2012 PGA Merchandise Show Report Part 1:

January 25-28, 2012

Orange County Convention Center

Golf Equipment Transactions are a Real Trend Now

Almost ten years ago we espoused a theory in our PGA Merchandise Show report regarding why we believed that consolidation in the golf equipment industry was inevitable. On the heels of what appeared at the time to be isolated transactions, we believe that it is now readily apparent that if consolidation has not occurred, at least we have a bona fide trend of transactions taking place. The trend has not necessarily taken the form we expected. We expected the aggregation of brands under fewer organizations, but transactions are taking place nonetheless and assets are in motion, presumably landing in more desired and efficient homes.

 Our story begins in 2005, when Quicksilver made their ill-fated acquisition of Rossignol, which owned not only Rossignol ski equipment, but also the Cleveland Golf Equipment Company. At the time, Quicksilver (Symbol ZQK; Not Rated) was trading in the low to mid-teens, near is highest price ever. By late 2007, Quicksilver had suffered enough with Cleveland and sold it to SRI Sports, a Japanese conglomerate that now encompasses not only Cleveland Golf, but Srixon and Dunlop Golf as well. According to sources, Cleveland was sold for approximately $130MM while at the time generating about $150MM in sales and approximately $10MM in EBITDA. This would put the price at about 0.9X sales and about 13X EBITDA.

The next chapter involves the sale of Cobra Golf out of the Acushnet portfolio in early 2010. Cobra had been purchased back in 1996 by Acushnet, which at the time was a division of Fortune Brands. The acquisition was expensive (approximately $700MM as I recall) and never really paid off for Acushnet, resulting in a significant write-down of the value of the acquisition. By 2010 it was determined that Cobra no longer fit with the Acushnet portfolio of brands, as management decided that the lion’s share of their attention should stay squarely fixed on the core Titleist and Foot-Joy brands. PUMA’s golf division stepped in and grabbed Cobra for approximately $90MM. Since Cobra was an internal division of Acushnet, accurate EBITDA measure were impossible to establish, but sources estimate that the final price approximated about 0.7X sales.

In 2010 Pershing Square Partners, a noted activist investor, pushed Fortune Brands into a break-up. The first step in that breakup was the sale or spinoff of Acushnet Brands. Our opinions on the matter prior to the sale were well documented in our research piece “Gilford Securities Golf Industry Research: Fortune Brands — Acushnet Sale/Spin-Off” . We felt it was quite likely to go for an attractive price to an Asian conglomerate or Asian private equity firm. In a sense it went to both as Acushnet was acquired by Fila Korea Ltd. and Mirae Asset Private Equity for a reported $1.2 billion. Based upon published estimates at the time, that would have represented a little better than 1.0X sales and a little better than 10X EBITDA. On almost every point our forecast of the Acushnet outcome turned out to be accurate.

Now it is Adams Golf (symbol ADGF; Not Rated) that is up for sale. In a word, they are going through a strategic review that could result in a sale or some other strategic maneuver. But their largest shareholder has amassed 35% of the votes and was prepared to initiate a proxy fight to take control of the Board of Directors.  Instead the board initiated the strategic review and by all reports the largest shareholder is more than ready to cash out. Given that Morgan Stanley has been hired, and Morgan Stanley ran the auction for Acushnet, we have high confidence that a deal is going to take place. A fair question is to whom, and for how much.

Given that Adams is much smaller than Acushnet, an acquisition by a strategic buyer is a much greater possibility. Acushnet had anti-trust issues related to the ball business that made an acquisition by a strategic buyer very complicated, and Acushnet was operating on a specific timetable. None of these issues exists at Adams.

Therefore, a strategic buyer can eliminate a significant amount of overhead at Adams, which makes the potential profitability of the ensuing company far more profitable than purchasing Adams as a stand-alone. Also, we note that Adams only does about $5MM is sales outside of North America. A global strategic buyer can fit Adam’s products into their international distribution scheme and significantly increase Adams top-line almost immediately. Less cost and greater revenue makes for a juicy potential acquisition for a strategic buyer.

A private equity buyer simply cannot compete on price when faced with the advantages a strategic buyer acquires from Adams. A private equity buyer has no potential overhead reduction (other than eliminating some Sarbannes-Oxley compliance costs), no established international distribution channel, and therefore no incremental profit opportunity that would justify a higher price. Private equity is simply outbid on this deal.

The most likely strategic buyers in this equation are TaylorMade and potential Asian buyers such as Bridgestone, SRI Sports, and Mizuno. The Japanese buyers represent particularly interesting possibilities as the Japanese Yen is quite near its 52-week high versus the U.S Dollar which makes the acquisition relatively cheaper to them. We doubt Callaway (Symbol ELY; Rated Buy). or Nike will be in this other than tire-kicking as they both have work to do on their own equipment businesses.

A second possibility could be another deal by an apparel/footwear company. After all, Puma came after Cobra and is leveraging the apparel line by identifying with Ricky Fowler, and integrating club design with the Fowler-centric color schemes. Who’s to say another apparel/footwear company might not enter the fray? We won’t speculate on which apparel company might weigh in on the deal, as there are dozens of apparel companies that have an interest in the golf business. But we would guess that this route is still more likely than a private equity or similar financial buyer.

When speculating on price, it seems possible that the deal price could exceed the metrics established on the Acushnet deal simply because there is more that a strategic buyer can do to enhance the value of Adams Golf after the deal is closed. But if 1.0X sales and 10X guess-timated 2011 EBITDA is a baseline, the potential valuation suggests a range of $75MM-$90MM. Due to a recent legal settlement, Adams is also sitting on approximately $2 per share in cash. Not all of this cash is necessary to run the business, and therefore could become additive to the value of the deal. With approximately 8 million shares outstanding it seems reasonable to assume this deal could be consummated in the $10 per share area.

