With Yes!, Adams Golf expands sales frontier
Late last year Jim Furyk plucked a Yes! Golf putter out of a bargain bin for $39 and used it to claim the $1.35 Tour Championship and the $10 million bonus as the winner of the 2010 FedEx Cup playoffs.
Adams Golf hopes it will earn a similar return on its investment.
The Plano, Texas-based equipment maker outbid the competition for Yes! Golf, paying $1.5 million for the brand and its related assets in U.S. Bankruptcy Court.
It’s no secret that Adams Golf has entertained the idea of purchasing or partnering with an independent putter brand for some time. Under the leadership of CEO Chip Brewer, Adams has pursued an aggressive, multi-faceted growth strategy, while using caution in evaluating acquisitions. Brewer engaged in conversations – some cursory, some intense – over the last decade, but invariably he passed every time.
“We were always pacing and looking for the right opportunity,” Brewer said. “We never wanted to be so enamored that we overpaid.”
So when Brewer learned Yes! was available, he pondered the opportunity again. The parent of the Colorado-based putter company filed for Chapter 7 bankruptcy last November, forcing the liquidation sale. Brewer met with his management and sales team, and even floated the idea to trusted retail customers. Then he conferred with his board. There was strong sentiment to bid in the auction, which was held Jan. 18 in Denver.
Adams’ chief financial officer, Pamela High, represented the company in Denver. Brewer listened on a phone line for eligible bidders. (Parties interested in submitting a bid were required to post a $25,000 refundable deposit prior to auction.)
Brewer said six bidders participated, and that the auction was more heated than he expected. By the time the bids climbed to the $800,000-$1 million range, only one other bidder, Steve Lee, Yes! Golf’s Korean distributor, remained. Brewer said Adams paid “in the high-end of a good range for us.” He added that he didn’t think a better option would become available that has the brand image, tour validation and technology of Yes!
“There’s a time to be aggressive and a time to be conservative,” he said.
Yes! Golf was founded in 1996. Known for its concentric grooves etched into the face and for the success of Retief Goosen, who wielded its putters when winning two U.S. Opens, Yes! achieved a modicum of success. According to financial data prepared by Yes! Golf, the company generated revenues in excess of $10 million in 2007. Yes! putters, however, couldn’t sustain the momentum. In 2010 revenue dipped to approximately $2.4 million. Being an independent putter company is challenging in this day and age, Brewer said. He added: “You lack shared resources and scale. With Adams there is a significant advantage.”
Brewer said Yes! had achieved better sales internationally, and that Adams’ distribution channels would help beef up its market share at home. As of November 2010, Yes! Golf’s unit market share at on- and off-course golf specialty shops was 1.9 percent, according to research firm Golf Datatech. Brewer said he intends to keep Yes! as a separate brand, operating it similarly to Odyssey, which maintains its identity even as an asset of Callaway Golf. Adams purchased Women’s Golf Unlimited in 2007, and successfully integrated it into Adams' operations.
Adams re-entered the putter category in late 2009 with the a7 Select line of value-priced putters. That move yielded only limited success.
“That was never intended to be our strategic play into the putter category,” Brewer said.
Yes! also will benefit from individuals on the Adams staff with an expertise and a passion for putters. Tim Reed, Adams’ vice president of R&D, had taken on putters as something of a pet project. Earlier in his career, he worked for Odyssey and designed putters for TearDrop Golf. Michael Vrska, director of product development, can give chapter and verse on the history of the Wilson 8802.
Given that Adams Golf is a public company, Brewer wouldn’t speculate on any forward-looking projections other than to say he plans to “make Yes! a relevant factor” and expressed his confidence that the brand “can match or improve on recent results.”
Wall Street approved of the purchase. Adams' stock hit a new 52-week high of $5.99 on January 19.