Fernando H. Green Blog: TaylorMade Releases Sergio Garcia from Contract

Monday, October 9, 2017

TaylorMade Releases Sergio Garcia from Contract

Earlier today TaylorMade Golf issued a brief statement stating that it, along with Sergio Garcia, have mutually agreed to a release from the remaining years of his TaylorMade contract.

Today, after a memorable 15-year partnership with Sergio Garcia, we have mutually agreed on a release from the remaining years of his TaylorMade contract. It has been an honor to play a role in his performance throughout his career, including The PLAYERS Championship, 19 worldwide wins, Ryder Cup heroics and his 2017 Masters win. We congratulate Sergio on a career year and wish him all the best for the future.

The news doesn’t come as any sort of real surprise. Sergio has been spotted with Toulon Design (Odyssey/Callaway) and Callaway wedges in the bag. A source also told us that Sergio showed up a recent adidas Golf shoot with a full bag of Callaway gear.

While we don’t have confirmation from Callaway, we have every reason to believe a new deal is already in place.

Under ordinary circumstances, it would be odd for a company to release the reigning Master Champion from his contract (reportedly to sign with its primary competitor), but these aren’t ordinary times for TaylorMade. Last week it completed the formal/legal separation process from adidas and is now operating under the umbrella of private equity firm KPS Partners.

By necessity, KPS will reshape the way in which TaylorMade operates.

I’d wager that when the dust settles, the Garcia move will prove to be the first domino to fall in a line of significant cost-cutting measures. While cuts are likely to happen across the proverbial board, we expect significant cuts at the tour level which, when coupled with Nike’s exit last season, will almost assuredly change the value and volume of PGA Tour endorsement contracts moving forward.

This could open the door for smaller brands like Mizuno, Wilson, and Cleveland/Srixon to more bags at the tour level. You can bet that more names you know will be on the move come January 1^st.

We’ve believed from the beginning that TaylorMade’s eventual buyer would need to make significant cuts to get things back on track at the company. Private equity seldom scales up, and KPS has a record of streamlining brands leaving its acquisitions lean, profitable, and more attractive to future buyers. It’s what it does with the companies it manages, and there’s no reason to think TaylorMade will be the exception.

The release of Sergio from his contract is the first visible sign of cost-cutting at TaylorMade in the post-adidas era, but it won’t be the last.