Will Nike buy TaylorMade?

[driveandputtmachine]

4 minutes ago, cn34 said:

 

Interesting perspective that I hadn't considered and factored in to where golf equipment sales go from this recent boom. I've got a kid who plays soccer at a competitive level and as games and tournaments have resumed, I'm definitely playing a little less. I think this definitely could be the case. What will be interesting is, for the kids who have started playing or are playing more during pandemic due to impact to their other sports, will they keep playing golf? Or, if they do keep playing, how much time will be dedicated to golf versus their other sports?

 

And to chime in on the main topic. Nike isn't buying TM. I would speculate they are not really even interested in being in the golf apparel business except for Tiger.

We had a bunch of people join my club to the point where there are 70 people on the waiting list at this point.  I have met a few of them in the last year or so, many stating well I have time to play now with XXXX traveling sport being cancelled and my wife and I are pushing the kids to play some golf to get out of the house.  Tennis is another sport I have heard many mention.  I know our courts are full more now than they used to be as well.

 

I don't imagine many that played competitively at other sports will have the time to continue to put towards golf with their sports picking back up.  The question will be this summer and how close to normal we get, but once we get thre I do not see golf being at the same level.  Public course rounds will drop, some people will drop from country clubs, but some will remain and depending upon the initiation they paid they may stay in their CC for awhile, but the amount of rounds they put in will drop as they aren't working from home anymore and once traveling for sports or vacations starts to become more like normal.

[BallerNate]

1 hour ago, driveandputtmachine said:

I would say no chance Nike buys them.   Nike screwed up their first foray into clubs, and when they left you saw the biggest jump in distance on the PGA tour, because a bunch of people playing Nike were able to go somewhere else.  Nike should have bought and existing club company that already had manufacturing deals and club designers in house with a long history.  But NO, Nike thought they could basically start from scratch and do it better, because they knew nothing about industrial manufacturing.

 

Building clubs isn't just about the best designers.  It's about those designers knowing tolerances with the metals and factories they are already working with to eek out a little more here or a little more there.  You can design a great club, but then working with a newish factory for your designers with a slightly different material and your tolerances are different.

 

No one touches TMAG at 2 billion.  Sure the Investment group fixed some things, tightened up the ship, and didn't allow the company to start blowing out 5 and 6 month old drivers at 100 to 150 off.  I think the SIM went on sale the week before the SIM 2.  Aushnet is a 3 billion company, Callaway is a 2.5 or so.  Both are more than just golf equipment, way more.  Acushnet alone with their shoes and balls makes them worth at least twice as much as TMAG.  Callaway with their shoes and clothing brands and other investments makes them worth twice as much as TMAG.

 

Current sales will not hold once the pandemic is over.  People who's kids stopped travel soccer, tennis, lacrosse, softball, that are buying equipment and playing will slow down or stop.  Kids that are playing golf instead of many of those sports will do the same.  Golf will go back to just above pre pandemic levels(some back to golf and new comers will stick, but most will not), anyone with half a brain expects this.

 

Will someone buy TMAG?  Yep.  Anywhere near 2 billion?  Nope.  TMAG was purchased for 250 mill cash and an overall price of about 425 mill or so in 2017.  TMAG sells for 1.15 at the most and I would guess not to Nike.  

Great rundown, I agree with your logic for sure.

 

Why did Nike decide to stop manufacturing and selling clubs in the first place?

[driveandputtmachine]

3 minutes ago, BallerNate said:

Great rundown, I agree with your logic for sure.

 

Why did Nike decide to stop manufacturing and selling clubs in the first place?

$$$$$$$$$$$$$$$$$$$$$

 

I think I heard somewhere that at their highest they held 5% of market share in clubs.  There are piles of articles about why they never made it farther in.  I touched on a few of those points, but the biggest and most technologically advanced clubs are drivers, especially while they were in the business.  Making a driver that never fit most people, and every one I ever tried was either unwieldy or short or both is not how you make inroads.  I think arrogance and that their usual strategy didn't work is what killed them.  In golf Tigers best winning percentage was amazing, but never enough to drive them like Lebron or MJ or other people in sports.

 

Plus as many have said, the RoI is lower in equipment percentage wise, and other than on WRX people aren't changing equipment that often.  So a lower % of money made on items that you don't sale as often?  That is not what Nike likes.  Nike likes items that all said and done cost them 4 or 5 bucks and sell for 90 in stores and people buy 7 or more a year.  A club that costs 150 and sells for 300 and people buy one every three years on average?  No thanks.  Especially when you only have 5% of the market share.

