NIke buying Taylormade?

[Templet0n]

Not trying to bait and switch. But could not think of a better title that would be interesting.

I also don't think it will happen but I thought the idea was interesting and would kinda make sense..

Callaway has become a global golf monster by purchasing lots of other smaller brands of different kind including clothing, putter brand, entertainment etc.. Nike could do something similar and maintain a one step removed presence by maintain TM as a brand under the umbrella..



What are your thoughts? Would they? Should they?

 

[radiman]

Honestly, I think it wouldn't be the worst idea. If they purchase the brand and treat it like a completely separate entity and let them essentially manage themselves outside of Nike Golf.

 

[MattyD-MPLS]

I can't see it happening but weirder things have happened. They got out of hard goods for a reason.

 

[Templet0n]

Honestly, I think it wouldn't be the worst idea. If they purchase the brand and treat it like a completely separate entity and let them essentially manage themselves outside of Nike Golf.

That is my thought. It just would give TM a deeper pocket essentially for R&D. Not sure they need one but having Nike as a parent company could free them up to some degree. As long as it didnt become NIKE 2.0 in the club section..

 

[radiman]

That is my thought. It just would give TM a deeper pocket essentially for R&D. Not sure they need one but having Nike as a parent company could free them up to some degree. As long as it didnt become NIKE 2.0 in the club section..

That is key. While I did like some of the Nike products. I never settled on a wood that I enjoyed. I think TM is doing a fine job in the club department. They just need an owner that will allow them to operate as-is rather than getting sold every few years.

 

[DG_1234]

Not trying to bait and switch. But could not think of a better title that would be interesting.

I also don't think it will happen but I thought the idea was interesting and would kinda make sense..

Callaway has become a global golf monster by purchasing lots of other smaller brands of different kind including clothing, putter brand, entertainment etc.. Nike could do something similar and maintain a one step removed presence by maintain TM as a brand under the umbrella..



What are your thoughts? Would they? Should they?

Nike discontinued its golf hard good business because it's too small of a market for a company the size of Nike. The company has annual revenues of $40 billion, so to pursue a relatively small market size such as golf hard goods does not make good business sense. Callaway, Titleist, TM , Ping etc... are each $500 million to $2 billion annual revenues
companies,

 

[Jiffypop]

Are you guy talking about a wholly-owned subsidiary kind of thing?

 

[radiman]

Nike discontinued its golf hard good business because it's too small of a market for a company the size of Nike. The company has annual revenues of $40 billion, so to pursue a relatively small market size such as golf hard goods does not make good business sense. Callaway, Titleist, TM , Ping etc... are each $500 million to $2 billion annual revenues
companies,

They also weren't ever as big as Callaway, TM, Ping, etc. They started from the ground up. If they could acquire an established brand that is profitable, it seems like a good decision.

 

[echico]

Why did Adidas pawn it off and why would Nike think it would do better?

 

[Templet0n]

Nike discontinued its golf hard good business because it's too small of a market for a company the size of Nike. The company has annual revenues of $40 billion, so to pursue a relatively small market size such as golf hard goods does not make good business sense. Callaway, Titleist, TM , Ping etc... are each $500 million to $2 billion annual revenues
companies,

Agreed, but what if it was not Nike golf? It was still Taylormade?

 

[Templet0n]

Are you guy talking about a wholly-owned subsidiary kind of thing?

I guess. Something like that..

Again, I doubt this will be a thing. I just thought the idea was interesting and would make a fun conversation.

 

[McLovin]

Why did Adidas pawn it off and why would Nike think it would do better?

i'm not sure why adidas pawned tm off, but i would think if nike could gain a bit of a foothold in equipment again, maybe they could sell more soft goods.

 

[DataDude]

Why did Adidas pawn it off and why would Nike think it would do better?

Adidas sold it because the economy crashed and no one had money to buy golf clubs. Nike would buy it because the economy is booming and people have money to buy golf clubs.

