So you say you’d like to be in the golf equipment business?
Here’s your chance. But you better have deep pockets to absorb the money you are going to lose.
The very, very wealthy Adidas Group is ready to throw in the towel on clubs and some of its clothing. It is putting TaylorMade, Adams and Ashworth up for sale.
The facts of business life is that Adidas makes a ton of money pedaling athletic shoes and performance clothing.
Golf equipment? Not so much.
First consider that it costs a TON of money to pay guys like Jason Day to throw your clubs in his bag and produce advertisement urging all the hackers out there to buy the stuff because it will make you play better or hit the ball farther.
The truth be known, there is no money in golf equipment for retailers. The markup is low, only about 30% and then you get TaylorMade coming up with a new $500 driver every six months and tells you it is significantly better than the $500 driver you bought a few months back, it’s a no-win situation.
Dick’s Sporting Goods found that out. The chain added huge golf sections to their stores then found out that their inventory was outdated after six months and they were stuck with a bunch of expensive clubs that wouldn’t sell.
Barney Adams knows how tough the equipment business can be. Without Adidas Group buying his company, it might not have survived.
Even the rich will eventually throw in the towel when cash goes out faster than it comes in.
Such is this case.
Someone will pony up for those brands, don’t be surprised if it is a South Korean buyer. Golf is booming there and their perception differs from conventional golf wisdom.
