2005: Business - Ball manufacturers wary of rollback

The relationship between equipment manufacturers and the U.S. Golf Association always has been tenuous at best. Now, it will be tested anew as ball makers contemplate how to respond to a USGA request that many of them privately abhor: Roll back technology and create reduced distance golf ball prototypes.

In an April 11 USGA e-mail to ball manufacturers, the governing body invited those companies to submit prototype balls that are 15 yards and 25 yards shorter than the Overall Distance Standard of 317 yards.

The USGA insists its action is simply on-going research into the growing concern about excessive ball distances and maintains that no rule changes are imminent. In the spirit of cooperation, the USGA says it is seeking participation of manufacturers now – just in case rule changes become necessary.

Many manufacturers, including Titleist, Callaway and Nike Golf, offered little comment about the situation, saying they still are seeking clarifications from the USGA and evaluating the numerous ramifications of a potential rollback. Nor did they indicate to what degree, if at all, they would participate in the research project.

But privately, some ball makers expressed suspicion that the USGA already has decided to reduce golf ball distance and is seeking input only to make that change a reality.

“The (USGA’s) language is akin to a vigilante group affording a prisoner his choice of capital punishment, and then suggesting that the fact that the prisoner had a say in his final solution was evidence that the vigilante group was faithful to the ‘due process’ promise,” said a ball company executive who requested anonymity.

Reactions from golf’s business community didn’t stop there.

Some manufacturers and retailers described the USGA action as a singular persecution of golf balls when, they argue, so many other factors also have contributed to increased distance, including superior athletes and training, better clubs, improved agronomy and equipment optimization.

That complaint, coupled with concerns about a rollback’s potentially negative impact on the marketplace, also raises the specter of litigation. Indeed, the prospect of selling reduced distance golf balls to consumers opens a Pandora’s box of commercial worries: Will golfers cry foul? Will existing balls be outlawed? Will it lead to the proliferation of nonconforming balls?

There may be reasonable ways to address these concerns, but nonetheless, they will distract industry leaders from tasks at hand, costing them valuable time and money.

“If the USGA one day does decide to roll distance back based on a 15 or 25 yard reduction, almost every solid core ball on the market today would be deemed nonconforming, both in the premium end like Pro V1 as well as in the value 15-ball distance segment like Top-Flites and Pinnacles,” said Mike Pai, Srixon’s vice president of marketing and advertising. “I would think that the millions and millions of dollars in inventory that large retailers like Wal-Mart, Target, Dick’s (Sporting Goods) etc. have in two-piece distance balls would make these guys a very interested party as well.”

More market confusion and a potential consumer backlash are not what retailers need. Several of them expressed frustration at the USGA’s investigation of golf balls, especially at a time when many of them say the governing body should be doing everything in its power to grow the game, not push golfers away from it.

“We’re trying to keep (all sorts of) people in the game, and one of those sectors are the seniors,” said Kerry Kabase, sales director at Edwin Watts Golf Shops. “One thing that’s kept them in the game over the last few years are golf balls with technology that’s helped them get the ball higher in the air. If I’m a 70-year-old guy, and my 180-yard tee shot I struggle to hit now is suddenly going to be 140 yards, what’s the message there?”

Added Pete Line, general manager at Carl’s Golfland in Bloomfield Hills, Mich.: “For the average golfer, (this is) a hard game. I have some real issues about a very small select group of people making decisions for everybody in the whole golfing community.”

If the USGA does rein in distance, retailers say demand for nonconforming golf balls will increase and lead to the proliferation of such products.

“Somebody would make them, I can tell you that,” Kabase said. “I don’t know if it would be the Titleists or the Callaways of the world, but somebody would. And for the recreational golfer, he’d buy the golf ball. There’s no doubt about it.”

The development of reduced distance prototypes could lead to yet another scenario, albeit an unlikely one – creation of a so-called “competition ball,” designed exclusively for elite tournament play.

Separate balls for the game’s best – an option adamantly opposed by the game’s ruling bodies – also has unfavorable implications for manufacturers and retailers. Their current marketing strategy, which relies so heavily on tour usage and validation, would suffer a clear disconnect with consumers.

And if USGA-triggered actions send the marketplace into a tumult and disrupt business, it is conceivable a legal imbroglio may erupt. Manufacturers could seek redress under anti-trust laws if the actions of a regulatory body negatively affects their commercial position, resulting in a loss of marketshare or an inability to sell existing goods.

“Antitrust laws have on many occasions been used to scrutinize, and sometimes overturn, the findings of a self-regulatory body,” said Eric Talley, professor of law and business at the University of Southern California Law School. “The usual argument you would have to make in order to get something like that overturned was that the change (the regulatory body) made was a thinly veiled attempt to capture market power either on behalf of a group of manufacturers or a particular manufacturer.”

But proving collusion is a difficult task. Moreover, considering the present economic challenges facing the industry, few ball companies, if any, may be willing to engage in a costly and protracted court battle against the USGA and its significant financial reserves. Officials from category leader Titleist, for instance, indicated they would work diligently to resolve any issues with the USGA outside of a courtroom.

Which explains why so many manufacturers are urging the USGA not to overreact to a problem that, arguably, doesn’t even exist.

“We don’t believe that increased distance off the tee is a problem for golf at the professional level,” said Dan Murphy, Bridgestone Golf’s director of marketing. “In fact we believe it adds excitement to the game and draws people to our sport.”

And if the USGA insists on tackling distance, Murphy added: “We hope the USGA would look at all the factors contributing to increased distance . . . focusing only on the ball seems quite limited.”

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