Here we are a little less than halfway into the PGA Tour season.  The tour has now completed 20 out of 45 events to be exact. Team Alexander has just picked up win number three. This one was especially sweet as Rickie Fowler conquered the field in the Wells Fargo Championship at Quail Hollow Club in Charlotte to pick up his first Tour victory and push Team Alexander into the overall lead out of 48 teams. Quail hunting indeed!

Our blistering team has also earned a win from Tiger Woods at his now standard personal Tour stop the Arnold Palmer Invitational. When Tiger retires he will need an entire room devoted to this one tournament. As well, Rory McIlroy has been incredibly consistent, including a win at the Honda Classic.

Arguably, we could have had two more, including a major. Louis Oosthuizen lost the playoff at the Masters to that ridiculous, goofy snap-hook wedge of Bubba’s. That shot was what a shank looks like, but in reverse. And Jim Furyk also lost a playoff to Luke Donald at the Transitions Championship. No shame there.

Three of our players have already out-earned their cost on the pool. Lee Westwood has been terrifically consistent with multiple top ten finishes to best his season salary of $1.4 million. Lee will go well over $2 million before the year is out, and possibly over $3 million.

Oosthuizen has almost doubled his $800,000 cost, and Rory McIlroy has incredibly already trashed his $2.4 million cost but producing almost $3 million in earnings in five events. That is an average of almost $600,000 every time he tees it up!

As for my Side Bet Patsy’s, Grizzly John and Dan the Cow, let’s just say one is getting deep in the hole, and the other is so far down he can’t even consider standing up. Team Alexander has generated over $10.8 million in earnings already, or 91% of the original cost. Dan the Cow has generated a respectable $9.2 million, which puts him in 9^th place overall, $1.6 behind the pace-setting Team Alexander. He’s good, just not good enough. You see, Moo-Man got this elevated by plagiarizing several of the Team Alexander picks, including Tiger, Furyk, Westwood, Oosthuizen and the injured Anthony Kim. His problem is he is trying to make up the difference with Bud ‘Cauley me a cab’, Sean O’Hair-y, Ian Poulter-geist, Paul ‘Casey-at-the-bat’ and Sang Moon ‘Bae-at-the-moon’. That is thin soup when stacked up against Rickie Fowler and Rory McIlroy. My guys just know how to cash big!

Grizzly John has been shot like a bear and left for dead. I could line my living room floor with his ratty skin after disposing of his rotted carcass. Grizzly John has earned a total of $6.1 million. He’s in a $4.7 million hole and he’s never coming out. Not with Jeff Overton, Zach Johnson, Geoff Ogilvy and Marc Leishman. His only two worthwhile players are Tiger and Westwood, once again plagiarizing Team Alexander.

The overall standing are tight. Team Alexander currently holds a $700,000 lead over the second place team. But Team Alexander is saddling every horse except for the injured Anthony Kim this week at the Players. Let’s look for win number four.

Team Alexander          Salary                                Earnings Year to Date

Woods                                  $2.5 million                  $1,811,000

McIlroy                              $2.4 million                  $2,996,000

Fowler                                 $2.1 million                   $1,834,254

Furyk                                   $1.6 million                    $1,168,941

Westwood                         $1.4 million                   $1,508,675

Kim                                        $1.1 million                    $      33,960

Oosthuizen                       $800,000                       $1,462,839

One if by Rory, two if by Luke. Tiger, Tiger, burning bright, where the heck is Bubba tonight? Will the Wizard of Westwood astonish and amaze us. Oh, what a tangled Webb we weave, when a Rose by any other name would cause us to Bae at the Sang-Moon. Someone revoke my poetic license, please.

What has driven me to such heights of linguistic lunacy? I have stood by silently watching the 2012 version of the PGA Tour unfold, reserving vocal judgment until now. But I count myself astonished at the vast cast of characters that have lead to multiple fantastic finishes this year. It has led me to conclude that the 2012 Master Invitational is going to be the best Masters. Ever.

Better than Nicklaus in 86, you say? Better than Charl’s four straight birdies down the stretch, or Phil’s incredible charge for his first? Better than Arnie’s birdie-birdie finish? Yep, better than all of them.

Here’s why. Without hesitation, I see at least four outstanding players guaranteed to be in it on Sunday. Rory is playing so well that even when he is off his game he gets it around somewhere under par. In three events in the U.S. this year he has finished first, second and third. And he has shown his ability for payback. Last year’s final round still has to stick in his craw. It seems a certainty to me that he’s going to be in it to the end.

