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adidas Golf Selling Off Golf Brands?

SuperStroke
ArmyGolf said:
Do they though? I don't have the numbers but isn't Taylormade like a 1.5 billion dollar company? And UA at 2.5? Seems like quite the leap. (Those numbers are pulled from thin air, loosely based on an article I read somewhere)

I still think a giant like Nike is the only kind of company that can afford that sort of risk, but even then I'm not sure what they gain from it. Top to bottom I think Nike makes better clubs at the moment.
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I thought I remember Taylormade losing close to $1,000,000,000 in cash assets this past year. I may be way off on that.
 
Vortex said:
Hard to see UA buying Adidas golf assets. Private Equity seems like a better option.
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If PE buys it and breaks it up, TM could end up being a case study in MBA programs for how to eff up a really good thing.
 
Vortex said:
Hard to see UA buying Adidas golf assets. Private Equity seems like a better option.
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Agreed but Private Equity is typically looking for significant synergies and growth so they can quickly flip out of the asset, splash and dash. It would be very interesting to see the Guggenheim OM and see how much slashing has been done inside TM already. I would think the biggest lift would come from a strategic buyer who can take the best of both platforms and blast out the redundancies.
 
NoLine said:
Cycling isn't cheaper then golf if you are serious, my buddy has $150K of bikes in his garage then thrown in a half dozen cycling trips a year and this is the same as going to WalMart to buy a Huffy
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Your buddy must have a sweet garage! I have 4 high-end bikes and my investment is around $25K. Sponsor discounts helped! I migrated to golf after 20+ years of competitive cycling. For perspective; I typically spent less than $5 during a 4-hour ride (drink & snack at a gas station) vs. $50+ for a 4-hour round of golf. I still enjoy cycling but golf is my new passion.
 
If UA buys TaylorMade do they rename the golf side to Under PARmour?

#yepIsaidit
 
My former college roommate is an analyst for one of the largest M & A firms in the country. He has seen the TM numbers up close and with the golf market projections his firm has access to, he believes TM will be gone within five years. There are no market share projections that justify anything like the numbers for the TM sale being discussed and the intellectual property, while of some value, is not enough to make TM remotely attractive. He projects a private equity purchase and quick resale of the assets with value (ball factories, patents, etc.).
 
aslxa said:
My former college roommate is an analyst for one of the largest M & A firms in the country. He has seen the TM numbers up close and with the golf market projections his firm has access to, he believes TM will be gone within five years. There are no market share projections that justify anything like the numbers for the TM sale being discussed and the intellectual property, while of some value, is not enough to make TM remotely attractive. He projects a private equity purchase and quick resale of the assets with value (ball factories, patents, etc.).
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this is interesting, and not very encouraging. a dodo tm is bad for all of us. i could see somebody coming in and trimming down the operations. no more wedges, no more putters, no more balls, no more gloves, maybe even no more irons or hybrids for the time being. just drivers and fairways. wouldn't that be something?
 
Vortex said:
Your buddy must have a sweet garage! I have 4 high-end bikes and my investment is around $25K. Sponsor discounts helped! I migrated to golf after 20+ years of competitive cycling. For perspective; I typically spent less than $5 during a 4-hour ride (drink & snack at a gas station) vs. $50+ for a 4-hour round of golf. I still enjoy cycling but golf is my new passion.
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Yeah, there are a few McLaren's in his garage.
 
NoLine said:
Agreed but Private Equity is typically looking for significant synergies and growth so they can quickly flip out of the asset, splash and dash. It would be very interesting to see the Guggenheim OM and see how much slashing has been done inside TM already. I would think the biggest lift would come from a strategic buyer who can take the best of both platforms and blast out the redundancies.
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PE firms are masters at reducing waste, cleaning up balance sheets, improving business efficiency, and streamlining production. PE could clean up the asset(s) and flip it to UA or another strategic buyer. IF TM has some of aforementioned problems, then the Wall Street analysts won't support the acquisition because of its dilutive impact. This is all conjecture on my part.

I was a TM fan and bought a set of Tour Preferred irons this Spring. The clubs were discounted almost 50% and I'm satisfied with the purchase. That said; the TM marketing team needs a huge refresh. Their positioning, pricing and promotion strategy is convoluted. I replaced the rest of my bag with Callaway XR products and couldn't be happier.
 
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NoLine said:
Yeah, there are a few McLaren's in his garage.
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Ah, that explains a lot. I know one guy who bought a McLaren. This bike hangs on the wall 364 days of the year. Good to have lots of "fun" money.
 
aslxa said:
My former college roommate is an analyst for one of the largest M & A firms in the country. He has seen the TM numbers up close and with the golf market projections his firm has access to, he believes TM will be gone within five years. There are no market share projections that justify anything like the numbers for the TM sale being discussed and the intellectual property, while of some value, is not enough to make TM remotely attractive. He projects a private equity purchase and quick resale of the assets with value (ball factories, patents, etc.).
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Based on what I am learning, I would disagree strongly with this.
 
