Aug 6th, 2015
Adidas considering sale of golf brands
Is this deal TaylorMade for someone...
Words: Daniel Owen
Adidas made an announcement this morning that it has engaged an investment bank regarding the possible sale of its golf brands.
Rumours have been afoot for a few months now regarding the German sports group’s golf brands, as sales and market share have decreased over the last few seasons. Adidas 2015 financial results released recently confirmed that revenues for TaylorMade had declined by 26 per cent in the second quarter of the year, following a 9 per cent fall in the first quarter.
Overshadowed by a group-wide 5% increase in sales, it’s clear the TaylorMade figures have instigated Adidas to “consider all options”, including the potential sale of TaylorMade, or possibly just the smaller Adams and Ashworth brands.
Adidas bought the TaylorMade brand in 1997 along with Salomon, developing it into the world's biggest golf supplier. It then acquired the Ashworth brand in 2008 for $72.8 million (46.60 million pounds) and the Adams brand for $70 million four years later in 2012. But it’s clear that, amongst other contributing factors, the decline of the sport in the United States, where the number of golf courses has fallen over the past eight years, has undoubtedly placed pressure on the group's golf businesses.
TaylorMade gained massive market share four years ago in 2011 when in a bold and hugely successful move, it launched the white headed R11 and Burner Superfast drivers. Everywhere you looked on TV all you could see were tour players, TaylorMade contracted or not, using the white headed drivers. At the time it was perceived to have been a very risky decision, but the risk paid off and sales went through the roof, as they took control of the market that year.
Adidas said in a statement: “As a reaction to the persisting challenges at TaylorMade-Adidas Golf, the Adidas Group has initiated a major turnaround plan for its golf business. The set of measures is aimed at enhancing the company's pricing, promotion and trade patterns, as well as optimising the supply chain and product costs.
“Furthermore, the group targets a re-prioritisation of the global marketing spend and significant operating overhead savings at TaylorMade-Adidas Golf. In addition, the Adidas Group has engaged with an investment bank for the purpose of analysing future options for the company's golf business, in particular the Adams and Ashworth brands.”
If the sale of Adams, Ashworth or even TaylorMade does goes ahead it does beg the question surrounding the future for some of the biggest and best brands in golf. The R15 has been one of our favourite drivers this year, while we love the Adams Red and Blue hybrids.
Potentially a private purchase, possibly from the Far East, similar to Acushnet? Another golf brand? Callaway? Just imagine a white Callaway Big BerthR or the R17XR if they were under the same umbrella. Or will another powerhouse sports brand look to snap them up - one possible contender could be US brand Under Armour, who replaced Adidas as the second-biggest sportswear brand in the US market last year. Maybe John Ashworth would want to buy back the clothing line that bares his name and that he founded back in 1987?
Who do you think will buy one of these golf brands? Let us know in the comments below...