Luke showed two weeks ago at The Transitions Championship that he will just grind away at a course until he chews it to bits, and the field gets chewed up with it. Given the fact that he is the best putter in the world by a wide margin, it tells me that at the putting contest known as Augusta National’s super slick and slope-y greens, he will most assuredly also be a factor at the end.

If you look at history, half-crippled and mentally a mess, Tiger still finds a way to grab a piece of the leaderboard on Sunday at the Masters. His final round at the Honda showed us all he was getting into bankable form. His seventh win at the Arnold Palmer Invitational makes him the favorite at Augusta. If he can stay away from hitting a drive under that certain tree on the 17th hole this year and wrenching another limb into submission, you have to count him among the final round cast.

Phil’s closing round at Pebble Beach tells you he’s not far off either. With his history at Augusta, you also have to figure him as a player in the final round drama. He’s just too good and knows Augusta far too well to be out of it.

So when you look at it objectively, those four are going to be in it right up to the end. It is entirely likely that they will be joined by one or two others in this jaws-of-death struggle on the back nine. Lee Westwood finished second two years ago, but he just feels a little bit off right now, and a little bit is enough to kill you at Augusta. Rose, Scott, Schwartzel, Simpson, Mahan and Kucher all make sense. But somehow I can’t get away from Bubba.

Bubba and his prodigious length, coupled with his willingness to bend the ball to his will, seem to make the perfect harmony to go with Tiger, Phil, Luke and Rory. I can see Bubba taking crazy chances and making it pay off on the back nine at Augusta. He is the perfect complement to the other four to create a fantastic finish.

Picture this sequence of events on the back nine on Sunday. Rory is in the last group, leading by one, standing on the tenth tee. As he prepares to tee off, Jim Nantz can’t help but dredge up Rory’s collapse from 2011, heralded by the biggest snap hook you have ever seen a professional golfer hit on the tenth tee. Up ahead, Tiger is two behind, hitting every shot pure but burning the edges with his still stubborn putter. The strain is showing on his face. Rory draws it beautifully around the corner and down the hill on 10, this time intelligently going with a 3-wood. One demon slain.

Luke intelligently plays out to the right of the eleventh green and uses his delicate short game skills to chip to six feet. Luke has not missed a six-footer in the tournament, and he doesn’t start now.

Bubba, in a lefty-lefty pairing with Phil, is hitting it 50 yards by him on every hole. Phil draws a soft eight-iron to the center of the green on 12, then Bubba smashes a wedge over the water and makes birdie. All Phil can do is smile. Then Bubba hits a big slice with that pink monstrosity he calls a driver 360 yards around the corner on 13, hits wedge to five feet and cans the putt for eagle. The crowd is losing their mind as Bubba draws even with McIlroy. Phil goes par-birdie and loses two shots to Bubba. Phil’s not smiling any more. He smiles even less when Bubba crushes another one on 14 and hits wedge again! Bubba spins the wedge back 35 feet and almost makes it. He has made Masters history by hitting wedge into 12-13-14 and is now leading the Masters.

Tiger hits Driver and 4-iron to 15, two putts for birdie, and is now only one shot back. He still can’t buy a putt, but the urgency on his face tells you the old Tiger is still in there somewhere. In the meantime, Rory is facing another demon on the 12^th tee. This time, the demon carries an ill breeze. A puff of wind wafts into Rory’s ball mid-flight and drops it on Couple’s bank. It does not stay there.

In the meantime, Luke goes all Zach Johnson-y on us, and lays up on 13 and 15. That magic short game and dependable putter leads to Johnson-like results. Birdie, birdie. Luke pulls into tie with Bubba.

Tiger birdies 16, Phil birdies 15, and Rory saves bogey on 12, followed by a birdie on 13 and the Augusta patrons have simply gone mad. It is the loudest Sunday in Master’s history. CBS can barely keep up. Bubba, Rory, Phil, Tiger and Luke are all within one shot of each other and the tense anticipation of great things to come is pulsing through the place like never before. The next hour is going to be riveting. It is the greatest Masters. Ever. Bar none.

Only at Augusta can this happen. The other majors leave too many casualties in their wake. Given the way the 2012 PGA Tour year has unfolded so far, it is not too far-fetched to imagine a finish such as this. Golf deserves it. We deserve it.

2012 PGA Merchandise Show Report Part 2:

January 25-28, 2012

Orange County Convention Center

 The Equipment Review

When we attend the PGA Merchandise Show, we make the attempt to try out as much equipment as we possibly can. The following is our opinions about some of the equipment we tried, and to some extent what we believe may sell well in the coming year. This in no way represents all equipment; that would be impossible. But our opinion is reasonably well informed, and we hope it assists golfers in their selections for the upcoming year. We are going to go from the least important categories of the year (as we see it) to the most important.

