With four new manufacturers entering the fray, the competition and the hype for the most personal piece of golf equipment the ball-is certain to intensify. The insurgents are storming the gates and the longtime industry leaders are plotting to aggressively defend their turf. How will it all sort out-and what will it mean to you? We go inside the competing camps to find out.
Keep an eye on your golf ball: Forces are plotting to snatch it up and replace it with one of their own.
The blustering gods of contemporary golf equipment have come to wage an angry battle over the heart and soul of your game. It’s a clash of wills and egos that golf has seldom seen. Callaway demands that you try its “pleasingly different” new ball; Taylor Made is doing its damnedest to dazzle you with its new ball’s “revolutionary” feel; Nike seeks to seduce you with its Swoosh-all while the established market leaders, Titleist and Spalding, are screaming, “Get back to your game and they’ll all go away!”
The Ball Wars have begun. This is no fantasy, but a scenario that will play out in shops, golf courses and in the media this year and next. It will be a war of Eastern tradition versus West Coast insurgency. In their attempt to make you switch or stay, the ball companies will be dispatching their foot soldiers, strafing your synapses with in-your-face ads and littering your clubhouses with marketing campaigns. Will you abandon your beloved, traditional brand-for which you’ve developed an attachment bordering on fanatical obsession-to try the new balls, or would you rather fight than switch?
“Ultimately, no matter what the brand loyalty is, if you build a better mousetrap, people will come,” says Chuck Yash, president and CEO of
Callaway Golf Ball Company, one of the ball-business interlopers betting that you’ll at least give their products a whirl.
You may be asking, “Why such sudden interest in balls?” The answer is, of course, money. Balls are golf’s most lucrative commodity, with an estimated profit margin of 50 to 75 percent. They’re also golf’s only expendable product, literally the food the game gobbles up in astonishing quantities. The annual U.S. retail market represents an estimated $650 million in sales, $1.5 billion worldwide-the biggest business sector in golf equipment, along with golf clubs. Balls are a mouth-watering commodity for public-industry conglomerates, especially those suffering the current malaise in golf-equipment sales. For some of these companies, it’s not enough to satisfy the golfer; they must also satisfy shareholders, the droves of investors baying for growth, for extension of the company brand.
But re-inventing the golf ball is radically different from making golf clubs. The U.S. Golf Association’s regulations on balls are strict and getting stricter. Costs are exorbitant-the Callaway Golf Ball Company estimates its start-up expenses at $150 million and the industry is fraught with famous failures. “The market’s already saturated,” says Gene Parente of Golf Laboratories Inc., an independent testing firm in San Diego that sees many of the game’s innovations well before the public. “My opinion is that companies are going to have a bloodbath on their hands.”
This is the story of an already bloody war. It’s a war of corporate espionage and pre-emptive strikes, executives and R&D wizards ricocheting between tantalizing new jobs, secret laboratories filled with Ph.D. polymer chemists and rocket scientists seeking to unlock the riddles of aerodynamics and dimple patterns. It’s a war involving most of the barons of golf equipment, some content with capturing a specific niche of market share, others determined on dominating the original orb, the basic commodity of the game.
“Welcome to Fairhaven, a place as good as it sounds.”
These are the words with which Walter R. “Wally” Uihlein (pronounced U- line), chairman and CEO of Titleist, welcomes you into his office in Fair-haven, Mass. To Uihlein, Fairhaven is indeed a town as good as it sounds, a small, smokestack-dotted, quintessential New England hamlet where Herman Melville set Moby Dick and where, Uihlein likes to joke, “We keep Captain Ahab’s leg in a freezer.” If the leg existed, Titleist would surely own it, so solidly is the company entrenched in the town and its thinking. After an hour or two inside the Titleist compound- touring its eight facilities, including three ball plants, totaling 800,000 square feet, with Wally and his minions; hearing Titleist sales leader Joe Curtis say, “Our reps eat, drink and sleep this job”; listening to the company “associates” and officers pledge absolute allegiance to the Titleist flag-you can almost imagine God decreeing Titleist the industry leader and Uihlein walking through the streets of Fairhaven with a tablet bearing the commandment, “Thou shalt have no other ball before thee.”
Wally Uihlein personifies Titleist, whose employees are called “associates” and where company life is called a “culture.” Celebrating 50 years as the global leader in golf balls, Titleist is the most played ball on the PGA Tour (see accompanying story). The company’s products are backed up by a highly motivated sales organization, whose “Pyramid of Influence” hits its targets-tour pro, club pro and amateur- with unflinching accuracy.