Edited March 2, 2021 by driveandputtmachine

[lefthack]

Old people don't buy fancy Nike clubs and old people make up 75% if the golf club buying public. That's why Nike threw in the towel on hardware and sell overpriced shoes to parents with too much money.

 

Nike would NEVER pay over market for anything ever. Would they buy them in a couple years at a fire sale for $100MM, maybe.

 

But I doubt Nike wants to get back into clubs. They don't wear out fast enough.

[Soloman1]

32 minutes ago, BallerNate said:

Why did Nike decide to stop manufacturing and selling clubs in the first place?

 

 

It's simple. It was too much work for peanuts compared to the apparel business.

[Davidv]

Nope Nike learned their lesson and are not foolish enough to repeat their history when it comes to golf equipment.

[BallerNate]

43 minutes ago, driveandputtmachine said:

$$$$$$$$$$$$$$$$$$$$$

 

I think I heard somewhere that at their highest they held 5% of market share in clubs.  There are piles of articles about why they never made it farther in.  I touched on a few of those points, but the biggest and most technologically advanced clubs are drivers, especially while they were in the business.  Making a driver that never fit most people, and every one I ever tried was either unwieldy or short or both is not how you make inroads.  I think arrogance and that their usual strategy didn't work is what killed them.  In golf Tigers best winning percentage was amazing, but never enough to drive them like Lebron or MJ or other people in sports.

 

Plus as many have said, the RoI is lower in equipment percentage wise, and other than on WRX people aren't changing equipment that often.  So a lower % of money made on items that you don't sale as often?  That is not what Nike likes.  Nike likes items that all said and done cost them 4 or 5 bucks and sell for 90 in stores and people buy 7 or more a year.  A club that costs 150 and sells for 300 and people buy one every three years on average?  No thanks.  Especially when you only have 5% of the market share.

 

17 minutes ago, lefthack said:

Old people don't buy fancy Nike clubs and old people make up 75% if the golf club buying public. That's why Nike threw in the towel on hardware and sell overpriced shoes to parents with too much money.

 

Nike would NEVER pay over market for anything ever. Would they buy them in a couple years at a fire sale for $100MM, maybe.

 

But I doubt Nike wants to get back into clubs. They don't wear out fast enough.

 

14 minutes ago, Soloman1 said:

 

 

It's simple. It was too much work for peanuts compared to the apparel business.

Good to know...thanks! Was always curious about why Nike got out of the golf club business.

 

Well, there’s the answer right there then...why would they buy TaylorMade if they chose to get out because of low profit margins?

 

And even if they did want to get back into the club market, they could do it under the Nike brand...what would they need TM for?

[lefthack]

If they could get TM at wholesale, maybe. Look at Bauer. When the hell was Nike ever involved with hokey? They bought low, and sold for a profit later.

 

But it was a new market to try and why not at fire sale prices?

[BallerNate]

6 minutes ago, lefthack said:

If they could get TM at wholesale, maybe. Look at Bauer. When the hell was Nike ever involved with hokey? They bought low, and sold for a profit later.

 

But it was a new market to try and why not at fire sale prices?

For sure. But that’s the case with any business though right...buy low, sell high?

 

Clearly that’s not the case with buying TM for $2 Billion. No idea where they’re going to find someone to pay anywhere near that with any kind of business savvy.

[tsecor]

21 hours ago, VNutz said:

Those who do not learn from history are doomed to repeat it.

very valuable lesson......

 

"Those who cannot remember the past are condemned to repeat it"

-George Santayana

Edited March 2, 2021 by tsecor

[tsecor]

If Nike were to buy TM, maybe they could lure Mike Taylor and John Hatfield back to Nike......Imagine Tiger Woods coming back from injury with a new set of Nike Irons......wins the Masters and puts Nike Golf on the map......

 

 

[TiScape]

2 hours ago, tsecor said:

If Nike were to buy TM, maybe they could lure Mike Taylor and John Hatfield back to Nike......Imagine Tiger Woods coming back from injury with a new set of Nike Irons......wins the Masters and puts Nike Golf on the map......