The addition of Adams to the transactional trend also raises the question of “Who might be next?” In our opinion, the next logical candidate for a transaction could very well be Callaway Golf (Symbol ELY; Rated Buy). This is not something we would expect to occur inside of the next 18-24 months because we believe the Board of Directors is fully engaged in a turnaround of Callaway’s operations first. Assuming the turnaround takes hold and Callaway returns to profitability with an improved sales profile, a transaction at Callaway could easily come at a price well in excess of the current share price. We can speculate on the valuation, but we will leave that financial construction for another day.

Suffice to say, the trend of transactions, if not outright consolidation, is alive and well in the golf equipment industry. And it is a trend we expect to continue for several years to come.

 I, Casey Alexander, certify that all the views expressed in this research report accurately reflect my personal views of the subject company (ies).  I also certify that I have not and will not receive compensation with respect to the issuance of this report.

 REQUIRED DISCLOSURES

 In the normal course of business, Gilford Securities seeks to perform investment banking and other services for various companies and to receive compensation in connection with such services.  As such, Gilford Securities intends to seek compensation for investment banking services from the subject companies in the next 3 months.

 Callaway Golf is rated a Buy.  No other company mentioned here is currently rated by Gilford Securities, Inc.

  ANALYST STOCK RATINGS

 Buy        The stock should outperform its industry or peer group by 20% or greater within a 12-18 month time frame.

 Sell      The stock is expected to under-perform its industry or peer group by 20% or greater within a 12-18 month time frame, or where fundamentals of a company have deteriorated significantly and the stock is expected to materially depreciate.

 Hold    The stock does not have enough upside or downside potential to rate a Buy or Sell. The stock is either fairly valued or has too much uncertainty to have a Buy or Sell rating.

I have received all the recommendations. I have processed all the data. I have built the Matrix, and my fantasy world is complete. I am ready to play.

My team in 2011 was strong because I had the 2011 Fantasy Player of the Year. Webb Simpson easily earned the most money above his salary cost. Simpson cashed over $6 million at a cost of $1 million. A 6:1 return still didn’t allow me to finish better than 5^th place, and didn’t get any honors in the pool. This was because we had three players, Mike Weir, Jamie Lovemark and Michael Sim, who carried an aggregate cost of $3 million and barely cleared $100,000 combined! That was just a killer.

But we won all our side bets in 2011, because all our side bets were designed to fade Tiger Woods. Woods cost his investors $4 million in 2011, and returned a little over $600,000. That was an intelligent play. By me. Yay!

But enough of last year. The question is what to do this year with $12 million in salary to spend? This year and last year both kind of started with a binary decision on Tiger Woods. This year Tiger has been assigned a posted salary of $2.5 million. If he was given his assigned salary of $700,000 (rounding up to the nearest $100k for salary purposes) then we might as well kick him out of the pool, as everyone would be forced to take him as a defensive pick. By posting his salary at $2.5 million, it at least forces a binary decision. Do I take him or not? More than half the suggestions I received said take him. I agree.

With only one win, Tiger is sure to earn at least $2 million on the year. If he wins twice, he is going to out earn his salary, and he could do it only winning once if he has enough top ten finishes. To me, he looks motivated, and he sounds like he is finally past the psychological issues that had to plague him during the course of the last couple years. If he gets hot, he has significant upside to the $2.5 million salary. And by the way, I’m tired of rooting against him. It’s time to embrace the comeback. It’s time to show my side bet patsies that I know when to take Tiger better than they do. Go Tiger!

So that leaves me with $9.5 million left to spend. The next guy is a no-brainer. In 2010 I drafted Rory McIlroy for $900k and he earned me $2.5 million. Then he kind of skipped out on his PGA Tour membership, but still earned $2.3 million in PGA Tour-eligible earnings due to his U.S. Open win and his World Golf Championship earnings. For 2012, he has renewed his PGA Tour card and vowed to play more here in the U.S. This boy can win ANYTHING he plays in. The only way he earns less than his $2.4 million salary cost is if he gets injured. Otherwise by my assessment McIlroy is almost automatic for $4 million-$5 million in earnings. And he is easy to root for too!

Now I’m down to $7.1 million left to spend. I received multiple requests for Rickie Fowler. Rickie was also on my 2010 team with a cost of $700k and a return that year of $2.4 million. I agree with my readers that Fowler is ready to have that giant breakout year, including his first PGA Tour victory. Rickie costs $2.1 million in salary, and I think he could jump his earnings as high as McIlroys; somewhere in the $4million-$5 million area. It also helps that Fowler will play close to 25 events. That gives him lots of chances to win.

OK, we have $5 million left. The next one is simply another no brainer. In fact, this is a defensive pick as he will be on almost every sheet. Lee Westwood is taking a PGA Tour card this year. He comes at the ridiculously modest cost of $1.4 million. In 2010 Westwood earned $3.5 million with his PGA Tour card, and he’s arguably playing better now than he was then. In the search for players that can return two times their salary, Westwood simply is too easy to pass up.

This brings us to $3.6 million in remaining salary to spend. With a few breaks we could have $15 million in earnings already with Woods, McIlroy, Fowler and Westwood. We need another $7 million in earnings at least to hit the money. Last year $17 million won the pool (with a starting salary pool of $11 million), but in 2010 it took over $25 million (with a starting salary pool of $13 million). It will definitely take over $20 million to get there.

Jim Furyk earned a paltry $1.5 million last year. It’s the first time he earned less than $3.4 million in a year since 2004, a year in which he was injured. Furyk is one of the grittiest competitors we have ever seen. We have not had great success playing bounce backs from over 40 year-old guys, but if we need $7 million more from the last few picks, Furyk is as good a bet as anyone to get back to $3 million in earnings, and possibly a lot more. With a 2011 salary of $1.6 million, Furyk simply makes good sense as a value play. That leaves us with $2 million left to spend.

