The Nike Golf Shutdown: What We Know So Far

As you might imagine, the aftershocks from yesterday afternoon's announcement that Nike is exiting the golf equipment business are still being felt.

Information is coming in at a steady rate, and we'll continue to update you as we learn more, but we wanted to give you an update on what we're hearing and share what we've learned about how things went down.

Here's what we know:

The Tour Impact

• Nike’s exit is particularly disruptive at the tour level because of its position as the biggest spender (at least on individual contracts) in the game. There is immediately less money available for Tour players by way of sponsorship dollars, and that’s likely going to be the longest lasting impact of the exit. The financial landscape just shifted, and likely dramatically.
• The presumption is that Nike will be on the hook for the full value of its current player contracts - at least until staffers reach new equipment deals, which they are now free to pursue.
• Assuming new deals haven’t been quietly completed already, this will ultimately impact that amount of money that Jason Day, Dustin Johnson, and others that come behind them can expect from their equipment sponsorships.
• Regarding current Nike staffers, the suggestion is that Nike is actively working with their guys to assist in the transition to other equipment providers. Tiger’s agent, Mark Steinberg, has said that Woods will continue to wear Nike apparel and shoes, and will take a methodical approach to switching clubs.
• I expect that to be the case with Rory and the rest of the Nike staff as well, although the equipment changes will likely come more quickly.
• PXG’s Bob Parsons told us that he’s fielded 30 calls from people connected to Nike Golf. This no doubt includes employees, and multiple player agents as the tour staff looks at the options.
• Parsons has hinted at a more formal arrangement with Nike. After pointing out that his PXG brand comes without apparel entanglements, he added “maybe I could be their partner”.
• Given the nature of the current market (Nike out, TaylorMade not spending, and Callaway being exceptionally measured in its tour approach), if PXG wants to make a bold statement and a lasting impact, this is its opportunity. That fact is not lost on Parsons.
• When asked about specific rumors that PXG was working on a deal with McIlroy, Parsons uncharacteristically declined to comment.
• We’ve likely just witnessed the end of the head-to-toe, full bag deal. Professional golfers will need to get more creative in how they balance multiple sponsors.

The Retail Impact

• Nike Golf's 2017 product line will likely never see the light of day.
• Discounted gear will remain on shelves until it's gone.
• We're talking about a very small piece of the pie. Nike’s market share across all club categories barely registers, and what share they have within the ball category is at the $20.
• The bottom line – most in the industry feel the hard goods retail space will feel no significant impact from the Nike departure.
• Regarding Nike Golf's intellectual property, two sources I spoke with believe interest from within the larger industry will be minimal, and since Nike doesn't need the money, it probably isn't interested in selling it.

Shutdown: Product & Personnel

• The shutdown was well-guarded secret. Everyone I’ve spoken with was caught completely by surprise. As recently as last week everything was on track for the 2017 product launch.
• Nike’s equipment reps were recently shown the 2017 product which I’m told featured RZN technology across the entire driver line, a new adjustable weighting system, and filed under too little too late; no covert cavity.
• The 2018 lineup was well into the development phase, again suggesting a relatively sudden change of course.
• Every indications are that the decision was made rather quickly (possibly after Q2 results and second month of year over year declines industry wide).
• Athletes are rumored to have been given a heads-up ahead of Nike Golf's employees.
• Staff in Portland and Ft. Worth were let go yesterday morning. Remote staff, including Nike’s fitting team were notified via conference call yesterday afternoon.
• While Nike's press releases suggested a gradual transition, the reality is that the overwhelming majority of hard goods staff has already been let go, including the team at The Oven in Ft. Worth as well as hard goods personnel in Portland. By 11/1 the equipment division will be almost entirely shutdown.
• We’ve confirmed with sources at 3 other equipment companies that now former Nike Golf employees have reached out to inquire about open positions. We assume the same is true for other companies as well. It should be noted that the same companies have fielded calls from current TaylorMade employees who are weighing their options as a result of the uncertainty there.
• The reality is that, with the equipment side contracting a bit, there are few if any positions available for even the most experienced industry professionals. Nike’s products aren’t highly regarded by others in the industry, and that could impact the number of opportunities available.

We'll continue to keep you updated as more information comes in.

from MyGolfSpy http://ift.tt/2aQfqob