Sports Business Report: All 3 Winners of 2018 Men’s Majors Had Mixed Golf Bags as Equipment Sponsor Free Agents

by 7 months ago

CARNOUSTIE, SCOTLAND - JULY 22: Francesco Molinari of Italy kisses the Claret Jug after winning the 147th Open Championship at Carnoustie Golf Club on July 22, 2018 in Carnoustie, Scotland. (Photo by Francois Nel/Getty Images)

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All 3 Winners of 2018 Men’s Majors Had Mixed Golf Bags as Equipment Sponsor Free Agents

For the 3rd time in 2018, a USGA golfer won a men’s major without an equipment sponsorship. Francesco Molinari (British Open) joined Brooks Koepka (U.S. Open) and Patrick Reed (Masters) as tour members with Nike apparel/footwear deals, but without an exclusive equipment provider; enabling each to play the 14 clubs (and balls) best suited to their game. Francesco Molinari and Brooks Koepka have been playing as equipment free agents since Nike’s ’16 exit from the golf equipment space, while Patrick Reed left Callaway following the ’17 season after attributing his tour struggles to the equipment. Molinari won last weekend’s British Open playing with TaylorMade clubs and a Bettinardi putter (he does have a deal with them), Brooks Koepka won June’s U.S. Open with a mixed bag that included TaylorMade, Nike, Mizuno and Titleist clubs (including a Scotty Cameron putter), while Patrick Reed played Augusta with Ping, Nike, Titleist, Callaway sticks and an Odyssey (Callaway subsidiary) putter. All 3 players won their respective majors using Titleist Pro V1x balls.

Howie Long-Short: Several of the club manufacturers associated with this year’s major winners are publicly traded; including Nike (NKE), Mizuno (TYO: 8022), Titleist (GOLF) and Callaway (ELY).

Golf stocks are far outperforming the S&P YTD; Callaway Golf (ELY) is +37% YTD ($19.06), Acushnet (GOLF) is +13% YTD ($23.83) and the S&P is +5.5% YTD ($2,820.40). While it would be easy to attribute the sales growth to Tiger Woods’ return, both companies have been headed in the right direction for some time; ELY is +104% over the trailing 3 years, while GOLF is +32.75% since its ’16 IPO. The U.S. Golf Economy Report indicated that the industry’s strongest sales growth was coming from the equipment category, a far more logical reason for ELY & GOLF’s outperformance. Both ELY and GOLF are expected to report Q2 ’18 earnings next week (August 2nd).

For those wondering, Bettinardi and Ping have never been publicly traded. TaylorMade was acquired by KPS Capital Partners (P.E.) for $425 million in late ’17.

Fan Marino: Howie may not be willing to credit equipment sales to Tiger’s return, but there’s no doubt that Tiger contending for his first major championship in a decade was the catalyst for last weekend’s British Open drawing the tournament’s highest television rating since ’06 (5.0 overnight); the last time Woods won the claret jug. In fact, the only British Open to draw a larger audience was the 2000 tournament, which Woods also won; to complete the career grand slam. Interestingly, the highest rated tournament of year thus far has been the Masters (7.6 overnight); where Woods failed to make the cut.

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Starter Returning to Football Sidelines after 20 Year Hiatus

Starter has signed a multi-year deal with G-III by Carl Banks to become the official on-field apparel and game day uniform supplier of the Alliance of American Football. The iconic brand most often associated with licensed team jackets, will outfit all 8 teams. The inaugural contest, scheduled for February ’19, will mark Starter’s return to football sidelines for the first time since 1998; the company outfitted 12 NFL teams during the 1990s.

Howie Long-Short: Starter is owned by the Iconix Brand Group (ICON), a brand management company that owns more than 25 global consumer labels including Candie’s, Pony and Umbro. ICON posted top and bottom line YoY declines in Q1 ‘18, but the company launched Umbro at Target and continued to increase sales of Starter brand on Amazon; growth initiatives that allowed CEO John Haugh to reiterate revenue and free cash flow guidance for FY18. ICON shares are down -53% on the year, closing on Tuesday at $.60. The company is expected to post its Q2 financials on August 8th.

G-III Apparel Group (GIII) is a clothing company that owns several fashion brands (think: DKNY) and holds licenses to manufacture under several others (think: Guess, Calvin Klein and Tommy Hilfiger). Back in early June, the company reported Q1 ’19 net sales rose +16% to $612 million; an $83 million YoY increase. The unexpected profit sent shares soaring (+19.5%) to a 52-week high of $51.20 earlier this month. GIII closed on Tuesday at $46.33.

Fan Marino: The AAF is the league co-founded by Charlie Ebersol and Bill Polian. It’s not to be confused with the XFL, which is the league being funded by Vince McMahon and run by Oliver Luck; that league is set to launch in 2020. The AAF is hoping its “college model” will create natural rivalries and fan interest, with team/university affiliations ensuring players are assigned to the franchise located in the market closest to their collegiate team (or previous NFL/CFL team in B10/B12 country). Polian was quoted saying, “if the Birmingham team has Trent Richardson, we think that will be something that would be a significant gate attraction”; Browns, Colts and Raiders fans would likely disagree.

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What is JohnWallStreet?

JohnWallStreet, located at the intersection of sports and finance, is a destination for the educated sports fan.

While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related business news, in easily digestible bites, with commentary from both the sports money and sports fanatic perspectives.

We’ll cover publicly traded professional teams & stadiums (MSG, RCI, BATRA, MANU), television networks (DIS, FOXA, CMCSA, CBS, TWX, MSGN), apparel & footwear companies (NKE, UAA, ADDYY, FL, LULU), equipment companies (GOLFELY, FIT), ticketing companies (EBAY, LYV) content and facilities providers (CHDN, DVD, ISCA,TRK, LMCA).  If it trades on Wall Street, and has a sports angle, it’s in our wheel house.

Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.

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TAGSAlliance of American FootballFrancesco MolinariGolfsports finance reportStarter Jacket