There was a lot of support for Anthony Kim. Kim is another retread from my 2010 team. In 2010 he cost $2 million and returned over $2.5 million and he didn’t even finish the year because of thumb surgery. He played 26 events in 2011, but it was clear that his thumb wasn’t right until the end of the year. While his current world ranking of 75^th hurts, he will certainly be driving himself to make the Ryder Cup team. That means he will play a lot and could easily double up his current $1.1 million salary.

Louis Oosthuizen has a modest salary of $800,000, so one big showing in a PGA Tour eligible event and Oosthuizen will cover his salary. Two big showings and we’ll have our money doubled. After the FedEx Cup playoffs were finished, Oosthuizen had five top-ten finishes in 6 non-Tour events. His second year on the PGA Tour should be far more successful than 2012, especially since he will now know the courses better. His world ranking of 39^th in the world will keep him in all the big events too. Oosthuizen is a Dan the Cow re-tread, and a good chance to thumb Dan in the udder!

So what suggestions did we pass on? There were many:

James Driscoll: Driscoll seems to finally be maturing, but at a cost of $800k, we can’t help but note that with 6 years of PGA Tour status, he has never earned more than $850k. We have to pass.

Jimmy Walker: Walker is a very streaky player, and he has also been injury prone throughout his career. He simply does not have that mega-upside that makes him worth the injury risk. Especially following a year where the injury bug cost me cash.

Graeme McDowell: This guy was VERY hard to pass on, especially since I love to watch him play. I even asked myself the following question: If Anthony Kim and Graeme McDowell were coming down the stretch head-to-head, who would I guess would come out ahead, because their salary cost is the same? My best guess is probably the gritty McDowell. McDowell’s high world ranking is also a plus at 13^th in the world. But McDowell only played 16 times in 2011 and Kim played 26 times, which translates into extra chances to win. So I had to let McDowell go.

Padraig Harrington: He was on my team last year. I love the guy, but there can be no doubt he is a head case. So it was Harrington at $900,000 salary or Oosthuizen at $800,000. I landed on Oosthuizen as his future seems to be in front of him.

Sang-Moon Bae: This PGA Tour rookie earned his card at Q-School. But due to his work in Asia he is already ranked 30^th in the world, so he is going to get into all the big events. But I think Bae is going to fall prey to rookie-it is. He’s a poor driver of the ball, short and crooked. If it weren’t for his putter we wouldn’t even be a professional, but PGA Tour courses are not cream puffs like Asia. They are tough. Too tough for Bae.

So here it is. The 2012 Team Alexander:

Tiger Woods                      

Rory McIlroy

Rickie Fowler

Jim Furyk

Lee Westwood

Anthony Kim

Louis Oosthuizen

This team will have a chance to win almost every week. I will make a serious prediction about this team.  There are 45 eligible events in 2012. I believe my team will record more than 10 wins this year. If that isn’t good enough to get to the teller’s window, then so be it.

It would be hard to describe Elisa Gaudet as an author.  She has a blog, but I’m not sure I would describe her as a blogger either. In her book “Two Good Rounds; 19^th Hole Stories from the World’s Greatest Golfers” she has done reasonably extensive interviews, but she’s not really a reporter. In the Introduction of the book, Ms. Gaudet relates that her friend George Willis from the New York Post says that “Elisa writes a fluff column”.  She embraces that description, and “Two Good Rounds” lives up to that description. It’s fluff, but it’s fun.

To understand how the book came to be, you need to understand how Ms. Gaudet operates. Her blog, “On the Lip” is to a certain extent a combination of a golf industry publicity sheet as well as a ‘behind the ropes’ tease about life on tours. Ms. Gaudet has access to the players on multiple tours due to her previous business background working for various tours including the PGA Tour. Fortunately she comes off as more of a friend to many tour players, rather than an ingénue groupie. Checking her photo’s,  I am sure she has been misunderstood on that score on more than one occasion.

This book seems a perfect fit for anyone that has read her blog or met her in person. Ms. Gaudet has a name-dropping habit, and “Two Good Rounds” established her cred that she actually has access to the people whose names she frequently drops. Cinderella actually HAS been to the ball.

The structure of the book adheres to the fluff description, yet it encompasses just enough insider knowledge about an area of professional golf that is rarely discussed that once you pick up the book, you can’t stop thumbing through it. Ms. Gaudet has asked 36 professional golfers to describe their favorite cocktail, their favorite 19^th hole, and their most memorable hole-in-one circumstance.

Some of the responses are predictable, some disappointing, but many evoke emotional as well as visceral responses, especially as it relates to the cocktails some prefer. After all, everyones choice of cocktails are very personal.

Favorite Cocktails

The fact that Arnold Palmer likes an Arnold Palmer (1/2 unsweetened ice tea, ½ lemonade) is of no surprise to anyone. The fact that he likes to give it a little kick with some Ketel One from time to time just makes the reader smile and nod. Of course he does.

That several pro’s, including Jack Nicklaus, Annika Sorenstam and David Frost chose to promote their own wine labels should have almost disqualified them from inclusion in the book. It just doesn’t seem in the spirit, and instead feels too promotional. This is especially true of Frost who in his publicity photo has the website address for his label stitched into his golf bag. But Nicklaus and Sorenstam are obviously two of the greatest golfers that ever lived, so it would be hard to exclude them given the title of the book.

The most entertaining entry came from Christina Kim from the LPGA.  The always boisterous Kim concedes her fondness for Tanqueray and Tonic, Grey Goose and Red Bull (whoa!) and Jägerbombs (WOW!). A Jägerbomb is made by dropping a shot of Jägermeister into a glass of Red Bull.

