In a memorable moment in the recent golf movie “Tin Cup,” Kevin Costner’s character, Roy McAvoy, uses a baseball bat, an Army surplus shovel, a rake and a long-handled hoe (hitting out of a bunker, no less) to hustle $400 from a better-equipped, albeit higher handicapped, golfer. This probably wasn’t intended as a jab at the equipment manufacturers, but perhaps it had a few executives cringing in their theater seats.
The scene is amusing, but not exactly what the golf equipment manufacturers want the purchasing audience to see. They’d prefer to leave the golfing public with the image of a 20-handicapper switching to a titanium driver (price tag roughly $250-$450), and that driver adding yards to the player’s game. The scratch golfer with the shovel may beat you every time, but that does not mean that the titanium driver won’t add the 20 yards. As they say, “the game is hard enough, why make it harder with the wrong equipment.”
In the 1960s, Karsten Solheim answered that proverbial question with his cavity-backed Ping irons. Ping’s new clubs were the most dramatic innovation to hit golf. In the late 1980s, innovation struck again carrying the name, Big Bertha. Ely Callaway introduced his oversized metal woods that revolutionized the golf industry. Callaway used Wall Street as a very effective marketing tool. The more the clubs sold, the more the stock went up, and the more the stock went up, the more exposure the clubs were given.
More recently the introduction of titanium has caused another shift; golf equipment companies have scrambled to meet the consumer’s demand for a titanium driver. The theory behind titanium being that lighter clubheads mean larger clubheads, and what the golf industry would call a larger, more forgiving “sweet spot;” not to mention the lighter weight resulting in faster clubhead speed.
Callaway Golf Co., the Arnold Palmer Golf Co., Taylor Made Golf Co., Inc. and various other equipment manufacturers have managed to quench the golfer’s thirst for titanium drivers.
The debut of Callaway’s Great Big Bertha Driver has in great part been responsible for Callaway’s stock almost tripling, from $13 to a recent high of $36.
The industry is seeing what many consider a natural progression from titanium woods to titanium irons. Ray Cook Golf Co. was the first to heavily market an all-titanium iron. The “Titanic” put the industry on notice that titanium is a viable alloy for more than just woods. More recently, Tommy Armour Golf Co. introduced its “pure” titanium irons, the Ti/100. Made from commercially pure titanium as opposed to 6-4 titanium (90 percent titanium irons, 6 percent aluminum and 4 percent vanadium) which Ray Cook uses, Tommy Armour claims the Ti/ 100 produces a better feel. But keep in mind that not all companies are sold on the benefits of titanium irons. Callaway, Ping, Taylor Made and Titleist & Foot-Joy Worldwide, four of the largest club manufacturers, have avoided the move to titanium irons altogether. Callaway has introduced a line of aluminum bronze irons, and Ping uses nickel and copper as its alternative to steel. Other companies have hedged their bets somewhat by introducing titanium insert irons. Mizuno Corp. with their T-Zoid and Top Flite with the Tour Ti have opted for the inserts in part because the lightweight nature of the titanium insert serves to increase the perimeter weighting of the club.
Titanium irons have yet to make a splash with Wall Street, however. None of the 30 publicly traded golf companies have released a titanium iron to date.
On the other hand, Coastcast Corp., one of the largest manufacturers of investment-cast steel and titanium golf club heads, has benefited from the titanium revolutions. Coastcast’s stock has risen from $7.87 per share Oct 19, 1995, to $27 per share June 6. 1996 (a gain of more than 240 percent). In the past five years, Coastcast has been a supplier to more than 50 percent of the top two-dozen golf companies producing premium golf clubs, including Callaway, Titleist, Tommy Armour/ Odyssey, Taylor Made, Lynx, and Cleveland.
Innovation doesn’t end with titanium clubheads. Shaft manufacturers are quick to tout their products as “game improvement” equipment as well. Again, lightweight but resilient composites are used to sell golf shafts. Recently Aldila Inc. teamed with Bullet Golf to create an entirely new product called “The Shaft.” Using Bullet’s 444 oversized iron, the club will be positioned as a premium golf club sold under the Bullet brand name. From the name, it would be hard to miss that “The Shaft’s” primary marketing thrust is, obviously, the shaft. The shaft is exclusively designed for Bullet by Jim Flood, who has made countless innovative contributions to the game over the years. Flood has modified his signature graphite shaft to be four times lighter. Traditionally, it is accepted that shaft weight has a direct impact on the distance a golfer can hit the ball.
A more recent entry into the golf shaft market is Quadrax, (perhaps best known as the only supplier of thermoplastic composite materials to the Lockheed/Boeing F-22 air superiority fighter program). Quadrax also produces a patented high-performance continuous fiber-reinforced plastic it utilizes in its golf shafts. The material weighs about one-fifth as much as steel and is seven to 15 times stronger. Quadrax announced it had signed a contract with Taylor Made to develop new golf products made with Quadrax’s thermoplastic composite materials.
Possibly at this point, the only thing left to discuss would be the grip. AJ Tech, another shaft manufacturer, is trying to convince the golf world that a gripless golf shaft is a way to go. In the quest to shave ounces off a golf club, AJ Tech decided a golf grip was dead weight (so to speak). Its AJ Red Hot 9000 series shaft has an increased diameter at the butt end, and, by eliminating the grip, has made the overall club lighter to about eight ounces. The company claims this allows a golfer to swing faster and hit the ball farther.
Only time will tell if a gripless shaft is accepted by the golfing public. It is an easy bet that grip makers Royal Grip and Griptec will do everything in their power to promote the importance of the grip. Since Royal Grip introduced its all-rubber wrap golf grip at the 1989 Greater Greensboro Open, its products have gained acceptance on all three major pro golf tours. Royal Grip has worked hard to establish the golf grip as an integral component in the performance capabilities of the golf club.
Griptec will use its tour pro endorsements to help it grab market share. Phil Mickelson and Jack Nicklaus both endorse its products.
Whether you are a golfer, a golf industry insider or an investor, these are exciting times for the golf community. As a golfer, you have more courses to play and more equipment to choose from. As an industry insider, new segments of the population are entering golf on a regular basis. The baby boomers are thinking about devoting more time and money to golf.
PGA Tour newcomer Tiger Woods and his ability, as well as his celebrity, will expose golf to a segment of the market long untapped, and the Generation X crowd is taking to golf like low hung, baggy pants. If you are an investor and you are looking at putting your hard-earned money into the golf segment, quite possibly you should be the most excited. When the likes of Magic Johnson, Larry Bird, and Michael Jordan put professional basketball back on the map, for all intents and purposes there was no practical way for an investor to take part in that resurgence.
As golf becomes more popular, there are more than 30 pure-play golf companies in which to invest, not to mention another 25 that have a significant impact on golf but can’t be considered pure golf stocks.
As with any sport, golf will always have its critics, but more importantly, golf will always have its players. Loyal and dedicated to the game, they will continue to drive this exciting industry.
Saunders is president of Carlsbad-based ParValu, Inc., which provides financial information to the golf industry as well as Wall Street.