Nike to Stop Making Golf Equipment – What Will Be the Industry Effect?

A Look at the Effects of Nike’s Breakup with Golf Equipment

We haven’t seen the Nike golf equipment division as being relevant for a few years now. Not just because of Tiger Woods’ downfall, but the quality hasn’t been there with the products and many of their offerings didn’t seem as well thought out and developed as industry leaders Callaway, Titleist, Ping, TaylorMade, Mizuno, and Srixon.

Nike will continue to do what they do best, make some of the best golf apparel and we suspect that they will even double down in this area. Focusing solely on apparel while avoiding the expenses that come with developing and promoting equipment will immediately improve Nike’s profitability in golf.

Who wins from Nike’s loss?

There are several clear winners from Nike exiting the market. The first of which I think is every other equipment manufacturer. Most purists never made the switch to Nike’s flashy clubs, part of the brand’s trouble in this market was attracting those players. New players that were attracted to Nike may turn to Cobra at the lower end, or even PXG at the higher end.

The players on Nike’s roster, most notably Tiger Woods and Rory McIlroy, will certainly see this as a short term loss in terms of their games, but will certainly get rich as a result. We expect a bidding war for these two players, and it will be interesting to see if perhaps the most influential player ever is still more valuable that Europe’s most talented young player.

Breaking in new equipment is always tricky, but we think both players will benefit from the change in the long run. Nike’s equipment wasn’t terrible, but their top level clubs just were not on par with other leaders in the industry in our opinion. In fact, they were one of the lowest selling brands we featured on Global Golf over the past month.

nike prosThere are several extremely interesting young names on Nike’s roster, including bombers like Brooks Koepka, Tony Finau, and Jhonattan Vegas. As well as up and coming Europeans Tommy Fleetwood and Francesco Molinari.

Where do we think the majority of these players end up? Well we currently have zero indication so these predictions are complete guess work. However, I would bet on Rory becoming the face of Titleist (does want to play a Scotty Cameron putter), and Tiger ending up with a monster deal with Jason Day’s Taylor Made.

I think PXG makes a legitimate run at both guys but won’t be able to afford to stay in the race without giving up something like a significant share of the company. Look for them to ‘settle’ on a player like Koepka or Finau.

Other Ripple-Down Effects

It will likely be difficult for Nike to ever reenter this market after completely shutting down it’s golf equipment division, so one thing worth keeping in mind is you won’t be able to find Nike clubs in 20-30 years. Given their popularity and sales, I don’t think the clubs will ever truly be valuable, but they will be cool to have around.

A similar approach is currently being taken by Adidas, who is publicly searching for a buyer for TaylorMade. It seems as though both Nike and Adidas came to the realization that Under Armour’s approach to a statistically shrinking golf market may be the most profitable.

This is an industry that is rooted in advertisement dollars, but thanks in part to the growth in popularity of website’s like our’s, customers have grown to realize that popularity and playability are two very different things.

Mizuno is widely regarded as one of, if not the best iron makers on the planet, but has show an unwillingness to spend money on player sponsorships and TV spots, yet saw over 9% growth last year. This is clearly an industry that is shifting to a may the best club win mentality.

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