Another eye-opener came from Vijay Singh, who apparently kicks back with a margarita. I couldn’t help but wonder if there was a tiny umbrella involved somewhere.  Bernhard Langer disclosed his fondness for the Radler (1/2 Sprite, ½ beer). Langer relates that in England it’s called a Shandy. I call it disgusting.

Favorite 19^th Holes

I was thrilled to see Padraig Harrington choose the Spike Bar in the Royal Dublin Golf Club. Years ago I played the Irish Amateur Open there, and had a chance to frequent the bar after one of the rounds. Harrington relates how the bar was very small, and that doesn’t go far enough to describe it. As I recall, there were no more than about 4 stools to choose from, but the quaintness of the place added to the memory.

I’m sure most would understand the interest in learning where Natalie Gulbis’s favorite 19^th hole is located. She likes the 19^th hole at the Whitney Oaks Golf Course where she grew up in Sacramento, California. The best part of her story was that she likes to play liar’s dice and have a beer with family and friends. I’m pretty sure we can all relate to that. The worst part was that her father works in law enforcement. Yikes!

John Daly is not a chapter in the book, but we can imagine his answer would be all abbreviations. A case of PBR in the back of his RV.

The Hole in One stories are good too. If I give away any more you won’t be inclined to read the book. And frankly, you should. It’s an easy, breezy read, and somehow brings you closer to those professionals who drink like you, or drink where you have enjoyed a post-round libation yourself.

“Two Good Rounds” is published by Skyhorse Publishing and can be purchased through the “Two Good Rounds” website. The book costs $19.95 or $25.00 for an autographed copy.

Looking Back at 2011

With the close of the President’s Cup and Tiger’s first win in the Silly Season, it seems appropriate to look back at 2011. These may or may not be the most important stories, but these are the “Things that make me go ‘hmmmm’.”

Sale of Acushnet

Since my day job is that of Securities Analyst and I cover the golf equipment industry, this was clearly a matter of focus and attention. After all, several private equity firms contacted me for consultation about the golf equipment industry and about my opinion of Acushnet. Ultimately, I published the story “Gilford Securities Golf Industry Research: Fortune Brands — Acushnet Sale/Spin-Off”. In my story I came to the conclusion that the best bet in terms of an ultimate buyer was an Asian Private Equity firm. In fact, Acushnet was finally purchased by Fila Korea in partnership with Mirae Asset Private Equity (the largest Private Equity firm in Korea) and the National Pension Service of Korea.

The auction was run by Morgan Stanley and the price of $1.2 billion hit the high end of our expected valuation scale. It would have been interesting to see if the end result had been different of Fortune Brands, the precious owner of Acushnet, had been able to operate under a more extended timetable. Fortune was on a strict timetable that would not allow for any anti-trust objections to the sale, which for all intents and purposes excluded the universe of strategic buyers such as TaylorMade and Nike.

One of the more interesting subtexts to the deal was the strong interest from both U.S. and Asian private equity interests, as well as almost the entire cast of strategic competition. In the process of evaluating Acushnet, these multiple entities have to clear several hurdles. They have to decide that Acushnet is an interesting opportunity, they have to study the golf industry and decide that this is an industry they want to invest in, and they have to believe they have an exit strategy within some reasonable timeframe. That requires a significant investment of time and capital. Once all of these interests have gone through those steps and yet not bought the target, they keep their ears open for other potential ideas within that industry. And that makes me go ‘hmmmm’.

Tiger Fires a Caddie, and the Caddie Fires Back

By now everyone who cares has heard the entire saga of Tiger Woods and Steve Williams. Still, it ranks as one of the most important stories of the year. I was clearly struck with the inaction of the PGA Tour in policing a caddie gone rogue in my story “Steve Williams Should Be Suspended.” It seems a dangerous precedent when the most important asset of the PGA Tour is attacked by someone as unimportant as a caddie, and the caddie is allowed to get away with it with no apparent consequences.

But here’s the thing that makes me go ‘hmmmm’. What makes Steve Williams think he’s so important that he believes that he can get away with it? He simply does not shut up. Even after the improper remark from the caddy dinner, he still feels the need to create another story stating that he should have left Tiger after the Australian Open win in 2009.. Like anyone actually believes that Stevie Williams was ever going to voluntarily give up Tiger Woods bag? Puh-leeeze. Steve Williams was going to hang onto that ride like grim death for as long as he could. But let’s face it. It took a stupid caddy to help Tiger look sympathetic. Thanks Steve.

“I Was Wrong, White Is Right”

If you haven’t seen the white woods produced by TaylorMade in 2011 then you clearly do not own a television. In my 2011 PGA Merchandise Show report, I inferred that the white woods from TaylorMade increased the risk for everyone in the woods business. I thought that if the white woods turned into a white elephant it would cause such a rash of discounting to ram the leftovers through the distribution channel that it would harm the business for everyone else.

Doh! I couldn’t have been more wrong. TaylorMade used their PGA Tour presence to create the impression on televisions that we were watching the TaylorMade Tour. Sales of white woods exploded, market share expanded, and my shame grew to the extent that on a late-year trip to California I presented CEO Mark King with the hat you see below:

Needless to say, the 2012 product year should provide some entertainment as TaylorMade tries to follow in some pretty big footsteps.

The U.S. Open?

Most will think of the 2012 U.S. Open and think of the brilliant performance from Rory McIlroy. And it was brilliant. It just wasn’t the U.S. Open, it was more like the Kemper Open. The scoring was so low and the course provided such a meager challenge that I shudder to think what the USGA will do to the course next year to make up for it. If you like to see professional golfers struggle, then mark your calendar for June 2012 at The Olympic Club in San Francisco. I suspect the course is going to be brutal.

Tiger Beats All Seventeen of Them

Tiger is in the Winner’s Circle again. Of course, he won his own tournament and there were only seventeen other players there, but hey, a win is a win.