 

[echico]

Adidas sold it because the economy crashed and no one had money to buy golf clubs. Nike would buy it because the economy is booming and people have money to buy golf clubs.

so buy high and sell low.

 

[DataDude]

so buy high and sell low.

That's what the private equity firm that owns it now is trying to do. Nike would be selling low (dumping their business for $0 at the same time Adidas sold TM) and buying high (buying TM after a record year of sales).

 

[DG_1234]

Agreed, but what if it was not Nike golf? It was still Taylormade?

What matters to Nike is that the company participate in industries with market size large enough to impact Nike's topline and bottom line. Golf equipment hard goods is just too small, regardless of whether the company used the Nike or other brand name. If Nike bought TM, Callaway and Titleist these three acquisitions combined would barely move the needle for Nike's total annual sales..

 

[BlkNGld]

I don't see it. I think we've already been down this path.

Remember, it's one thing for a club company to branch out into soft goods. The reason that's attractive is higher margins.

But why would a soft goods company purchase something with lower margins? Remember all the "UA should buy xxxx" discussion?

The other thing to consider... golf has benefitted from covid as one of outdoor activities still available. When things get back to normal, some people that took up the game will stick with it, but many will either leave or play much less.

It really is a buy high scenario at the moment.

 

[Templet0n]

What matters to Nike is that the company participate in industries with market size large enough to impact Nike's topline and bottom line. Golf equipment hard goods is just too small, regardless of whether the company used the Nike or other brand name. If Nike bought TM, Callaway and Titleist these three acquisitions combined would barely move the needle for Nike's total annual sales..

Sometimes diversification is a good thing. Especially if it a subsidiary that really has to stand on its own feet. You are just the helicopter to keep them on track.

 

[donny475]

I hate to see that if it happens, I would have some serious thinking to do

 

[radiman]

What matters to Nike is that the company participate in industries with market size large enough to impact Nike's topline and bottom line. Golf equipment hard goods is just too small, regardless of whether the company used the Nike or other brand name. If Nike bought TM, Callaway and Titleist these three acquisitions combined would barely move the needle for Nike's total annual sales..

They're already participating in golf. Their hard goods brand failed for a few reasons. Being built from the ground up, poor economy, less than stellar sales. It was hard for them to compete with the likes of taylormade which if I remember correctly may have been the biggest equipment OEM at the time. If they can buy and turn a profit I don't see why they would care. I think if it helped solidify their soft goods products it would be a great investment for them. But, that's just my thoughts. Like you, I really don't have any insight into Nikes business decisions.

 

[blugold]

What matters to Nike is that the company participate in industries with market size large enough to impact Nike's topline and bottom line. Golf equipment hard goods is just too small, regardless of whether the company used the Nike or other brand name. If Nike bought TM, Callaway and Titleist these three acquisitions combined would barely move the needle for Nike's total annual sales..

Yes because Hurley and Converse are big money makers for Nike.

Edit: Nike sold Hurley in 2019

 

[JB]

Sometimes diversification is a good thing. Especially if it a subsidiary that really has to stand on its own feet. You are just the helicopter to keep them on track.

Of course it is and 5-10% of overall revenue being laughed off as not interesting makes no sense at all. Nike has purchased smaller and is involved with smaller. They failed in the golf space for very different reasons. When they acquired Hurley, it was 50-70 million in revenue.

 

[fuffle master]

I could see the interest and wouldn't mind having Nike back in the golf business. It is always good to diversify and TaylorMade would be an interesting purchase for Nike if it were to happen

 

[Templet0n]

Yes because Hurley and Converse are big money makers for Nike.

Edit: Nike sold Hurley in 2019

Good call. I didn't even know Converse was owned by Nike..

 

[DG_1234]

Yes because Hurley and Converse are big money makers for Nike.

Edit: Nike sold Hurley in 2019

Good call. I didn't even know Converse was owned by Nike..

Nearly 20 years ago Converse had $200 million annual sales revenues, and Nike acquired the company from a bankruptcy court for $300 million. Today Converse annual sales revenues are approximately $2 billion.