 

 

Fun idea and would make for a great ESPN special. Tiger won a lot of tournaments including the Masters with Nike clubs already, couldn’t save em then. Bottom line is regardless who wins with what or who’s designing those clubs, as 95%+ here  have already mentioned, it’s not going to change what the ROI is on hard goods. Nike will gladly let the current OEM of hard goods occupy their old 5% piece of the golf map while they rake in big dough selling inexpensive to design and manufacture soft goods. 

[QuigleyDU]

On 3/1/2021 at 11:44 AM, cbeau166 said:

 

Tiger is smarter than that. He knows not to buy high and sell low.

 

As the saying goes. "want to make a small fortune in golf? Start with a large one".. 

[tsecor]

51 minutes ago, TIScape said:

Fun idea and would make for a great ESPN special. Tiger won a lot of tournaments including the Masters with Nike clubs already, couldn’t save em then. Bottom line is regardless who wins with what or who’s designing those clubs, as 95%+ here  have already mentioned, it’s not going to change what the ROI is on hard goods. Nike will gladly let the current OEM of hard goods occupy their old 5% piece of the golf map while they rake in big dough selling inexpensive to design and manufacture soft goods. 

The funny thing is, people scoff at 5% of the overal sales #.....its not small peanuts....but looks as such when you compare to the biggest companies.....if they grabbed that same 5% + another 15% of the current TM market......the numbers jump tremendously. 

[tsecor]

EQUIPMENT SALES EXPLODE!!

 

This may be the "new norm" as they say.....interest in golf is on the rise, for many reasons...TM knows this which is why they set the price so high.....

 

since covid hit, iron sales up 83% with dollar revenue up 93%.......

 

many high schools are moving away from full contact sports and many kids are gravitating towards golf, lacrosse and other sports wich may limit contact.....the time may not be better for Nike to get back in......wil they? who knows....but the money could be right 

[TiScape]

37 minutes ago, tsecor said:

EQUIPMENT SALES EXPLODE!!

 

This may be the "new norm" as they say.....interest in golf is on the rise, for many reasons...TM knows this which is why they set the price so high.....

 

since covid hit, iron sales up 83% with dollar revenue up 93%.......

 

many high schools are moving away from full contact sports and many kids are gravitating towards golf, lacrosse and other sports wich may limit contact.....the time may not be better for Nike to get back in......wil they? who knows....but the money could be right 

Perhaps one of the reasons why they want to sell now. Sales have peaked during Covid and will trend downward as we get past it. So post pandemic sales will presumably decrease 83%. Doesn’t sound like a key selling point. Not an economics major. Just seems like common sense. 
🤷🏼‍♂️

Edited March 2, 2021 by TIScape

[tsecor]

8 minutes ago, TIScape said:

Perhaps one of the reasons why they want to sell now. Sales have peaked during Covid and will trend downward as we get past it. Not an economics major. Just seems like common sense. 
🤷🏼‍♂️

yea, you are probably right......would make a good story though....."TIGER  AND NIKE GOLF TAKE OVER THE #1 SPOT  IN HIS COMEBACK BID FOR MAJOR # 16". NOW THE BEST SELLING BRAND IN THE BUSINESS. TITLEIST NOW # 2"

[golfortennis]

1 hour ago, TIScape said:

Perhaps one of the reasons why they want to sell now. Sales have peaked during Covid and will trend downward as we get past it. So post pandemic sales will presumably decrease 83%. Doesn’t sound like a key selling point. Not an economics major. Just seems like common sense. 
🤷🏼‍♂️

 

This is exactly why they put it back on the market.  NO better time to cash in on the investment.  It's a private equity firm.  It's what they do.    

[golfortennis]

7 hours ago, driveandputtmachine said:

$$$$$$$$$$$$$$$$$$$$$

 

I think I heard somewhere that at their highest they held 5% of market share in clubs.  There are piles of articles about why they never made it farther in.  I touched on a few of those points, but the biggest and most technologically advanced clubs are drivers, especially while they were in the business.  Making a driver that never fit most people, and every one I ever tried was either unwieldy or short or both is not how you make inroads.  I think arrogance and that their usual strategy didn't work is what killed them.  In golf Tigers best winning percentage was amazing, but never enough to drive them like Lebron or MJ or other people in sports.

 

Plus as many have said, the RoI is lower in equipment percentage wise, and other than on WRX people aren't changing equipment that often.  So a lower % of money made on items that you don't sale as often?  That is not what Nike likes.  Nike likes items that all said and done cost them 4 or 5 bucks and sell for 90 in stores and people buy 7 or more a year.  A club that costs 150 and sells for 300 and people buy one every three years on average?  No thanks.  Especially when you only have 5% of the market share.