Hybrids

Hybrids have been the darlings of the business for the last several years, but it is entirely possible that hybrids are hitting a little wall in their momentum. The innovations seem to have become more incremental in nature at the same point in time that customers could easily be reaching a short-term saturation point in terms of demand.

The reality is hybrids were in a long-term sell-in cycle for the last decade, but now try to find a bag that doesn’t have one or two. Hybrids are now entering a phase where they have a replacement cycle. It will take another eye-opening innovation to change that, and this year that level of innovation seems to be lacking.

The King of the hybrid business has been, and will continue to be Adams Golf. Adams makes several varieties, but they made substantial improvement to their tour model, the Adams IDEA Pro a12. The most significant improvement comes from the look at address. Last year’s tour hybrid had a bulbous toe that made the head look out-of-balance from the address position. Adams softened the toe and the look now is perfect, inspiring confidence that a strong, piercing ball flight will be easy to achieve.

The trend to make hybrids look like fairway woods is a waste of time. We saw several hybrids that were really hybrids in name only. In reality they were fairway woods. Thus we were far more partial to the Ping G20 Hybrid (which looked and hit like a hybrid), than we were to the Ping i20 Hybrid (which looked and hit like a fairway wood.

Most of the rest were pretty indistinguishable, and yes, that includes the TaylorMade RocketBallz hybrid. But there were a couple that stood out from the standpoint of their ineffectiveness. The Mizuno JPX Hybrid appears to be a poorly disguised copy of the Adams hybrid. The biggest difference is that the Adams feels better, hits it better and has a better ball flight. Other than that there is no difference. Also, the new Cobra Baffler, which had been a star performer a couple years ago, just didn’t have a ball flight that worked for me and the feel wasn’t nearly as solid. Also the look from the top seemed a little awkward.

Wedges

The wedge business also went through a full blown mandatory replacement cycle inspired by a groove rule change that took effect at the beginning of 2010. By now, if you haven’t changed out your wedges to conform to the rule change, you certainly are not going to because of the rule change. Therefore, we are back to a simple replacement cycle, although the frequency of wedge turnover is greater than that of hybrids because the grooved face of wedges gets worn down with frequent use.

We also place less emphasis on the wedge sector because they are in most cases very indistinguishable from each other. If you input the technical specifications of an effective wedge into several CAD/CAM systems, you are going to come out with products that are very similar. In fact, at the end of the day the biggest difference ends up being mostly cosmetic. We have stated for years now that we could change out our wedge brand once a month and we doubt our wedge game would suffer much. We just don’t see much in the way of bad wedges these days.

Still we get weak in the knees when we see a pretty face. Cleveland Golf was born with a core competency in wedges. The Cleveland 588 Forged Chrome Wedge is so damn pretty that it’s a shame that we have to take it into a bunker and scratch up the club. The balance and feel are as good as the look. It has just the right spin ratio so you can spin the ball when you want to and release it when you want to.

Despite all the noise, color, pomp and circumstance at the Cobra booth, the Cobra Trusty Rusty Rust Wedge had just the right feel on the ball. The head weight was perfect in relation to the rest of the club, and therefore we were really able to dial in the distance on less than full shots from 40-70 yards. The Trusty also made controlling trajectory see easy with only slight changes in ball position at address.

Irons

The irons category is almost like working against a stacked deck, at least from the standpoint that we dislike almost any forged blade. We have ample swing speed and pretty good game, but we can’t get over the feeling that we have to muscle the ball into the air with forged blades. The lack of forgiveness tells us that forged irons are for the professional golfer, and most likely that is not our audience in this report. Therefore clubs we are going to like are going to have a little more game improvement features and a little more forgiveness.

When I picked up the Ping G20 Irons it was like I was transformed back to the late 1980’s when I bought my first set of Ping Eye2’s. The offset was there; the confidence-inspiring top-line was there, the color was there, and most of all, the feel when I hit the ball was there. I hit four 7-irons and hit every one of them on a different place on the clubface. They had the identical ball flight and landed within 5-8 yards of each other. This was one of the “Aha!” moments of the Demo Day at the PGA Show.

We also enjoyed the Cleveland CG Black Irons. The titanium face gave the irons terrific fell when striking the ball, and the trajectory was piercing, allowing for wonderful distance. Still, at the end of the piercing trajectory, the ball sort of just fell out of the sky and landed plenty soft. We never got the feeling that we were hitting ‘hot shots’ that could not be controlled when landing on the green.

