2002: Business - Reed mulling radical moves

By GENE YASUDA and JOHN STEINBREDER

Long before Acushnet Co. announced earlier this month its exit from the PGA Merchandise Show, the event’s owner and operator had begun considering major structural changes to save the annual exhibition in Orlando, Fla.

In a radical step defying PGA Show history and tradition, Reed Exhibition Cos. is contemplating moving the event from its customary January date to the fall, which would lead to the elimination of its sister event, the PGA Fall Expo.

Another Reed proposal calls for the creation of a two-day, invitation-only event for the top 20 to 30 manufacturers and top 150 equipment buyers. But attendees of this exclusive event – designed primarily to allow the two parties to do business in the critical fall season – also would be required to attend the January PGA Merchandise Show, albeit in limited fashion to keep their exhibition costs down.

The two ideas conceived by Reed officials were outlined in confidential “concept papers” obtained by Golfweek.

For months, some Reed critics have insinuated that the show operator was only providing lip service to complaints that the PGA Show was no longer timely or valuable. But the existence of the documents underscores the measures Reed appears willing to take to placate its customers – even at great cost to the organizer.

For example, in a concession to cries that the golf industry no longer needs two trade events annually, Reed seems on the verge of eliminating the PGA Fall Expo, which it purchased along with the PGA Show from the PGA of America for $122 million in 1998.

“I’ve said it once, I’ve said it a hundred times, our job is not to dictate what the industry needs,” said Christopher McCabe, vice president and show manager. “If the day comes when it is prudent to say the PGA Fall Expo shouldn’t exist, we’ll make that decision. But we’re not there now.”

McCabe declined to say which, if any, of the proposals would be put into effect. Though he insisted the two plans were still only “concepts,” he indicated they were serious proposals, drafted after a yearlong research process, including culling input from exhibitors and buyers.

“We have had extensive conversations with the universe of our customers,” McCabe said. “For the past year, we have filtered down what people say they need. These are the ones that have come up the most and seem most feasible, but we recognize that these aren’t perfect, either. At some point, we’re going to have to make some hard decisions.”

Indeed, preserving the status quo most likely would be most damaging to Reed and its two shows.

Taxed by the rising costs of attending two events, many top exhibitors in recent years have skipped the Fall Expo. And odds are – without changes from Reed – more big companies will follow Acushnet’s and Ping’s decision to withdraw from the PGA Show.

Increasingly, major exhibitors have complained that they don’t “write enough orders” at the January event to justify the cost of attending. That’s a reflection, in part, of an evolution in the industry’s product cycle. Today, many companies prefer showing new clubs to retailers in the fall, building inventory to match orders during the winter and debuting goods to consumers in a well-planned spring launch.

In recent years, these companies have either held their own “pre-booking events” for retailers or sent sales representatives to call upon accounts individually before year’s end. By the time January rolls around, their work is done, making the PGA Show essentially irrelevant.

“It is just my opinion, but Acushnet’s departure will prompt other major exhibitors to leave the show as early as next year, and the show will never be the same again,” said James Craigie, CEO of Spalding Sports Worldwide. “The net result is that the PGA Show is headed toward a show made up of the thousands of small, entrepreneurial companies that will use the show to introduce their inventions. This will still be a lot of fun for the golf trade and enthusiasts to see, but there will no longer be a show where all the golf companies spend millions of dollars on booths just to exhibit their product lines.”

Added Luke Reese, general manager of Wilson Golf: “We are worried that attendance will not be what it has been in the past and will therefore not warrant our investment. . . . If two or three more majors go out, no one will be there, and no one will need to go. Main Street on the floor of the Orlando Show might become a dead end street.”

Reed’s proposals, however, potentially could eliminate the possibility of such a scenario. In theory, moving the PGA Show to October would restore order writing at the event for major exhibitors. Creating a special invitation-only, fall “pre-book” event would be another way to address the same issue.

Support for a single exhibition seems to be growing. Nike, Cleveland and Adams Golf, among others, are proponents.

“What some of this means to me now is that it is time to go to one show a year, in the fall, and have it be a scaled-down version,” said Barney Adams, founder of Adams Golf. “I think the large manufacturers have learned their lessons and would make sure that their booth sizes are more intelligent this time around.”

Gaining consensus on any idea from Reed’s varied constituency, however, virtually has been impossible. Many apparel companies, for instance, dislike the traditional January date and prefer a summer event, which would serve as a prelude to book spring collections that account for the bulk of their sales. Furthermore, they say mixing apparel and equipment exhibitors in one show inherently is flawed.

“It’s a little like the fight between the North and the South,” said Kevin Tomlinson, CEO of Sport Haley. “Apparel has nothing in common with equipment. And with the costs going up and attendance going down, in addition to the conflicting product development schedules, no one wins.”

Reed also recognizes each of its two proposals has downsides.

Changing the traditional January date “could be viewed as alienating the PGA professionals” who have grown fond of their annual winter trip to Orlando. A fall pre-book event, however, “could erode equipment buyer participation” at the PGA Show, as well as “erode ‘buzz’ from the January event.”

Regardless, Reed is well aware that changes must be instituted. McCabe said some prescription will be issued at the PGA Fall Expo this August in Reno.

“Whatever we do will be a risk,” he said, “but the biggest risk would be to do nothing.”

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