2002: Business - Equipment companies predict COR chaos

The newest driver proposal from the U.S. Golf Association and the Royal & Ancient Golf Club of St. Andrews, Scotland – creating two categories of drivers for a five-year period beginning Jan. 1 – could become an economic nightmare for golf club manufacturers.

This is what several manufacturers, led by Acushnet Co. chairman and CEO Wally Uihlein, are saying. Uihlein points out that a huge quantity of new drivers with a coefficient of restitution (spring-like effect) of .830 are already in golf shops and warehouses. If amateurs are allowed to post scores in 2003 using “hotter” .860 drivers, Uihlein says this “puts a chill on all .830 inventory that is in the market today, either in retail inventory or in the warehouses of manufacturers.”

Besides killing demand for existing drivers, the COR proposal could flood the market with poorly performing drivers, potentially leading to consumer victimization, some manufacturers say. Many of them are raising their voices during the COR proposal’s “commentary period” which ends July 15. After that date, the proposal can be amended, adopted or dropped.

USGA officials have offered little in response to manufacturers’ concerns.

Said Reed Mackenzie, inaugurated in February as USGA president: “There are unresolved issues which require discussion.” Such dialogue will be held during regularly scheduled USGA committee meetings prior to the U.S. Open.

Until then, there is little manufacturers can do but prepare for worst-case scenarios.

“There’s going to be a land rush to buy .860 drivers,” predicted Jesse Ortiz, chief golf club designer for Orlimar. “As a designer, I’m not going to sacrifice control and feel and sound just to achieve some magic number. Believe me, there will be some drivers that say .860, but really aren’t. And there will be others that say .860 that just won’t perform well – they might be loud, they might feel lousy and you might not be able to keep them in the fairway.

“The other thing is that some of these .860 drivers will break. There definitely are durability issues. When you start polishing the faces, any little bit you take off the face can affect the durability.”

Nevertheless, Ortiz applauds the USGA for attempting to resolve the fractious COR issue. And he acknowledges that the governing body had little chance of pleasing the manufacturing community.

“There was never a good time (for a proposal on spring-like effect in drivers),” Ortiz said. “There never could be a good time. What do you do? If the USGA announced it in the fall, guys (manufacturers) would be screaming that they have their new lines in production. If it was announced early in the year around the Orlando (PGA Merchandise) Show, they would be screaming that they are selling their new products.”

The lack of time to adjust to the USGA’s proposal is what troubles some manufacturers the most.

“Moving a worldwide marketplace in terms of drivers is not an overnight process,” said Mike Kelly, Nike’s director of golf clubs. “We were hoping the USGA would say, ‘Let’s work toward a common goal,’ and then would give the manufacturers adequate time to make changes. We don’t mind changes, but trying to make them this fast is not sensible from a business perspective. The USGA could do great harm to the golf industry.”

Uihlein observed that manufacturers needed to be in development, if not production, during the second quarter of 2002 to meet a Jan. 1, 2003, introduction. Yet the USGA and R&A did not announce their proposal until May 9.

John Solheim, Ping chairman and CEO, was succinct.

“My biggest fear,” he said, “is that the USGA and R&A could end up controlling the marketplace.”

Indeed, if the COR proposal becomes a statute it could have a profound impact in the retail environment.

According to Uihlein, “you can take it to the bank” that the number of .830 drivers in shops or warehouses in the United States is at least 350,000 and perhaps as high as 450,000.

“A reckless conversion date runs the risk of devaluing this product anywhere between 25 percent and 50 percent from current wholesale prices,” Uihlein said. “At wholesale value, you are talking about a devaluation somewhere between $25 million and $50 million. And this does not take into consideration any component parts rendered obsolete by a rush-to-judgment adoption.”

Furthermore, Uihlein said, “In the history of USGA rules adoption regarding equipment, you cannot find or identify another time or incident where due to conversion timing, and timing alone, the marketplace stood to be battered by the amounts indicated above.”

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