Nike Buy of Titleist (WHAT THE?)

[foss69]

Just had a very interesting rumour come my way, am curious if it has any standing...

 

Am a golf pro in Ft Worth and my Mate from nationwide came into the shop this morning saying that the rumour going around the Byron Nelson this week is that NIKE is looking to try and buy TITLEIST!

As I said, have no proof of this myself, but that is the conversation going around the reps and players up at the Byron....

Fire away if you have any further info....

[nikeguy]

NO WAY IN A MILLION YEARS!

[BM1]

Seems like a stretch to me. Nike usually seems to buy a company to get INTO a particular arena, like Bauer for hockey. I would think that the price tag on that would be pretty steep, perhaps to steep to make sense.

[foss69]

My feelings are the same... We stock mainly Titleist in our shop and I think that NIKE and Titleist philosophy are totally different...

In saying that however, my mate is a NIKE Staff player so I have to give him some credibility on this one...

[nickc445]

I cannot imagine that Fortune Brands would sell Titleist.

 

The only scenarios would be if FB needed the cash or was in serious problems... I'm pretty sure with their portfolio (including Jim Beam, Swingline, et al), that is not the case.

 

Case in point:

 

"Fortune Brands Inc. on Tuesday declared a regular dividend of 39 cents per share, payable on June 1 to stockholders of record at May 9.

 

Fortune Brands (nyse: FOPRA - news - people ) owns spirits and wine brands Jim Beam and Maker's Mark bourbons, Sauza tequila, Canadian Club whisky, and Courvoisier cognac, among others. Home and hardware brands include Moen faucets, Diamond and Schrock cabinets, Therma-Tru door systems, Simonton windows, Master Lock padlocks and Waterloo tool storage.

 

Acushnet's golf brands include Titleist, Cobra and FootJoy."

 

http://www.forbes.com/feeds/ap/2007/04/24/ap3645913.html

[foss69]

Not sure if I remember correctly or not though, wasn't there a post going back a month or so ago that NIKE were looking to try and buy TmAG?

[taylormadefan]

My feelings are the same... We stock mainly Titleist in our shop and I think that NIKE and Titleist philosophy are totally different...

In saying that however, my mate is a NIKE Staff player so I have to give him some credibility on this one...

 

Interesting, but on that same token, why would a Nike STAFF player know the corporate ins and outs of a company that nets 10 billion dollars a year in revenue? :russian_roulette:

 

Also, the Nike home office is in Portland Oregon which is just a little more than stone's throw from their golf facilities in Ft. Worth, TX.

 

These rumors start about all companies all the time. Until we see some hard sources we're able to cite, this is pretty silly.

[arkstorm]

I find it very unlikely that Acushnet would be willing to divest its flagship line.

[Baller]

If you think about it, Titleist really hasn't had the quality of staffers/top names it has had in the past. I may get flamed but, In my opinion, the Marketing of the product, except balls is basically none exsistant. It would seem as if the parent company is not behind the brand as it used to be and Cobra seems to be the new, young, exciting, hipper, brand for them.

[foss69]

Not trying to say that a lowly NIKE Staff tour player would know the insides and out of any or all corporate decisions.... All I was doing was passing on the information as to what is being discussed around all the reps and players at the Byron Nelson this week...

As for the likelihood of NIKE buying TITLEIST from Fortune Brands.... Fortune Brands did not get where it is by not looking at all the offers that would come it's way... And I am sure that if NIKE is serious and makes an attractive offer to Fortune... Everything has a price...

I also agree that Titleist marketing is lacking on anything other than it's balls and shoes...

 

The purpose of this post though was not to start a rumour mill for rumours sake, but to try and see if anyone had any hard evidence of truth behind it...

[mat562]

I think Titleist have a very good way of marketing themselves to the masses and have had for many years.

 

Their whole marketing philosophy is built on making quality products that invite mass usage amongst the higher profile golfers (i.e. PGA/Nationwide tours, club professionals and high-level amateur golf.)

 

They do all that without tee-up-money being paid out in anything like the quantities that other OEMs do.

 

When I was growing up, and playing competitive golf as a junior and young adult, the amateur game was awash with Titleist. Everyone, and I mean EVERYONE played a Titleist golf ball, because they handed them out to the teams and individuals knowing that members back at their clubs would see us using them in competition and buy the product. The same went for gloves, and shoes.

 

Ping had a similar philosophy back then too, and, in the UK amateur scene, everyone who didn't play blades played Eye 2s.

 

If you look at the equipment counts which Titleist base their advertising upon so heavily, they reign supreme at PGA, Nationwide, Club Pro and Amateur levels. In nearly every category, they ranks 1st; the ones they don't, they rank 2nd.

 

The ball counts are an absolute landslide.

 

If you go to a PGA Tour event (or a Euro Tour event) Titleist is everywhere you look. Balls, wedges, irons, woods, Cameron putters, and drivers and fairways. Their whole marketing strategy is based on saturation of the marketplace.

