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TaylorMade Struggles Continue

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JB

JB

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A while back THP wrote a piece on TaylorMade Golf and asked the question what happened to the dominance of TaylorMade. If you missed that, you can find it here.

https://www.thehackersparadise.com/what-happened-to-the-dominance-of-taylormade-golf/

The NY Post has a story right now (yes I know how bad they are) talking about how adidas is struggling to sell the brand and the losses are mounting. There is more to the story than this quote, and you can find the link below.

Losses at TaylorMade are much greater than many potential bidders anticipated, causing suitors to walk away, sources said.

The golf division that Adidas announced was for sale last May — which includes golf club maker TaylorMade, and the much smaller Adams and Ashworth brands — is losing between $75 million and $100 million a year, according to sources close to recent deal talks.

That is quite a fall from 2013 when TaylorMade was posting $1.7 billion in sales and a healthy profit, sources said. Today, sales are a little better than $500 million.

Adidas last year was asking for more than $500 million for the business, but now may have to give it away, a source who considered making a bid said.
Click to expand...

https://nypost.com/2017/02/27/adidas-struggling-to-sell-taylormade-equipment-brand/
 
How much of this is terrible leadership, and how much of it is bad asset management?

is their crazy collection of tour staff too much to dig out from underneath?
 
Do we get to the point where Taylormade is no longer a thing?

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JB, what is Adidas big sport right now (where $$$ are good).

Soccer? Basketball?
 
Given some of the whispers heard around the show, this could make the list of interested parties REALLY intriguing should the number Adidas wants continue to fall.
 
Talk about a bleek article, yikes. 3 months and they could be in serious trouble? That's not good for the industry.
 
Nate said:
JB, what is Adidas big sport right now (where $$$ are good).

Soccer? Basketball?
Click to expand...

definitely not college football. They had some huge names that all jumped ship, ND, Mich, etc.
 
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Nate said:
JB, what is Adidas big sport right now (where $$$ are good).

Soccer? Basketball?
Click to expand...

I believe both of those. I know last year they were over 30% marketshare in soccer footwear in Europe, but I dont have any of the other stuff.
 
I feel it is hard to put a finger on 1 thing with these guys. Could be over stimulating the market with product, could be the amount of R&D money it took to create new product at the pace they were or it could simply be so many options out there at lower price points. Or dare say the timing of the fall in relation to when Harry left and Callaway began to rise.

I have always liked their products but when the margins are that bad your survival is short lived in my opinion.
 
Shouldn't pay the tour pros so much money.
 
JB said:
I believe both of those. I know last year they were over 30% marketshare in soccer footwear in Europe, but I dont have any of the other stuff.
Click to expand...

Basketball could be short lived as Nike is taking over the NBA contract shortly.
 
First, of course the article had to mention Tiger woods as a reason TM is struggling to find a buyer because why not? Second, a drop in revenue to $500m for $1.7B?!? Holy crap, leadership heads should be rolling down the corridors. Sounds like they need a 5-year war and a pirate ship to revive that level of hurt. Someone will scoop them up once the fire is put out and this will become another Ben Hogan revival type story
 
Adidas will start supplying the NHL jerseys next year but they don't actually use Adidas to brand any Hockey Equipment as that is all done under CCM. Very strange.
 
man this is crazy. I had a feeling it was bad, but given their current lineup I would imagine they would be a little better from a revenue perspective. I wonder how much is the Tour staff versus revenue.
 
Canadan said:
How much of this is terrible leadership, and how much of it is bad asset management?

is their crazy collection of tour staff too much to dig out from underneath?
Click to expand...

My sentiments exactly!!
 
TM struggles from their fiasco a few years that ruined some golfers.

I also think their plan of "#1 on Tour" is being taken advantage of by professionals with lenient club contracts. They pay for all of these pros to play their clubs which seems to be losing it's ROI thanks to club fittings becoming more popular.


