The Pellucid Perspective - January 2011 - (Page 6)

EQUIPMENT 2011 equipment news highlighted by Acushnet fate By Jim Koppenhaver he annual PGA Merchandise Show is about to unveil the year’s big news in equipment and all things golf. So, what is it? Yet another adjustment feature for drivers, irons that the 15-20 handicappers in Golf Digest and Golf Magazine’s equipment reviews will swear “I can’t slice this club!” or someone proclaiming that it’s still “the year of the wedge?” None of the above in my opinion. Equipment technology in 2011 is going to be vastly overshadowed by the drama of watching the Acushnet sale or spinoff unfold and the potential other storylines it will spawn. It will also be a critical year for marketing and sales execution for the “boys in white blazers” as the executive team will do doubleduty in trying to hold altitude while a number of ”mechanics” go through their plane in-flight. First, let’s talk about a couple of potential options in the mandated change-of-control event set in motion late last year by Acushnet parent Fortune Brands. One initial interesting aspect was that Fortune chose, potentially, three different strategies for splitting up the curiously diverse conglomerate: 1. Keep the Premium Spirits business ( Jim Beam et al) intact under the continuing Fortune corporate banner; 2. Spin off (tax free) the Home & Security business (Moen et al); and 3. Either sell or spin off the Acushnet business (hopefully all of you reading this know what’s in the Acushnet portfolio). While I don’t know the exact logic behind the sell/spinoff option unveiled in the announcement specifically for Acushnet, for some reason they’ve chosen to keep multiple options open but are leading with the outright sale-in-whole, with Morgan Stanley recently named as the financial advisor to lead that attempt. In looking at the potential buyer candidates and scenarios, longtime Pellucid sympathizer and Gilford Securities analyst Casey Alexander recently penned what I thought was an intelligent review summarizing and handicapping the range of potential suitors. Since Casey has probably forgotten more about corporate transactions and financing than I know, with his permission I’ll borrow heavily in this section from his thoughts on who might be in the hunt, why, and whether they could pull it off. T this would be like making 4 the hard way. • Nike: Global player, they can handle the purse but big obstacles in anti-trust (footwear) and culture (the Nike “way” vs. the Acushnet “process”). Casey points out that they’d likely have to kill their current Nike ball business (which wouldn’t be the end of the world and I believe it’s outsourced anyway so not a manufacturing issue) and the footwear dance between the flagship Nike brand (and reason for being) and FootJoy would be challenging to say the least. • TaylorMade-adidas Golf (TMaG): Casey sees these guys as “committed to winning in the marketplace” vs. pursuing growth by large acquisition and the accompanying risk it entails. I think they could sure use the help in the ball business but, as Casey points out, the footwear dilemma is equally as challenging here as the Nike situation. While it seems that TMaG may have a slight advantage in current market momentum in their core categories, Casey doesn’t think it fits their strategy and I agree that it doesn’t seem to be the Mark King mentality. Non-golf company buyers • Asian Conglomerate/Multi-National: This is an interesting option as outlined by Casey’s above classification and the strong points favoring this option: 1. Acquisition of a global brand and powerhouse in golf vs. trying to build one 2. Acushnet’s recent focus on Asian growth strategy (Korea in particular) and 3. It’s where the world money currently is and favorable exchange rates would provide a financing tailwind. If this comes to pass, let’s hope they do better than the Japanese did during their turn at the wheel in owning Pebble Beach (buy high, sell low). • Private equity buyers: Casey doesn’t favor this option based on the poor track record of previous private equity returns in golf deals (he cites Spalding, Macgregor, True Temper and Nickent) and the potential lack of a reasonably-timed exit strategy. He cautions however that, with considerable money currently available in PE, a momentary lapse in judgment coupled with ready cash in their pocket could produce this outcome. Existing golf company buyers Spin-Off • Callaway: Tough given their relative small size, tough on anti-trust (clubs & balls), tough on financing. Casey opines that Callaway could eliminate several of the obstacles either by trying to acquire a piece of Acushnet (if that becomes a purchase option in the process) or by partnering with a Private Equity firm. Factor in that Callaway isn’t exactly knocking the cover off the ball so to speak in current business performance, • Based on the anti-trust challenges among golf company buyers (i.e. no “perfect portfolio fit”) and the considerable risk factor to a private equity play, he gives due respect to the very real potential that a sale at an acceptable price and terms to Fortune Brands may push this into the Plan B spinoff option. He cites several pro and con implications of a spinoff option; on the positive side is the excellent management team and established predictable business performance, while on the negative side is January 2011 6 The Pellucid PersPecTive

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2011

The Pellucid Perspective - January 2011
Contents
Municipal Courses Face Major Property Tax Challenge
Dec YtD Weather Impact, Nov YtD Utilization
2011 Equipment News Highlighted by Acushnet Fate
Is Groupon Good for Golf?
Symposium Examines Varied Aspects of Affordability in Golf
Dallas, Tx Core Business Statistical Area (CBSA)
Yes! Golf the Recession’s Latest Victum
Year of Change for Golf, for Better or Worse?

The Pellucid Perspective - January 2011

https://www.nxtbook.com/nxtbooks/pellucid/perspective_202101
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202012
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202011
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202010
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202009
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202008
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202007
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202006
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202005
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202004
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202003
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202002
https://www.nxtbook.com/nxtbooks/pellucid/perspective_202001
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201912
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201911
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201910
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201909
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201908
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201907
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201906
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201905
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201904
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201903
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201902
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201901
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201812
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201811
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201810
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201809
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201808
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201807
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201806
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201805
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201804
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201803
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201802
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201801
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201712
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201711
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201710
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201709
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201708
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201707
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201706
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201705
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201704
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201703
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201702
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201701
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201612
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201611
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201610
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201609
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201608
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201607
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201606
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201605
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201604
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201603
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201602
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201601
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201512
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201511
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201510
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201509
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201508
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201507
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201506
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201505
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201504
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201503
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201502
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201501
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201412
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201411
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201410
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201409
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201408
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201407
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201406
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201405
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201404
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201403
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201402
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201401
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201312
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201311
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201310
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201309
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201308
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201307
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201306
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201305
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201304
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201303
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201302
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201301
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201212
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201211
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201210
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201209
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201208
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201207
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201206
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201205
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201204
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201203
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201202
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201201
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201112
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201111
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201110
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201109
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201108
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201107
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201106
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201105
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201104
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201103
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201102
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201101
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201012
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201011
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201010
https://www.nxtbook.com/nxtbooks/pellucid/perspective_201008
https://www.nxtbookmedia.com