Everybody Into The Pool

By finishing fifth out of 45 entries in my yearly golf pool, I believe I proved that I have significant expertise when it comes to analyzing the potential of PGA Tour players.  At least that’s the story I’m going with. Conjecture aside, the facts say otherwise. With the help of my readers, I landed on Golf Fantasy Player of the Year Webb Simpson, who provided a 6:1 payback on dollars invested. With three players that failed to earn even $100,000 on the year, some levels of judgment have to be regarded with a skeptical eye.

Mike Weir? A disaster. Jamie Lovemark? A rookie with an injury. But the real shocker was Michael Sim. Sim cost me $1.4 million and brought back a mere $47,000 after a terrific year in 2010. All three were damaged by injuries. I had only budgeted for one season ending injury. Sigh.

Fifth place was out of the money, but side action more than covered my entry fee, so I will go after the pool in 2012 with gusto!

Looking Ahead to 2012

No doubt there is a lot to look forward to in 2012.

The Tiger in the Room

Tiger has already been installed as the favorite at the 2102 Masters. Last year, I targeted my golf pool side bets towards those who were putting Tiger on their team. It worked beautifully, as I cashed every side bet I made. But I certainly doubt that will work in 2012. Tiger looks, healthy, fit, and most of all, his swing and his game look under control. I figure he makes at least $2.5 million without winning an event, and considerably more if he starts winning.

As far as how Tiger is perceived by history, this may very well be the most important year of his career. America loves a comeback story. The fall from grace, the time spent in the valley, the long climb out only to re-emerge at the summit again. The story line is simply irresistible. The television ratings will be off the charts if Tiger hits the Winner’s Circle in a major this year.

Acushnet’s New Owner

As we discussed, Acushnet was sold during 2011 to Fila-Korea. Only a fool would seriously consider messing with a formula for success that has worked for the last couple decades. But as obvious as that may seem, I have seen companies do just that.

The leadership of Acushnet is the same, so major differences are unlikely. But if it starts to happen, it will be readily apparent to many in the golf equipment industry. And the competition will be licking their chops to get at some of that dominant market share enjoyed by Acushnet in the golf ball business.

The Amateur Invasion

In 2011 we saw several amateur golfers have more impact on the professional game then they have in years. Harris English, winner of a Nationwide event, has turned pro and earned his Tour card. Patrick Cantlay has returned to UCLA, but his presence is likely to be felt again. Former U.S. Amateur Champion Peter Uihlein begged off of some of Oklahoma State’s fall events after a jam-packed schedule this last summer. But these young guys are fearless and can flat-out play. They will be heard from, you can bank on it.

The Year of the Belly Putter

If one thing can be counted on, it’s that the general golfing population will gravitate towards equipment that is deployed with success on tour. On that score, we can count on 2012 to be a year where sales of bell and long putters is going to be very strong. Young Tour guns such as Webb Simpson and Keegan Bradley have shown that you don’t have to have the yips to matriculate to the longer putters. Once you start to make some putts, ugly gets pretty in a big hurry.

This will be a case where the strong get stronger. Odyssey (a division of Callaway Golf), Ping, Scotty Cameron (a division of Acushnet) and TaylorMade are best positioned to take advantage of this trend. That’s because belly and long putters have to be custom fit to each players body size to be effective. Therefore the inventory investment necessary to exploit the market can only be sustained by the larger companies in the golf equipment business. The larger equipment companies are also more capable of training the distribution channel in the custom fitting process. It also helps to have brand name identification and Tour validation.

Rounds Played Rebound

When I look at the dismal figures detailing rounds played in 2011, it is clearly a sorry picture. But it seems that weather really did have a seriously negative impact on the results here in the U.S. Rounds played were down almost 17% in April, and April generally is the month that kicks off the serious golfing season. The weather in April in the northern geographies was just off the charts bad. In fact, the geographies that have experienced negative weather patterns for the year outnumber those with positive weather patterns by almost 3:1. It’s easy to get discouraged about playing often, when there are so many days where the ability to play is simply compromised. And once you get on another entertainment track, it becomes easier to stay on the alternate path. The good news is that some of the negative weather comparisons for 2012 are almost statistically unrepeatable as compared to 2011. So we are going to go out on a limb and forcast a rebound in rounds played driven by weather that simply has to get better. Pellucid Corp., the industries weather watcher, will start trying to saw the limb off behind us as soon as they read this. Alas, that is the risk of being a prognosticator.

Everybody Back Into The Pool

The 2012 golf pool starts with the Tournament of Champions in Hawaii. Much as I did last year, I am singing out the clarion call for suggestions from my readers for players to put on my team.

The rules are pretty simple. I have $12 million to spend. Players cost the value of last year’s PGA Tour winnings rounded up to the nearest $100,000 (Player A earned $907,000, he costs $1,000,000). All Q School, Nationwide Tour, non-member and players below 125 on the 2011 money list cost $700,000.

Various players have had their cost set by the arbiters of the pool: Tiger Woods $2.5 million, Rory McIlroy $2.4 million, Darren Clarke $1.5 million, Lee Westwood $1.4 million, and Bud Cauley $800,000.

I welcome any suggestions, but please include your reasoning for why I should include the player on my team. After all, I have a reputation to uphold, and important side action that needs to pay for my participation in the pool. Grizzly John and Dan the Cow are not going away.

Steve Williams has simply gone too far this time. At the Annual Caddie Awards Dinner in Shanghai, Williams chose to rip into Tiger Woods one more time. Just so the comments can be placed in the correct context, let’s do short review of history.