 

Titleist have a lot of staffers with big, noticeable bags everywhere you look. They don't have a stable of one "big name player" (although Adam Scott may take offence at that comment) who is the sole basis of their marketing. Even when Woods was a Titleist player, a lot of their marketing still focussed on the "strength in depth" aspect of their product usage rather than a "We've got the world number 1" strategy.

 

I think Titleist's marketing does exactly what it intends to do: namely, it appeals to the 'lower handicap' strata of the market which then permeates down to the general golfing population. Sometimes I think that thought process hurts them (the 'I can't play Titleist; they only make clubs for low handicappers' attitude of some golfers) but in the main I think that's why they've been dominant over recent years.

 

Some companies like the buzz of having a 'big name' to use as their selling point.

 

Many others, Titleist perhaps most of all, use the 'strength in depth' approach coupled with excellent products to sell their clubs and balls.

 

Before anyone knocks me, I KNOW Titleist do pay tee-up money, but I honestly think they'd still dominate (at least in ball counts) if they didn't. And how many Vokeys and Camerons are seen in bags on the WITB shots?

 

I can see why Nike would look to acquire Titleist; the brand is so strong it would be a bargain at any price.

 

As an aside, I don't work for Titleist and am not Wally Uhlein's son-in-law...

[metroplanner]

Golf is a small portion of Fortune Brands' business, and the fact that they posted a 39 cent dividend probabaly has little to do with Titleist and Acushnet in general. Titleist is a sub of Acushnet, (not saying there is any truth to the rumor) but if Nike did buy the company, I am guessing it would be buying Acushnet, not just the Titleist brand.

 

Fortune Brands owns a bunch of home improvement companies, it is one of the other two sectors it is in besides golf and spirits. Their spirits business is rising due to a general upshift in that sector: http://biz.yahoo.com/ap/070418/sector_glan...cohol.html?.v=1

 

In fact...the golf part of the business is not exactly changing the world for them lately: http://biz.yahoo.com/e/061108/fo10-q.html There was only 3% increase in net sales for Acushnet from 05 to 06, and there was a 4% decrease in operating income. Put this up against their wine and spirits business, which saw net sales increase by 88% in the same time and saw operating income increase by 87%!!!! Straight from their report: Net sales increased $31.6 million, or 3%, to $1,095.8 million. Higher sales benefited from increased sales of Titleist and Pinnacle golf balls, and FootJoy and Titleist gloves and golf accessories, as well as share gains in the U.S. golf ball market and continued growth in international markets. These gains were partly offset by slightly lower sales of golf clubs and golf shoes due in part to competitor promotional activity, as well as unfavorable foreign exchange ($6 million).

 

Incidentally, they also have this in their report: In March and April of 2005, the USGA and R&A each issued notices to golf equipment manufacturers 1) expressing their intent to further investigate issues regarding spin and club adjustability and 2) requesting that manufacturers participate in a golf ball research project by manufacturing and submitting balls that would conform to an overall distance standard that is 15 and 25 yards shorter than the current standard of 317 yards. The research being conducted could result in further ball and/or club regulation, including a rollback in the performance of either or both. Existing rules and any new rules resulting from this research could change the golf products industry's ability to innovate and deploy new technologies, potentially impacting our Golf business.

 

Interesting, eh? That has less to do with their profitability but raises questions over what the R&A and USGA are up to with regard to "club adjustability" and the distance rollback.

 

You can look at a lot of this for yourself: http://finance.yahoo.com/q?s=FO

[JHR]

That could possibly be the worst rumor i have ever heard.................

 

 

I highly doubt there is even a chance that could happen.

[JohnnyDub]

I heard another rumor that titleist was going to just soft goods(hats,gloves,shoes) and that the club department was being shutdown. I heard this from staff player. Who knows with this stuff.

[Double Rods]

Does Titleist have the child and sweatshop labor market cornered?

[Baller]

Metroplanner that is great info;

 

Bottom line is the profitablity. Foutune Brands is a parent company which, derives it profitablity from its different types of Brands it owns. Much Like Kraft Foods. They own brands you never would have thought of, next time your in the market look for yourself at packaged foods, frozen pizzas, cereal, etc. and check for the KRAFT logo. Market share is gained or loss by purchases of other brands when you do not create an item from raw materials.

 

The Bottom line profitablity of the brand or lack there of, or forecasted to be unprofitable, warrents that it be sold or kept. The sum total is greater than the individual componet. From a business stand point, shareholders perspective, coupled with the current market strategies shown by Titleist and Acushnet in general, it would appear the original posters information could be correct. You can try and justify a trickle down marketing strategy of the best players play Titleist, therefore, the common golfer will too. BS. Especially when booze is turning 88%.

 

I know the Titleist loyalist may not like it, but bottom line profitabilty has the finally say as far as companies are concerned. Don't worry Nike will do a fine Job in making your clubs.