When we arrived at the Callaway station, we were bombarded with a dizzying array of iron selections. So many, in fact, that we were unable to discern which iron would be the best for us. We recognized this issue with Cleveland a few years ago, where too many selections ends up just confusing the customer. The default tends to be to look in another direction. There was the RAZR X, the RAZR X Black, the RAZR X Tour, the RAZR XL, the RAZR XF, the RAZR X Forged and the RAZR X Muscleback. Whew!  Now each of these can be purchased with steel shafts or graphite shafts, so we are talking about 14 different iron options. It’s easier to order lunch from a Chinese menu written in Chinese.

Golf Balls

The new Callaway Hex Black Tour has already enjoyed solid performance on the PGA Tour, with a huge win by Phil Mickelson at Pebble Beach. This is the first 5-piece ball that Callaway has ever introduced, and according to Mickelson he has great control over the flight trajectory. Callaway has backed up the Hex Black Tour with the Callaway Hex Chrome which is a three-piece ball designed for more moderate swing speeds.

Nike is planning on giving away 40,000 dozen demo golf balls in their largest ball-related advertising spend ever. The demos will focus on the Nike 201XI-X and Nike 20XI-S balls. The X version is Tour distance while the S version is Tour feel. Having Tiger Woods back on his game would help Nike immeasurably in the effort to gain customer acceptance.Titleist is rolling out four new balls this year: Titleist Velocity (for distance), and new versions of the NXT Tour, the NXT Tour-S and the DT Solo low compression ball. They will still dominate the business with the Pro-V1 and Pro-V1x models.

Fairway Woods

Adams Golf has always been known for high performance fairway woods. They do not disappoint this year with the Adams Speedline Super XTD fairway wood. These incorporate the ‘Velocity Slot Technology’ to increase the COR, something that heretofore had not really been measured to any great extent in fairway woods. All we know is the feeling was like hitting a driver flush off the ground, with a pleasing mush of the ball on the face. It seemed as if the ball stuck with the face up until about the point the club passed knee height. The ball flight was awesome.

TaylorMade took the “If you can’t beat ‘em, join ‘em” approach with the TaylorMade RocketBallZ Fairway. They use what they describe as a ‘sole-positioned speed pocket’ to increase COR. In reality, it is a clear take-off on the Adams ‘Velocity Slot Technology’. But the end result is incredible. This fairway wood is the longest fairway wood we have ever hit. The ball simply marshmalled on the face and then exploded off the face. It looked like it caught another gear around the 200 yard mark, and just extended its flight. Of everything TaylorMade has developed this year, this club could start a migration back to fairway woods from hybrids. Just incredible!’

For the traditionalist, the Nike VR_S Fairway has a solid, traditional look, and solid strike on the ball, and a solid ball flight. It didn’t feel as explosive as the Adams or the TaylorMade, but it did feel as though the shots were under control and consistent from shot-to-shot.

Drivers

Drivers are always a fascinating category. Last year we whiffed the market in our fear that the white woods from TaylorMade could potentially be a white elephant. In fact, we were so wrong that we delivered the hat below to the management team at TaylorMade with a clear concession speech. This year, we fully intend not to make the same mistake.

TaylorMade is going to sell plenty of the new TaylorMade RocketBallZ Driver. Of that we have no doubt. We do not know a single person who likes the name RocketBallZ, but we know plenty who will like the feel. Once you get used to the white head (which we still contend is not that easy to get used to) the feel of the club will be plenty pleasing. The ball flight almost felt self-corrective on off hits, and without much loss of distance.

The TaylorMade was good, and they will probably sell more drivers than anyone else this year. But it wasn’t the best club, and it wasn’t the best value. Callaway has put a lot of effort into the Callaway RAZR Fit Driver, their first driver with adjustable technology. We hit it and liked it a lot. At $399 retail it’s comparable to the TaylorMade R11 adjustable driver. But when we hit the Callaway RAZR X Black Driver, which is essentially the non-adjustable version of the RAZR Fit, we just went bonkers. Let’s face it, most golfers know what loft they need (i.e. 9.5 or 10.5, etc.), and what shaft they need (i.e. regular, stiff, etc.) or they can find out in about 10 minutes on a hitting machine. Then for $249 retail they can have a driver that just booms it. The mush-factor on this driver was extreme. The ball flight trajectory was a perfect 45 degrees with tremendous carry. The look from the set-up position was just so comfortable that we felt sure we would hit a good one every time, and we darn near did. At $249, $50 below the standard cost of a premium new driver, Callaway is going to really penetrate the market with this weapon.