Following Adam Scott’s stirring win in the WGC –Bridgestone Invitational in August at Akron Firestone, William’s chose to describe caddying for Scott’s victory as “The best week of my life.” This was an indirect shot across the Tiger Woods bow after Woods had relieved Williams of his duties as Woods’ caddy after more than decade and multiple major championship victories on Woods bag. At the time, it seemed a little disingenuous, but seemingly fair game for a jilted lover, so to speak. Woods blew off the comment and congratulated Scott and Williams for their victory, and allowed the smoke to clear fairly quickly.

Apparently that wasn’t enough for Steve Williams. While collecting his trophy for ‘Caddie Celebration for the Year’ at the annual roast this last weekend, which generally takes the privacy tone of the Radio/TV Correspondents Dinner, Williams chose to explain his August celebration by stating “I wanted to shove it up his black ___. An eleven-year old could fill in that blank.

Two things immediately come to mind. First to mind is the firestorm that emerged after Tiger Woods won the 1997 Masters Invitational, and Fuzzy Zoeller uttered the infamous line to reporters to “tell him not to serve fried chicken next year, or collard greens, or whatever the hell they serve.” Zoeller’s funny-man reputation which had made him one of the most popular players on Tour was blasted to smithereens, and he has never been looked upon the same way since. The court of public opinion scalded him beyond recognition. Zoeller made an inference based upon a racial stereotype and has had to live with that remark since.

Second to mind is the equally infamous Don Imus performance at the Radio/TV Correspondents Dinner in 1986. While edgy jokes at the expense of important political figures is the norm at the dinner, Imus simply pushed the envelope too far and made the suggestion that President Clinton had most certainly said “Go Baby” more than one time, an over-the-top reference to the reported philandering that was delivered in front of both the President and the First Lady. Talk about your uncomfortable moments. Simply put, it was tasteless at best, and Imus got hit square between the eyes with an enormous backlash of criticism.

The Williams comment is reminiscent of those two train wrecks, but clearly worse. Far worse. Williams makes a direct racial reference. In both Zoeller’s and the Imus case, they were known funny men trying to make a joke, and had it go South on them. Williams is not and never has been confused with a comedian. He has been likened to a bully for the way he not only caddies, but acts as a one-man security force. His words carry the imprint of self-truth on them. The comments are anything but funny. They are damaging, hurtful, hostile and painful to see. They even perpetuate the image that golf is an elitist sport and black men do not belong. Given the reaction of the audience, they were equally painful to hear.

Once again, it is going to be up to Tiger to be the ‘better man’ here in order to make this go away. I personally don’t see how he can. The idea that Tiger is going to have to play on the same course and in the same group with Williams on Scott’s bag in the upcoming Australian Open is wrong on so many levels it begs description. Tiger will be forced to spend 5 hours in close proximity with a man who has made a malicious personal attack, and Tiger will be asked to maintain his poise and decorum. As soon as the round is over, reporters will be forced to ask “How was it with Stevie out there?” Tiger will have to lie. He will have to say it was fine and that he was focused on his own agenda. Tiger will not be able to say “I wanted to punch his face out.” And guess what. The next day, Tiger will have to do it again.

Steve Williams did not place the burden of the consequences of his remarks on himself. He placed them on Tiger Woods. That is unfair, and adds to the pressure that Tiger has been under in dealing with his own self-imposed troubles. Tiger should have this mess cleaned up for him. Instead of riding to the rescue, PGA Tour Commissioner Tim Finchem and European Tour CEO George O’Grady have punted the ball back to Tiger by issuing the following statement: “We consider the remarks of Steve Williams, as reported, entirely unacceptable in whatever context. We are aware that he has apologized fully, and we trust we will not hear the remarks ever again. Based upon this, we consider the matter closed and we will have no further comment.” Ask yourself on simple question; If Tim Finchem had been the target of Steve Williams’s intemperate remarks, would Finchem have responded so blandly? Hardly. Williams’s next bag would be on the Hooters Tour.

Steve Williams is not a member of the PGA Tour. Tiger Woods is a member. The Tour should be protecting their own member, and suspending this loud mouth blowhard for at least one year. The fact that Adam Scott can’t seem to figure out the right thing to do is no surprise. He may even consider this gaining an edge in a grouping with Tiger. But for the PGA and European Tour’s to blow this off as business as usual is to remain ignorant of the consequences. The burden of dealing with the months of media attention that this is going to engender falls on Tiger, and last I checked Tiger was still a valuable Tour asset. Stevie Williams? Not so much.

With the incredible finish at the Children’s Miracle Networks Hospital Classic now in the books, this year’s version of the golf pool is over. It’s time to tally up the winnings and see how we did.

Before we do though, it seems impossible to discuss PGA Tour earnings without some comment about Luke Donald. Donald sprinted out of hibernation when Webb Simpson passed him the week before and took over first place on the PGA Tour Money List. In fact, due to the lower purses available in the PGA Tour Fall Series, Donald needed a first or second place finish to have a chance at the money title.

When the fourth round began, Donald was 5 shots behind, and had 11 players between him and the title. Donald turned 2 under par, and had crawled a little closer to the lead, but still had many players between himself and the finish line. With an incredibly clutch six birdies in a row starting at number 10, Donald stormed into the lead. This stretch of golf will be as memorable as anything that happens this year. It was that clutch. With three solid pars coming in, Donald, secured the 2011 PGA Tour Money title, on top of the PGA European Tour Money title. Without question, this also secures the 2011 Player of the Year title for Donald. It also proves beyond a shadow of a doubt that Donald’s ascension to the #1 World Ranking is well deserved and no fluke. As John Houseman used to say in those old Smith Barney commercials, ‘He did it the old-fashioned way, he earrrrrned it.’

Now for the 2011 Golf Pool. For those who have read my previous submissions about the pool, you will remember that there were 45 participants, we each had $11 million to spend based upon players 2010 earnings, and had to try to unearth those players that were going to seriously outperform their previous performance.