 

If it don't make dollars, it don't make sense. A CEO told me that when I audited his company putting together Financial statements and summaries like metroplanner posted, and DJ QUIK wrote a song and said the same damn thing.

[arkstorm]

You see...Tiger will be playing a Nike putter after all (If Nike buys Titleist)...LOL :russian_roulette:

[Goldenhawk]

This may or may not be true. But keep in mind one thing...............NIKE TRIED TO BUY CALLAWAY LAST YEAR!

[Konklifer]

The fact that this was heard third hand speaks volumes.

[ronaldroettger]

How many members here would quit playing Titleist if Nike bought them?

[TM golf guy]

How many members here would quit playing Titleist if Nike bought them?

 

A bunch.

[liketogolf]

I think this rumor has more to do with Nike looking to get Scotty Cameron to jump ship and make putters for NIke.

[sync71]

There's always a chance it could happen, but I just can't see Nike buying Titleist unless FB needed money terribly.

[neotheonlyone]

I am with most of the people that believe that this is nothing more than pure rumor - but that is the golfer in me. The investor in me believe that this could be a likely scenario. Wall Street is currently putting pressure on Fortune Brands to breakup some parts of the company as they believe that their is a ton of untapped value in the company as a whole. The stock is not doing as well as it should because some of the brands depend on the housing market (Moen and American Lock) So a sale to Nike would certainly would lift the stock price of both companies. Also, if Tiger has a revenue sharing deal with Nike Golf like Jordan has then I believe that he would be behind it 100%. Get the D2 in the bag - the Prov1x - keep his putter ; and make money on it all like Greg Norman did with Cobra Golf.

[tpariff]

If you think about it, Titleist really hasn't had the quality of staffers/top names it has had in the past. I may get flamed but, In my opinion, the Marketing of the product, except balls is basically none exsistant. It would seem as if the parent company is not behind the brand as it used to be and Cobra seems to be the new, young, exciting, hipper, brand for them.

 

Your post is somewhat accurate, but only if you pull out pieces and paste them together.

 

1. You're right in that Titleist doesn't have a bunch of top names. Why pay Els, Mickelson, Tiger, etc. tens of millions per year when the brand stands on its own? Titleist is a BRAND company, not a pay-for-publicity company. To my point, when is the last time you saw DLIII or Adam Scott doing TV commercials like Sergio does for TM?

 

2. Because Titleist is a BRAND company, they "market the product" as you accurately stated. Much of their marketing is done at the green grass level through pro shops throughout the world. Titleist is huge with the PGA of America as evidenced by their ads in golf magazines showing club pros with Titleist stuff. I have yet to find a pro shop with a significant stock of Nike, Srixon, Mizuno or many of the other OEMs. TaylorMade and Callaway have some penetration at the green grass level, but Titleist is still the king.

 

With Titleist it will always be about the brand, not about any single endorser of its product. They don't see the benefit of giving any single player $10 million per year. It's actually a smart business decision because the ROI just isn't there for any company besides Nike with Tiger Woods.

[daidee]

Just a thought, do any of you believe that Tiger might have something to do with this? I'm sure he prefers to use Titleist products.

[smithg1053]

Don't know the truth of the rumor...but stranger things have happened. My only thought is that if something does come of this, I will be quickly buying another set of 695MB's to back up my current set, as well as some backup wedges and maybe even an additional Scotty.

 

No offense, but I have seen too many acquistions (like when AMF bought Harley/Davidson and CBS music bought Fender) and the core product went from great to just junk in a short time. Both HD and Fender eventually got themselves out of their respective acquistions and went on to put themselves back at the or near top of the heap in terms of quality. Would hate to see that happen to Titleist. Hope this is nothing more than another outhouse rumor.

[Bobcat43]

Not sure if I remember correctly or not though, wasn't there a post going back a month or so ago that NIKE were looking to try and buy TmAG?

 

 

 

There always seems to be rumors like this floating around. To date all are rumors. Ask your self yourself this... What does Nike have to gain from this? You may just answer your own question.

[villa]

I'm dubious that there's any truth in the rumour but I wouldn't see it simply as a buy out.

Multi national organisations often merge but still operate independantly.

 

The reason we all love Titleist is because they don't bring new products out every other month even though we regularly long for some of the prototypes. This is good for exclusivity but profit's what counts. With Taylor Made and Callaway constantly stepping up their game maybe Titleist aren't cutting the mustard with market share.

 

I thought this was the reason Cobra have made another massive leap (and doing a great job) but you just never know what's going on behind the scenes.

[Grimace45]

I am not saying that I buy this rumor, but keep in mind that the management of Fortune Brands are there to make money and they are for lack of a better term a venture capital firm. I am not sure what Nike would gain by purchasing a brand like Titleist since Nike already is a player in the same markets as Titleist, but I do not discount that Fortune would sell the brand if management feels the price is right.