The Titleist 910D2 Driver is not exactly new, but it’s still really, really good. It sets up to the target as easily as any driver we have ever held, and the feel and flight are both terrific. We never felt like a foul ball was about to come off the club. It was almost like the face was cupping the ball towards the target. It’s hard to describe, but this was the most accurate driver we tried.

The Cobra AMP Drivers were cool, with vibrant Rickie Fowler colors. Unfortunately they just didn’t seem to perform quite as well as the Callaway or TaylorMade offerings. We applaud the effort to bring more ‘cool factor’ into the game, and up-and-coming juniors will be attracted to these.

Cleveland tried to bring back a classically-shaped driver in the persimmon tradition, but with metal woods performance. The result is a disaster. The Cleveland Classic Driver is a sort of brassy-sickly color with a massive deep face that just didn’t feel right. The ball flight was not ideal, and the face did not feel forgiving at all. Perhaps this is a professional’s –only club, as there is some tour play with it, but for the regular amateur we just don’t see it being worthwhile.

Putters

We believe 2012 is the starting point for an entire new sales cycle in putters; more specifically belly and long putters. The incredible success of PGA Tour professionals using belly and long putters has already started a significant movement in that direction by leading amateur golfers. Belly and long putters have been around for decades, but they were primarily considered an option for those who were simply incapable of putting adequately with regular putters. Victories in the PGA Championship by Keegan Bradley, and multiple Tour wins by Webb Simpson has proven that good putters can become even better using belly and long putters. When there is such significant Tour validation of an underutilized product, there is almost always a new sales cycle as that product penetrates the user base, in this case amateur golfers.

The trend has become so pronounced that the regulatory bodies have already begun a discussion about whether belly and long putters should be outlawed. But we would point out a couple things: 1) The putters have been in use for over 20 years. It would be quite hypocritical to outlaw them now after such extended sanctioned use. 2) Equipment rule changes usually undergo a few years of discussions with the equipment manufacturers and have an extended phase-in period so as not to damage existing inventories at equipment companies.

So it is not such an easy thing to just re-write the rule and outlaw the putters. And given that as a premise, we expect very strong sales of belly and long putters in 2012, as avid golfers now perceive that belly and long putters have a perceptual advantage over traditional putters.

In this particular case, we believe the major manufacturers have a distinct advantage in this sales vertical. It will take a significant investment in inventory to be able to take full advantage of the trend. Long and belly putters require specific fitting to be used correctly. This means either overnight shipping or keeping components such as shafts, heads and grips on hand at every distribution point. That requires capital.

Therefore, we see Odyssey (division of Callaway), Ping, Scotty Cameron (division of Acushnet) and TaylorMade to be the main beneficiaries of this trend. They all have fitting programs, multiple product offerings, and significant distribution capabilities that allow them to take full advantage of the sales opportunity.

The trend towards adjustability in drivers is undeniable. But what about the rest of the bag? We saw a neat idea at the PGA Merchandise Show called the Odyssey Flip-Face Putter. Every tournament player struggles with a putter face or insert that is too soft for slow greens or too firm for fast greens. It can make choosing a putter a nightmare. What if you could get two putters in one? The Odyssey Flip-Face putter gives you just that, allowing you to flip the face to adjust to the speed of the greens that day. Callaway uses the new Odyssey Metal-X insert for the firm side, and the soft, buttery, Odyssey White Ice insert for the soft side. Now players can control their speed no matter what greens they are playing. Finally, Odyssey has a putter that gives you the best of both worlds. What a great idea!

Neat Stuff

A Canadian outfit called Quagmire Golf is resurrecting a retrospective of Arnold Palmer’s most famous outfits from the 1950’, 1960’ and 1970’s. They are mimicking some of Arnie’s classic designs, but doing so using the most updated fabrics and treatments available today. They are staying away from some of the more cheesy 70’s stuff (lates face it, its’ a lost fashion decade to golf), and some of the styles such as the Palmer sweater from the 1960’s collection are really cool.

But we found an item in the Quagmire Kids collection that really caught our fancy; the Quagmire ColorFusion line for kids. The ColorFusion line of shirts and sweatshirts actually changes color with the temperature. We put our wrestler-son into one, and he wore it to practice and blew the roof off the place. The other kids thought it was so cool! We’d like to see this in adults too.

SUMMARY

That’s it for our 2012 Equipment Review. We no doubt left a lot of stuff out, but we highlighted what we thought was interesting and worthwhile from a consumer and an analytical standpoint.

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.

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.

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.

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.