Here is my roster, what I spent on them, and what they earned. My roster is headed by PGA Fantasy Pool Player of the Year Webb Simpson:

Player                                     Cost                                         2011 Earnings

Webb Simpson                      $1,000,000                              $6,347,353

Mark Wilson                          $   800,000                              $3,158,477

Sergio Garcia                          $1,000,000                              $1,524,091

Padraig Harrington               $1,400,000                              $   802,839

Angel Cabrera                         $1,300,000                              $   628,079

Ryo Ishikawa                          $   800,000                              $   580,136

Ben Curtis                               $   900,000                              $   423,466

Henrik Stenson                      $   800,000                              $   327,799

Michael Sim                           $1,400,000                              $     47,403

Jamie Lovemark                     $   800,000                              $     34,693

Mike Weir                              $   800,000                              $     23,312

Total                                       $11,000,000                            $13,897,648

The total, $13+ million, was good for a 5^th place finish in the pool. Good, but not in the money. Simpson, Wilson and Garcia were my only choices that out-earned their salaries. The trio accounted for over $11 million of my earnings and I finished less than $2 million out of second place. It is notable that everyone who finished ahead of my team in the pool also has Webb Simpson on their team. I finished over $3 million out of first place.

Clearly, with eleven team members we could expect a disaster, but three total disasters was a bit much. Injury factored into all of them. Michael Sim followed up his break-out year with a break-down year. The final indignity was Sim made the cut in the last tournament, then withdrew even though he was sure of a check if he just finished. Lovemark hurt his back, and Weir continued to suffer with the arm injury that cut short his 2010 season.

There is good news though. It centers on my well-publicized side bets versus Grizzly John and Dan the Cow. My side bets were a clean sweep, including presses, and that eaned enough to make it a profitable year despite the 5^th place finish. It’s always a pleasure when some other chump subsidizes the cost of your run for the big money.

Grizzly John spent the entire year lamenting the failure of Tiger Woods to fire in 2011. Since he only had a four man team, the earnings of Tiger at $600k plus were nowhere near his cost of $4 million.  The Bear Man did well to finish in the middle of the pack, supported by $3.7 million winner Phil Mickelson, and $2.9 million winner Jonathan Byrd. Still, I felt the need to point out to Grizz that if Tiger had earned another $5 million, he still would have lost to my team. So all in all, he did a pretty poor job.

Dan the Cow is another story altogether. We should change his name to Dan the Cow Pile. The Bovine Emission also suffered from the loss of Tiger, but his overall team was so poorly constructed, that had Tiger earned another $8 million, he still would have lost to my team. Putrid.

So it comes down to the last tournament of the year. Luke Donald and Webb Simpson will go head-to-head for PGA Tour Player of the Year at the Children’s Miracle Network Hospitals Classic played on the Magnolia and Palm golf courses at Disney in Orlando, Florida. Tournament officials had the very good sense to pair the two combatants together for the first two rounds.

Some say Donald already has the Player of the Year title locked up, because he is trying to win the US and European money titles in the same year. But I say nay-nay. If Donald thought he had Player of the Year locked up, I don’t think he would be here at all. He’d be sipping champagne and making room on the mantel for the trophies.

Donald is $363,029 behind Simpson on the PGA Tour Money List. He needs no worse than a second place tie to earn as much as $413,000. And even that might not be enough, depending upon where Simpson finishes. But Simpson’s second place finish last week in The McGladrey Classic at Sea Island certainly put the pressure on Donald.

A fair question is “Why wouldn’t Donald win the Player of the Year title anyway, given that he is threatening to walk off with both money titles?” The answer is that is comes down to wins, and Donald only had one win that counts on the PGA Tour. Even that win wasn’t a stroke play event. Donald won the WCG Accenture Match Play back in February. Since the players are the ones that vote, they will look at the Match Play as a nice win, but not as a full field win. Anyone can win a match play tournament; all you need I opponents that play worse than you in head-to-head competition.

Simpson on the other hand, has won two events, and one of those two was a FedEx Cup playoff event, which tour players consider to be, if not full-filed, very high level competition. Simpson has also dominated the all-around playing statistics this year, exhibiting wonderful ball striking capabilities. Simpson is second in scoring average, second in birdies per round average, second in top-ten finishes, and first in Par 4, Par 5, and back nine scoring average. He is clutch, and gets better as the day goes along. No wonder he is the number one ranked all-around player on the Tour.

Not that Donald is a slouch statistically. He is the scoring leader, and he dominates putting rankings. His short game is ridiculous. But players love guys who are consummate ball strikers, and honestly this year Simpson has been better.

The perfect scenario would be Donald and Simpson dueling it out down the stretch, with one other player involved. If Donald wins, Simpson would have to finish alone in second place to hold onto the Money Title, and then the vote would be really close. But one thing is not in dispute. These two have been the most consistent players this year. Whoever wins the Money Title and Player of the Year will be a deserving champion.

The interview was heard live on the PGA Tour Radio Network. You are invited to listen to a replay of the interview by clicking on the following link:

09.27.11 ARCHIVE MTT seg 1 (Casey Alexander)_1573993 

Making the Turn with host Peter Kessler
Peter Kessler can be heard weekdays on Sirius XM Satellite Radio’s PGA Tour Network.  The program includes the latest from golf’s top players, journalists, instructors, architects, manufacturers and more discussing highlights from golf’s current events, what’s happening on Tour, and the history of golf. The PGA Tour Network and can be found at SIRIUS channel 208 or XM Satellite Channel 93. 

ANALYST CERTIFICATION

I, Casey Alexander, certify that all the views expressed in this rebroadcast accurately reflect my personal views of the subject companies. I certify that I have not and will not receive compensation with respect to this broadcast.