JB said:
Based on what I am learning, I would disagree strongly with this.
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I do not know anything about the process myself but found it interesting and passed it along. I will say that he gave me a pretty tight price range for what Titleist would sell for several months before the sale happened - the final number was right in the middle of his range. His firm is very bearish on the golf market right now as a whole so maybe that influences his outlook.
 
Why sell when you can dump about half the tour staff and still have great exposure?
 
Vortex said:
PE firms are masters at reducing waste, cleaning up balance sheets, improving business efficiency, and streamlining production. PE could clean up the asset(s) and flip it to UA or another strategic buyer. IF TM has some of aforementioned problems, then the Wall Street analysts won't support the acquisition because of its dilutive impact. This is all conjecture on my part.

I was a TM fan and bought a set of Tour Preferred irons this Spring. The clubs were discounted almost 50% and I'm satisfied with the purchase. That said; the TM marketing team needs a huge refresh. Their positioning, pricing and promotion strategy is convoluted. I replaced the rest of my bag with Callaway XR products and couldn't be happier.
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You are spot on, I'm advising a $70B PE right now on an acquisition to drive $60M of costs out of 2 companies that just shed $30M combined over the past 9 months. The quickest way to make it happen is human capital, largest expense to most businesses.
 
aslxa said:
I do not know anything about the process myself but found it interesting and passed it along. I will say that he gave me a pretty tight price range for what Titleist would sell for several months before the sale happened - the final number was right in the middle of his range. His firm is very bearish on the golf market right now as a whole so maybe that influences his outlook.
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I hope your buddy has a clean phone line!
 
NoLine said:
I hope your buddy has a clean phone line!
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He was safe on the Titleist deal as his firm had no dogs in that fight - otherwise he would have not told me anything. I generally don't ask much about the specifics of his work but do find some of their resources (like the super detailed niche market projections and "brand" valuations) fascinating and he can speak about those on a general level. Its funny to get him excited and then he finally notices about five minutes that I am totally lost - M & A sort of has its own language, doesn't it?
 
aslxa said:
I do not know anything about the process myself but found it interesting and passed it along. I will say that he gave me a pretty tight price range for what Titleist would sell for several months before the sale happened - the final number was right in the middle of his range. His firm is very bearish on the golf market right now as a whole so maybe that influences his outlook.
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The Titleist sale was pretty much set and talked about price wise for quite a while.

I can assure anybody that this brand will not be gone in 5 years. I am not discounting what your friend is saying, just that I do not believe he has all of the facts in total.
 
JB said:
The Titleist sale was pretty much set and talked about price wise for quite a while.

I can assure anybody that this brand will not be gone in 5 years. I am not discounting what your friend is saying, just that I do not believe he has all of the facts in total.
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I'm going to agree 100% with this...market leaders do not just essentially disolve. At some point the cash burn will be more controlled allowing them more flexibility to make whatever changes they deem necessary
 
Interesting but I'm not surprised. Is Ashworth not selling well? I've never really noticed or thought about that. The turmoil with TM is well documented, but didn't think anything of Ashworth personally.
 
Long overdue to me, Ashworth hasn't made any significant leaps in the industry and Adams has really lost the small market it had when TM bougtht them. I think it's a good move.
 
I haven't seen Adidas Profit and Loss statement, but from an intuitive standpoint, the values seem skewed.

Adidas paid $70 Million to acquire Adams Golf three years ago. Then three days ago Adidas reportedly offered $200 Million to one guy to endorse their brand. (James Harden of Houston Rockets).
Just seems strange.
 
Holy wow! What a great thread. I know ZERO about the inner workings of the golf industry and frankly, do not try to follow it. Having seen the ripple effects of acquisition in my industry recently, this has been interesting to read just now. No idea how it turns out, but I have a big soft spot for the Adams folks. Probably because I am in their "old" demo, but more importantly because I saw their passion up close in DFW. I will never forget that.

Great thread and so much great info and opinions!

JM
 
Seems like a lot of CYA going on at Adidas. TM was king just 5 years ago. Wasn't the same decline in golfers going on then? Really their profit loss is in poor decisions and not being able to respond to stronger competition.
 
cbaker2882 said:
I find this interesting after they just offered James Harden a $200 million endorsement deal and recently took on as Manchester United's Jersey sponsor worth about $1billion over the next 10 years. Figured they weren't having money issues over at adidas
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Well said, it puts Adidas and their business intentions into a nice perspective.

My take is: sure golf is going threw some hiccups right now but everything will turn around someday. I like Adidas, I like what they make and buy it occasionally. However when they buy into the industry durring the gravy train days then seem so quick to bail when things get hard shows their commitment to golf as a whole. If they want out then thats fine. Golf will begin to grow again and if the industry is ran by golf centric people then all the better.
 
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