A graduate of the University of Massachusetts, almost J.F.K.-esque in his monogrammed shirt, suit and tie, Uihlein takes his business very personally. Rocketing through 11 executive positions in two decades with the company, Uihlein refers to the Titleist customer as “you” and the Titleist brand as “me,” as in, “If I lose you, then that’s a wake- up call to come back to you and say, ‘Hey, Mark, why did you leave me?”’
You immediately get the idea that competitors seeking to steal even the tiniest slice of Titleist’s dominant 45-plus percent share of the U.S. market will have to first walk across Uihlein’s dead body. Employing references ranging from motivational guru Tom Peters to the Amway direct-sales technique, Uihlein says the golf-ball business is ruled by the “Darwinian survival process.”
“When you look at the competitive landscape-right now there are five companies that total 90-plus market share, among ourselves, Spalding, Wilson, Maxfli and Bridgestone [Precept]-it’s not the strongest who is going to suffer,” Uihlein says. “If the Darwinian survival process has any merit and validity to it, it’s basically the weaker forces who will be first affected.” Or as he says later, “The sheep will fall first, not the wolves.”
Oh, but the interlopers are circling, hungry to steal even a sliver of market share, the term that will tally the score in the Ball Wars. One point of retail market share-representing the sale of 310,000 dozen of the 31 million dozen balls sold in the U.S. annually-can earn a company an estimated $6.5 million a year. Titleist and its longtime, cross-state competitor, No. 2 Spalding, control an estimated 70 percent of the U.S. golf-ball market, with the other 30 percent divided primarily among Maxfli, Wilson, Bridgestone, and Slazenger. Since the market has grown at a rate of only 2 to 5 percent year-and industry analysts don’t expect any radical increases-the pie is not expected to be expanded. So it’s going to take a full-scale assault for any newcomer to snatch even a point of market share.
Uihlein says he’s ready for any competitors. “Let’s bring it on,” he says. He speaks of competition in metaphors of war, employing terms like “hand-to-hand combat” to describe his sales force, and “rifle-shot focus” on the Titleist game plan for constant improvement. For Uihlein, Titleist is as indestructible as the balls it produces. The company was founded in 1932, when Acushnet Rubber Company’s president, Phil Young, missed what he considered a well-stroked putt. Taking the ball for an X-ray at his dentist’s office, Young discovered that the ball’s core was indeed off-center. He and a friend from the Massachusetts Institute of Technology spent the next three years creating the ball that would become the industry standard-the Titleist.
Forty-five years later in 1977-Uihlein joined the company he had fallen in love with through a Titleist sales rep of almost mythical stature, Jim Kernohan. As a high school student working behind the counter of the Crystal Springs Country Club in his hometown of Haverhill, Mass., Uihlein caught Kernohan in a small statistical error and corrected him. “He looked around and said, ‘Who said that?’ ” Uihlein remembers. “Because challenging Titleist was borderline heresy.”
“You wouldn’t wanna bet a dozen Titleist balls on that, would you?” Kernohan asked Uihlein, who accepted the bet and produced the proof in a magazine. When Kernohan asked him what he wanted to do for a living, Uihlein didn’t hesitate: “I want your job,” he said.
To prove Titleist’s unwavering commitment to excellence, Uihlein and Herb Boehm, Titleist’s executive vice president for golf-ball research and operations, lead me on a three-hour tour of Titleist’s three-ball plants, which run 24 hours a day, five days a week, producing 1.2 million balls a day. Dressing in long white lab coats and Titleist golf caps,
we enter the labyrinth, a loud, acrid, mechanical maze where, Uihlein stresses, almost everything is “patented and proprietary.” It’s a world of chemicals, robotics, X-ray machines, freezing tunnels, automatic ball winders, bouncing chambers, pneumatic suction-cup equipment, painting contraptions and a mind-boggling array of more.
What Uihlein and Boehm don’t show is the company’s R&D laboratories. As top-secret as the Pentagon, the labs house a 50-person staff-chemists, engineers, mathematicians, and scientists-all working to keep Titleist years ahead of the curve. “We don’t see it as a marketing game,” Uihlein says. “Our best defense is the product. Which is why, in the last 24 to 30 months, we’ve had 20-plus patents issued. Which is why, this year, we’ve got four or five new golf balls, with additional intended new products in the next 12 to 24 months.”