 

I think one decision they would take back is the head-to-toe requirement.  Ie., you either had all Nike(clubs, shoes, and apparel, possibly ball).  They missed the boat because a)once they dropped the hard goods, look how many guys now wear Nike apparel, and b)I can just about guarantee you would have had a large number of players playing their irons, especially the VR Pro blades.  Look at how Fleetwood and Casey held on to them so long.  You can't tell me there wouldn't be a lot of players signing up for that, but they didn't want the driver, so...  Not saying Nike's irons were so much better than anything else, but guys weren't giving up much playing another company's irons, and they were gaining large on the long end of the bag. 

 

I know the One ball was polarizing, but their balls weren't bad either.  BUt they killed their chance at a tour presence with the all or nothing requirement.

 

 

[lefthack]

1 hour ago, golfortennis said:

 

This is exactly why they put it back on the market.  NO better time to cash in on the investment.  It's a private equity firm.  It's what they do.    

 

Bought for 200m and sell for 2b in 4 years. That's some ROI if they can find a sucker.

[PeterPing]

Yes they will. And yes they did. 

[NoFancyUsername.]

16 minutes ago, PeterPing said:

Yes they will. And yes they did. 

The Koreans paid 1.7b. Pocket change for the equity firm. I'd say a bargain.

They'll run it tight and profitable....of which they are doing.

[BallerNate]

Interesting article about the sale of TaylorMade here: https://www.sandiegouniontribune.com/business/story/2021-05-21/taylormade-golf-to-get-new-south-korean-owner-as-golf-participation-grows-globally

 

I agree that this seems like Golf’s peak of popularity happening now during COVID here in North America, but the article speaks to the popularity of Golf in Korea (3rd largest Golfing market in the World outside of the U.S. and Japan). 
 

The Korean company that bought TM must see additional opportunity for growth in Korea and the Asian markets to make this purchase…maybe the company being owned by an Asian company will give TM a bigger market share there? I’m guessing Colin Morikawa and his incredible upside as a superstar doesn’t hurt either with his Asian heritage.

 

1.7 Billion sounds astronomical now, but I’m sure this purchase will age well and they’ll make massive amounts of revenue too.

[bladehunter]

On 3/2/2021 at 9:33 AM, driveandputtmachine said:

We had a bunch of people join my club to the point where there are 70 people on the waiting list at this point.  I have met a few of them in the last year or so, many stating well I have time to play now with XXXX traveling sport being cancelled and my wife and I are pushing the kids to play some golf to get out of the house.  Tennis is another sport I have heard many mention.  I know our courts are full more now than they used to be as well.

 

I don't imagine many that played competitively at other sports will have the time to continue to put towards golf with their sports picking back up.  The question will be this summer and how close to normal we get, but once we get thre I do not see golf being at the same level.  Public course rounds will drop, some people will drop from country clubs, but some will remain and depending upon the initiation they paid they may stay in their CC for awhile, but the amount of rounds they put in will drop as they aren't working from home anymore and once traveling for sports or vacations starts to become more like normal.

I hope you’re correct. I haven’t been able to walk a late 9 on my home course since 2019. And I live 3 min away. They book until 445 and it gets dark at 530 ish.  By 5 it’s too dark for my eyes.   My membership went from a great deal to a barely viable deal.  Since I’m cut down to one round a week on the weekend.  I’d be happy for them all to go back to where they came.  Just being honest.  

[MtlJeff]

Did Nike really buy TMAG? If so this should be awesome, can you guys imagine Nike making clubs? They are gonna crush it

[lefthack]

1 minute ago, MtlJeff said:

Did Nike really buy TMAG? If so this should be awesome, can you guys imagine Nike making clubs? They are gonna crush it

 

Korean equity firm. Not nearly as exciting.

 

[Billfitz]

Not likely to last either. Equity firms like this one buy under-performing companies with the intent of turning them around and after they do selling them for a profit. $1.7B isn't all that much in the world of business.

[grm24]

5 hours ago, PeterPing said:

Yes they will. And yes they did. 

Two swings. Two misses.

[boggyman]

What went with the NIKE Thread, Post your Nike equipment, no BST ? Can’t find it. 

[Bad9]

That’s two of the biggest names in golf equipment owned by Korean companies, Titleist and TaylorMade.