Let me start off this post with the fact that it is an opinion piece. Sure, I’ve done some research on it, but I didn’t call Nike or Tiger or anyone else involved for information on confirmation on things. It’s my own thoughts on the tragic demise of an equipment manufacturer – who by the way, will still be making golf stuff, just not clubs and balls. With that out of the way, let me start my little post about this and get it out of the way.
From 1983 to 1986, Nike was going through a rough patch where the company wasn’t growing and earnings were falling flat. To help boost these earnings, Nike entered a few new markets in 1986, including golf shoes. From 1986 to 1995, the golf shoe business did not fair well. It did not grow as expected and the company was forced to try something different. In 1995, Nike signed an young Tiger Woods to a $40 million, 4 year endorsement contract. In 1998, Nike Golf was officially established.
In 1999, Nike introduced their first line of golf balls and in 2002 they launched their first golf clubs. With Tiger Woods being the face of Nike, people flocked to the apparel that he wore every weekend on TV and wanted to dress the same. Stores offered sales on clothing based on what Tiger wore during that weeks events and clubs that Tiger carried in his bag. It was all Tiger, all the time. From there, Nike Golf’s sales grew but it was mostly due to the success of the shoe and apparel lines. Unfortunately, that was as good as it got for the shoe giant and the decline of business began. With Woods’ injuries mounting, Nike opted to sign a few big name stars to deals that were far too rich to be done. With the signing of Michelle Wie and Rory McIroy, Nike had landed two huge stars, but neither had the drawing power of Woods. The slide continued.
Finally, as we fast forward to today’s market, Nike is under assault from every direction. They can no longer depend on the shoe division to carry the losses that the equipment side of the project is creating. With companies like Taylor Made and Callaway having to mark down inventory to move it, Nike was forced to do the same. Creating a negative margin like this put more pressure on the apparel side, which was now facing competition from companies like Sketchers, Under Armour and Adidas. It literally was a perfect storm of issues for Nike.
What happened at Nike was simple, They applied their same marketing schemes to golf as they did to every other sport on the planet. The difference is, if Jordan misses that shot, or Bo Jackson fumbled the game winning touchdown, they were back at it a the next day and staring in a new game. The PGA Tour isn’t so kind. When things go wrong on tour, it can take weeks or months to get things back together. Look at Woods’ history of injuries and the same can be said of Michelle Wie. When you are on top and winning, everyone want’s to have your gear. When they don’t see you on the weekend, the forget you quickly.
Nike was forgotten. In fact, I can honestly say, the last Nike club that I hit was the Slingshot iron. I have only ever played golf with ONE guy that was carrying Nike irons and a handful that carried their drivers. Admittedly, I played their balls for a long time in the post-Balata revolution, but there is nothing that makes their newer balls any more special than something else. As much as I hate to say it, what happened to Nike was very simple. They got smart. They know the golf industry is hurting. They didn’t have a large market share to lose a percentage of and stay profitable, so they gracefully exited the equipment game and moved on. It is sad to see, but it’s completely understandable.
Perhaps when the next Tiger comes along, Nike will want to jump back into equipment manufacturing, but I doubt it. With the competition they are facing on their home turf in shoes and apparel right now, I have a feeling that they will have their hands full doing what they do best, making top quality footwear for every sport on the planet.
Update - I've had a few people asking me if Tiger really won with Nike Golf clubs in his bag... The answer is a resounding yes! He won 8 Majors before he switched over from Titleist to Nike, and 6 after. Surely if he hadn't had the injury issues the last few years he would have at least broken even at 8 and 8.
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