them. Probably should look at them and see what model they are. Cleaned up they looked brand new. 

As for a decline in golf, in general, I don't know. I do know there is talk of bulldozing one of the Vegas strip's courses (Bali Hai) in favor of a football stadium. There have been rumblings it has not been much of a money maker. The few times I have played it, it was not very busy. It remains to be seen what they will do with it. 

My home course is is doing fine, revenue wise. They provide a great product, at a decent price. 

Edited by Patch
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In My Bag:
A whole bunch of Tour Edge golf stuff...... :beer:

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13 hours ago, Piz said:

Even though they made some nice stuff; I never thought of Nike as a golf company.  I mean, I'd buy a set of Craftsman irons tomorrow.  Nike not so much.  Paying Tiger, and Rory, all that dough only reinforced the idea.  

Why? Nike invested a lot in R&D. Tiger and Rory didn't exactly play badly using their equipment.

3 hours ago, Spitfisher said:

Tiger got people to watch golfs,not play golf.

That is very true. The bump in viewership likely raised some speculative expectations.

Compared to other sports, golf has a relatively high barrier to entry in equipment, space to play, and learning the base skills. Also rising maintenance costs has reduced the viability of 'low rent' courses, exec courses, and cheaper 9-holers, which have traditionally been great for bringing in new players.

I also wonder if the 'highly programmed' generations participating in organized camps have reduced opportunities for play. I wonder if it would be smart for courses and 1st tee programs to reach out to camps to have a 'golf day' or two to increase exposure to the sport.

Also the 'snowbird' effect and decreased cost of travelling abroad means that grandma and grandpa are often less available to take the grandkids out to the course.

As far as fewer young people playing the game, some of that may be an effect of the 'baby boom' echoes.

Edited by natureboy

Kevin

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The problem with Golf is that it oversaturated itself with too many courses and the manufacturers made too much equipment.  Taylormade is the blueprint on what not to do.  A new club line release every month (it seemed).  I go to stores and see tons of older equipment on the shelves that never sold because a new line would come out right after the previous one did.  Also, the equipment is simply overpriced.  There is no way the average golfer is going to spend $500 on a new driver, $1000 on new irons, the list goes on.  

I think Golf needs to take a step back and reel itself in a bit.  Manufacturers need to quote releasing so much new equipment all the time and sell what they release much for longer span.  A club released today is not going to dramatically change anyone's game who has equipment that is less than 3-5 years old.   Release a new line every 2-3 years.

How do you get more people playing?  Today's society is all about instant gratification, doing things quickly, and the younger generations have been raised on technology instead of getting out of the house and doing things.  Golf has to find a way to make it cheaper to play but also quicker to play.  Too many courses do a terrible job in pace of play control and the cost to play is too much for many folks.  

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Golf will always be here and will rise in popularity again . .someday . . but today the thing that people really like to do is capture imaginary kid cartoon figures with their phones . .a round of golf will be a hard sell to them, I think. 

I have noticed a lot of equipment companies consolidating or folding but I was surprised by this one - they just came out with that awesome putter that I wasn't going to buy (are you kidding?  it's like $300 bucks!).

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Sign of possibly over abundance of golf equipment in the market. Or Nike execs might not be thrilled with operating income. Product cycle economics.

OT: I am not sure this has much to do with golf participation. I can see a correction happening to a sustainable level from a bubble level. But I am not seeing this 'steep decline'. Not sure what that means but I know golf will never be extinct. Certainly no more than other sports/games. The millennials can have their Topgolf.. I've been there couple of times. Might have as well visited AMZ Bowling Lanes... 

My very personal belief is that it is unreasonable for golf to continue bringing in hoards of new masses. Entry in golf is actually easier than what most opinions on the interwebs float. The hard part is sustaining the entrants through the learning curve where it becomes enjoyable or till they are self sustaining smitten. This year I have made it a point to support fledgling entrants (play rounds with them) through the initial hard period any time a meet one.  

 

Vishal S.

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3 hours ago, boogielicious said:

I'm sure they made back their money on Tiger. Rory on the other hand...I wonder if they have to honor they whole contract? They gave him something like $200MM, correct?

They do make excellent clothing.

Not an industry expert, but I wrote in another post before that professional golf may have reached peak revenue, I hope I'm wrong. I think it was estimated Spieth's 10 year contract in which financials were not disclosed was worth around 70-80m depending on incentives? Looks like a bargain compared to McIlroy at the moment, but lots of time for events to play out.

Steve

Kill slow play. Allow walking. Reduce ineffective golf instruction. Use environmentally friendly course maintenance.

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There were changes regarding Taylor Made too, but can´t recall the detail... Something like Adidas were going to sell Taylor Made, or something like that. Not sure though.