By the end of the day, you believe, you trust, you’re ready to salute the Titleist flag. But, then, you remember. Oh, yes! There are challenges to the crown, always have been. No company is bulletproof- even Wally Uihlein admits it. “Some of us came of age when Uniroyal was one of the top-three ball companies, and obviously they’re not in business today,” he says.
Sometime in 1995, the West Coast golf-club buccaneers began casting their covetous eyes toward Fairhaven. Callaway and Cobra had been begun as entrepreneurial businesses, but their revolutions in metal woods turned them into Wall Street commodities, hungry for new avenues for growth. At Callaway, Los Angeles consultant Fred Port was commissioned to do “some long-range planning,” recalls company founder Ely Callaway. Port’s extensive study of the golf-equipment business reaffirmed the company’s vision for its next venture: balls.
“Because outside of golf clubs, it’s the only area of golf that is a big business in golf equipment,” Callaway says today. “We said, ‘Since we don’t know anything about the ball business’-at that time-we gotta find the right man to head it up.’ ”
Today, Callaway says he doesn’t expect to conquer the market with his first ball. “We’re going to start out on a much more gradual basis and gradually move up and advance,” he says. But in the beginning, he sought to launch his new ball business at the top of the food chain, where a Big Bertha-style revolution in golf balls-which he is convinced his company can eventually deliver-could be earlier harvested. So Ely Callaway first considered buying Titleist. “But they wouldn’t sell it to us!” he booms. So he tried to buy the next-best thing: Wally Uihlein.
You would think the Eastern half of America would have to fall into the Atlantic for Uihlein to leave the town as good as it sounds. But one day in late 1995, Wally’s phone rang and the voice of Ely Callaway, then 76, master of smoke, mirrors and mainstream marketing, poured through the line like a shot of Tennessee moonshine.
Meetings commenced. Deliberations ensued. “He went through a process of thinking he wanted to come with us,” says Callaway. “They [Titleist] knew he was talking to us. They decided they wanted him even more than we did. So they kept him.”
Unable to get Wally Uihlein, Ely Callaway went after the next-best thing: Chuck Yash, then president of Taylor Made. During the years Yash served as general manager of Spalding’s ball division, he grabbed market share, most notably by pioneering the 15-ball package, infuriating Uihlein, who began calling him the “Darth Vader” of the ball business. If Callaway couldn’t have Obi-Wan Kenobi, he would hire Darth Vader.
The Ball Wars began publicly on May 13, 1996, when Callaway announced that Yash would join him in “launching, developing and heading up a new subsidiary, the Callaway Golf Ball Company.”
Asked about the job offer from Callaway, Uihlein initially says, “We have no comment on that.” But later in the day, in the conference room with his chief officers, he says, “Everybody here has been approached [by Callaway]. It’s like the scene in the Alamo where they draw the line in the sand, OK? And basically, only one person ran off to tell Sam Houston that Santa Ana is coming.”
At the same time of Callaway’s announcement, other West Coast insurgents were plotting their own arrivals. Taylor Made was dusting off nine patents from a ball project the company shelved in the early ’90s when inventing new and better golf clubs was the rage. In Eugene, Ore., Nike, which began planning its entry into the ball market in 1996, would contract with an established ball producer, believed to be Bridgestone-whose name, by signed agreement, Nike has sworn to keep secret to create the recently launched Nike Golf Ball. Nike, some industry sources feel, could garner an immediate 2 to 4 points of market share on the strength of its Swoosh alone.
But for Titleist, the new competitors were all talk, no product- especially since one of them, Callaway, had no apparent ball patents registered in its name as of late 1998.
So while the West Coast threat is real, for the Titleist loyalists that’s all it is: an idle threat. “In the absence of product, it’s almost impossible to react,” says Ed Abrain, executive vice president of sales and marketing. “So we don’t ‘What if?’ We stay focused on what we need to do-continuously improve our own product.”
“If he [Callaway] wants to have a war, you know, just name the time and place,” says Uihlein. “But it’s not going to change the way we do things.”
“We’re New Englanders,” adds Abrain. “We don’t plan on giving up our position easily.”
And so they conduct business, as usual, awaiting the phantom to show its hand. Titleist surely expected first fire from the West Coast golf-club revolutionaries. But it came instead from an unexpected source, the company’s Massachusetts nemesis, the formidable No. 2 ball manufacturer, Spalding Sports Worldwide. But it wasn’t the traditionally sleepy, predictable Spalding, but a newly enriched and emboldened company, recently acquired by the Wall Street investment giant, Kohlberg Kravis Roberts & Co., for whom the old rules are meant to be broken.