In the days when Tiger Woods was winning six or eight tournaments a year, the idea of a FedEx Cup crowning some sort of mythical champion was laughable. Tiger had already wrapped up Player of the Year. The FedEx Cup became sort of a ’do-over’. It was not legitimate in terms of factoring into the Player of the Year picture, because the Player of the Year was a foregone conclusion as Tiger, Tiger was burning bright.

This was clearly true the first three years of the FedEx Cup in 2007- 2009. Tiger racked up 8, 4 and 6 wins in those years, and walked away with the Player of the Year award in a romp. He also closed the deal on the FedEx Cup, but Player of the Year has already been decided.

Last year, the onset of the post-‘hand-it-to-Tiger-because-we-aren’t-worthy’ era was underway. Jim Furyk won THE TOUR Championship in 2010, and given the way the FedEx Cup Points slant to the end, Furyk won the FedEx Cup by default. But Matt Kuchar won the Player of the Year title, as he was the most consistent player week-to-week on Tour in 2010 and was a multiple winner. It must be nice to be the Player of the Year. But it’s funny how the Player of the Year Kuchar watched Furyk walk off with the $10 million bonus. Like the high class hooker says: Tell me you love me, but pay me in cash!

This year THE TOUR Championship will not only decide the Fed Ex Cup Champion, but it will have a huge impact in deciding the Player of the Year. First of all, there are six players that have already earned two victories this year on Tour. Still, you can’t make a case for all of them as Player of the Year. Some of them seemingly can’t get there even if they win this week. Let’s look at how the race for Player of the Year breaks down.

Webb Simpson – Simpson leads the current FedEx Cup points list, leads the PGA Tour Money List, has 10 top ten finishes in 23 events to go with his two wins, and is hotter than five-alarm indigestion melting down that belly putter. If he wins this week, wrap up both trophies and send them to his house. It’s over. But Simpson has never played at THE TOUR Championship at East Lake, and we see that as a decided disadvantage.

Nick Watney – Watney is in seventh place on the FedEx cup list and third place in the PGA Tour Money List. If he wins THE TOUR Championship he still needs Simpson and Dustin Johnson to finish third or worse to win the entire FedEx Cup, but that’s not too far fetched. Watney finished tied for fourth last year at East Lake so he obviously doesn’t hate the place. If he won THE TOUR Championship and the FedEx Cup, he would also very likely capture the PGA Tour Money Title, so we would have to crown him with the Player of the Year trophy as well.  You certainly have to like Watney’s past performance and respect his chances this week.

Steve Stricker – The quiet guy from Wisconsin sits number twelve in the FedEx Cup standings, is seventh on the Money List, and is ranked 5^th in the World. But he needs help to win the FedEx Cup even if he wins THE TOUR Championship. Basically the Top 5 in the FedEx Cup standings all need to fail to be in contention for Stricker to prevail. But if he won for the third time, improved his World Ranking, and got help from the top 5, he could get the Player of the Year nod as well. But that’s a lot of if’s.

Mark Wilson – Wilson is in much the same position as Stricker, but he will not be looked upon as favorably for Player of the Year unless he wins THE TOUR Championship, and the top 6 in FedEx Cup points all fail to fire, and he somehow carries home the FedEx Cup. Wilson could win all these and still fail to get Player of the Year. His wins earlier this year were lower stature events on the Tour, and he fell apart last week on Saturday and Sunday after being in contention at Cog Hill. I love Wilson, but somehow he seems sort of like a fluke, because he’s a short hitter and because he’s not flashy. That’s a hard way to get votes.

Bubba Watson – Bubba is very popular with fans, but the players vote on Player of the Year. He has played indifferently in the FedEx Playoffs and sits 18^th in FedEx points despite two wins this year. For Bubba to win the FedEx Cup he would need to win THE TOUR Championship and Simpson would have to finish 12^th or worse and the rest of the top 6 in points have to place outside the top 5. Simpson is on such a roll, that the idea of Simpson finishing outside the top 12 seems improbable at best, so Bubba needs a serious break there. And without both titles I fear Bubba’s Player of the Year hopes are a pipe dream. It also seems likely that his erratic play will not garner as much support from the rest of the players when it comes time to vote.

Keegan Bradley – Bradley is in a unique position, in that he could win THE TOUR Championship, not win the FedEx Cup, and win Player of the Year. Why? Well, the winners of The Masters, U.S. Open, and British Open are all absent from the Tour Championship. Thus Bradley could be the only three-time winner this year, and one being the PGA Championship and one the Tour Championship. That certainly seems like Player of the Year credentials to me! But winning the FedEx Cup requires Simpson to finish outside the top 13 at East Lake and the rest of the top 6 outside the top 5. That’s just not going to happen.

Luke Donald, Dustin Johnson, Justin Rose and Matt Kuchar would each also win the FedEx Cup with a win in THE TOUR Championship since they currently reside within the top 5 in FedEx Cup points. Without a doubt a win this week would sew up Player of the Year for World Ranked #1 Luke Donald. But I doubt that would be enough to earn Kuchar back-to-back Player of the Year titles, as it would be his only win of the year, and I suspect that voters would be hesitant to give it to him again without multiple victories. I also don’t think Rose can win the last two events of the year and steal player of the Year. In the case of Dustin Johnson, it could send the voters into a tizzy, with factions supporting Simpson, Donald, Johnson, Bradley, and Watney. That’s so confusing it’s almost worth rooting for.

Given all that, it seems to me that Luke Donald has worn the mantle of Worlds #1 rather well. He’s always in contention, and he finished runner-up at East Lake last year. So I would grab the chalk this week, look for Luke Donald to sweep THE TOUR Championship, the FedEx Cup, and Player of the Year. Add a $10 million bonus and a stranglehold on the World #1 Ranking, and you are talking about one heck of a year from a very classy player.