:nike:

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I will sorely miss its commercials. Nike had a predilection for making the funniest, most memorable commercials, think Woods and Yo-Yo Ma, juggling, and I'll use my persimmons till the day I die!

 

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Steve

Kill slow play. Allow walking. Reduce ineffective golf instruction. Use environmentally friendly course maintenance.

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Nike did everything they could to become a player, and they made nice stuff from my limited experience, but the bottom line is the club market is very saturated, it doesn't make sense for NIke to keep being a small fish.

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@nevets88 they sure did have great commercials.. I remember "Ripple" w/ Rory & Tiger. Boy if that one doesn't stir up any feelings then you have no heart for sports. 

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Nike and other manufacturers thought that golf was going to explode with young players, and spent tons of money on players and promotions. For the young, golf is too slow, too expensive; they'd rather play faster sports and spend their money on electronic technology. Golf isn't going to go away, but will remain popular as these young folks get older. They will then have the time and money to enjoy the game. Plus, you can always play golf as you get older, as opposed to faster, more physical sports. Maybe they won't buy as many clubs if they take up the game later in life, but the market will still be there.

Golf equipment sales will never be as big as Nike, TM and others hoped for. Golf technology doesn't advance every 3 months. The public can only be fooled for so long.

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I could be an anomaly here but I've been playing golf since before Nike got into the club business and I have never hit a Nike club nor have I ever had any inkling to try one. And at least off the top of my head, I can't think of someone that I've ever played with using them...(I'm sure someone I've play with has, just can't think of anyone)

Golf will always be around and will evolve with the times but it's definitely in a decline that seemingly has nothing to stop it. The middle class is shrinking, and resources (water, fertilizer, etc.) are only going to get more expensive. Courses are going to continue to struggle with their costs increasing while their ability to pass that cost onto players is diminishing.

Edited by skydog
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22 hours ago, dennyjones said:

Makes one wonder what becomes of the tour pros that use Nike products.   I'm sure they will be courted to go other places.   Nike gambled on Tiger and Rory and it hasn't turned out the way they envisioned.

http://www.golf.com/equipment/pxgs-bob-parsons-talks-nike-golf-tiger-woods-rory-mcilroy

Quote

Reached by phone Wednesday night, the founder of GoDaddy.com, who launched his own golf company, PXG, in late 2014, said that he has no plans for any quick moves, even as his own phone continues to ring.

"For now I just don't know what we'll do about potentially signing any new players like Rory or Tiger that might be available, but I can say that within an hour of the announcement we had no less than 30 calls from people who have relationships with Nike Golf," he said in a phone call Wednesday evening. "I think this situation caught a lot of people by surprise, and I'm going to let the golf community digest the news and then see the lay of the land."

He added that he never viewed Nike as a rival in the club business -- PXG irons retail for about $300 per club, more than triple the price of a similar Nike stick -- but instead sees a future ally.

"I don't compete with Nike on that end of the market, so from a business standpoint I'm not going to benefit from that company leaving the business," he said. "I do look at it as an opportunity to possibly do business with them as a partner in the future since they're an awfully good company and a big player in the apparel and shoe markets."

 

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Mike McLoughlin

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8 hours ago, nevets88 said:

I will sorely miss its commercials. Nike had a predilection for making the funniest, most memorable commercials, think Woods and Yo-Yo Ma, juggling, and I'll use my persimmons till the day I die!

 

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-- Michael | My swing! 

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On 8/3/2016 at 8:12 PM, Hardspoon said:

Huh. I hadn't heard about this.

Rumors of golf's decline are greatly exaggerated. It is just no longer profitable for what is basically an apparel company. 

I heard about it on a radio business report today. Between you and me, and the guy behind the tree, I have heard, and read, several times, that Nike golf sticks weren't all they were cracked up to be. Maybe Tiger could make them work, but Rory seems to be another story.

On 8/3/2016 at 9:35 PM, Chris223 said:

This is dissapointing to me. Not ready for new irons yet but was planning on another set of Nikes.  I have loved my Ignite irons since I got them.  They are still a joy to use.  Never really did care for many of the balls and shoes and other Nike stuff.  But love my irons.  Maybe I'll take a peak and see if I find a good deal on a set.

 

so does this mean Rory and Tiger go back to Titliest or do they continue playing their current sets of Nike for a while?

Well, if you start checking quickly, you should be able to find a screaming deal right now!

I understand that basically all equipment and apparel companies work the same business model. Pay a star to hawk your product, and pay them megabucks! That works fine as long as multi-megabucks are realized through sales. For some reason, that way of doing business seemed to be more transparent in Nike's model than anyone else. Could be because of Michael Jordan. And the fact that Nike took it to the Nth degree. Tiger hasn't played in a year, yet he's made 50 million dollars!

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Note: This thread is 2712 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!

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