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I'm really not surprised by this. I've been pretty 'meh' with their products for several years now (except their new tour irons this year are gorgeous). Their fall is the result of many, many things. But off the top of my head, poor marketing is one thing. Add to that, they seem to have become stagnant in club innovation recently. I know they come out, say they did something new, and that its better. But I honestly am just not seeing it.

~Rock
 
Sales are down 70% in 3 years? Ouch...

I'm sure they're working to be leaner. You can't spend like crazy on the commercials and staff gambling for dividends right now. I wonder if the staff contracts are guaranteed money? What would happen if they breached? Say we're cutting the contract short. If you want to sign for half then great, if not, hit the road...
 
TeedUpThoughts said:
First, of course the article had to mention Tiger woods as a reason TM is struggling to find a buyer because why not? Second, a drop in revenue to $500m for $1.7B?!? Holy crap, leadership heads should be rolling down the corridors. Sounds like they need a 5-year war and a pirate ship to revive that level of hurt. Someone will scoop them up once the fire is put out and this will become another Ben Hogan revival type story
Click to expand...

I think signing Tiger is an indication of how far TaylorMade's leadership is removed from Adidas'. Tiger wears Nike from head to toe after being signed effectively with Adidas' money. That's an awkward meeting before Tiger became basically dead money unless he plays Augusta and does decent.

I think it's tough to say how they bounce back. The net worth of the organization won't be able to justify keeping the development talent when they are bought out, and I'm not sure how you climb back to the top without something pretty innovative. They can't just keep adding slots to things.
 
If the numbers are correct and their sales have dropped off around $1 billion a year, one would think that would be the main issue. I'm sure it has to be a mix of issues that have caused this. Other companies stepping up their game in the marketplace, mismanagement, etc. I don't see companies like Callaway backing off on the dent they've made on the market. TM will most likely have to downsize their operation to accommodate for a smaller market share.

It'll be interesting to see how low Adidas ends up going on the selling price considering the annual losses.
 
I would be interested in seeing the numbers for the rest of 2016 and how they are doing this year. They seem to be gaining momentum so hopefully that helps. Having one of the major companies in golf struggle like this isnt good for anyone in golf, including consumers
 
Wow crazy that there is a chance Tailor-made could just go away. Hopefully something happens to bring them back. Figured they were losing money but didn't think it was thing big of a concern.
 
Canadan said:
How much of this is terrible leadership, and how much of it is bad asset management?

is their crazy collection of tour staff too much to dig out from underneath?
Click to expand...
Exactly! At what point have we seen a dramatic change in strategy to offset or curtail the losses? Seems like the same strategy with more force behind it. I thought they cod have kept the Adams brand alive as a low cost option for entry level players. Maybe less marketing allocated for it, but offer it to capture budget buyers.
Lastly, you don't have to be #1 to make a profit. They may need to settle for a lesser market share position for the time being rather than throwing all of your cash behind player endorsements and R&D in hopes of getting into first place.

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At this point who would be the interested suitor?

Callaway - just to gobble up the IP and further cement status as #1?
Cobra/Puma? Not sure what they would gain. Their lineup is solid across the board. Also not sure if they have the leverage to do the buy.
Amer Sports/Wilson Staff? Seems a little more do-able. Wilson has struggled with perception in it's wood offerings. Snapping up TM would give them an immediate route into more bags in the long end and perhaps draw more folks to W/S in other parts of the bag.

Maybe an overseas company looking for more foothold in the US snaps them up. At this rate it might turn into a fire sale.
 
It's important to look at how the article phrased things:

The golf division that Adidas announced was for sale last May — which includes golf club maker TaylorMade, and the much smaller Adams and Ashworth brands — is losing between $75 million and $100 million a year, according to sources close to recent deal talks.
Click to expand...

TaylorMade had a decent 3rd quarter with mid single digit revenue growth, but a sales decline at Ashworth and Adams brought down the golf division as a whole. Is the article looking at the golf division as a whole and applying that to TaylorMade? It seems that way to me.

Adidas Group reports full year 2016 earnings on March 8th, so we should get more info in a week or so.
 
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