Thursday, February 26, 2009

Woods’s Return Fails to Boost Golf as Recession Bites (Update1)

Feb. 25 (Bloomberg) -- At the Whippoorwill Club in Armonk, New York, the recession means fruit and cheese platters won’t be put out in the private golf course’s bar on weekends anymore, saving $12,000 a year.

Even Tiger Woods’s return to professional golf isn’t expected to reinstate the grapes and brie or rouse enthusiasm for the game at Whippoorwill, which over the past year has lost as many as 30 members, or about 10 percent of its total.

“It doesn’t make my life any different at all,” said Frank Marino, president of the club located about 40 miles north of Manhattan.

While Woods’s return to the game in Arizona today will give television ratings a boost, it won’t turn the tide for course owners who’ve had to tighten budgets or equipment manufacturers that fired workers, said Casey Alexander, who covers the golf industry for New York-based Guilford Securities Inc.

“It certainly does brighten some people’s spirits,” Alexander said in an interview. “But I don’t think he changes people’s spending habits, even in good times.”

Woods, out for eight months after knee surgery, won his comeback game at the World Golf Championships Match Play near Tucson, Arizona, as the U.S. recession approaches its 15th month. The economy has shed at least 3.6 million jobs, and golf has lost players and financial backers.

“None of us are immune,” said Chris Borders, general manager of the Atlanta Athletic Club, which is saving money by changing the way it cuts the grass.

Manufacturers are also paring costs. Adidas AG’s TaylorMade and Nike Inc., which sponsors Woods, skipped the PGA Merchandise Show in Florida last month, saving at least $392,000.

Nike Cuts

Beaverton, Oregon-based Nike, the world’s largest athletic shoemaker, said on Feb. 10 it may cut as many as 1,400 jobs from its payroll of almost 35,000. TaylorMade fired 70 in December.

In January, Minneapolis-based U.S. Bancorp’s U.S. Bank said it would end its sponsorship of the U.S. PGA Tour’s annual Milwaukee event, where Woods made his 1996 professional debut.

Ginn Resorts of Celebration, Florida, severed ties with the women’s LPGA Tour and 50-and-over Champions Tour. Atlanta lost its PGA Tour event when AT&T Inc. didn’t renew its contract, and FBR Capital Markets Corp., the Arlington, Virginia-based real- estate investment trust won’t back the FBR Open in Phoenix beyond 2010, the golf group said yesterday.

“We take this very seriously,” PGA Tour Commissioner Tim Finchem said at a press conference yesterday. “There’s too much pressure on too many companies. It would be unrealistic to think that we’re not going to have turnover.”

16-Year Low

Investors in sporting-goods stocks are also feeling the recession’s wrath. Shares of Callaway Golf Co., which introduced the Big Bertha steel-headed driver in 1991, are at their lowest in 16 years and underperformed the Standard and Poor’s Midcap Consumer Discretionary Index by 18 percentage points over the past 12 months. The Dow Jones Industrial Average ended at 12,269 on June 16, the last time Woods played in a tournament, and finished at 7,351 yesterday.

“The only thing I can control is what I do on the golf course,” Woods said on a conference call Feb. 20. “As far as off the golf course, those are things that I feel are out of my hands.”

Carlsbad, California-based Callaway, which sponsors players including Phil Mickelson, said on Feb. 6 that it will no longer match employees’ 401(k) contributions.

Across the U.S., as many as 15 percent of private clubs are reporting financial strains, according to the Jupiter, Florida- based National Golf Foundation, which tracks the industry. Memberships are down 29 percent at these clubs and total rounds played have declined 22 percent since 2000, the organization said.

‘Crazy Time’

“It’s a very crazy time and it’s all a bit frightening,” said Elaina Brooks, president of the Phoenix Corporation of Georgia, the lead broker for home sales at the Manor Golf & Country Club in Alpharetta, Georgia.

In January, Brooks had agreements with five potential buyers, three of whom have since backed out, she said. The Manor, a gated community with the state’s only Tom Watson- designed course as its centerpiece, has 150 residents and plans for 700 homes priced from $900,000 to $2.9 million. A 33,000- square-foot stone and brick clubhouse is being built.

At Congressional Country Club in Bethesda, Maryland, the home of Woods’s annual AT&T National tournament, three companies canceled holiday parties in December, costing the club about $108,000, according to Chief Operating Officer Michael Leemhuis.

“Thank goodness we had the cancellation clauses,” said Leemhuis, whose club charges a $150,000 initiation fee for a full membership.

‘Every Little Thing’

Maintenance crews at Atlanta Athletic, where golfing legend Bobby Jones grew up playing the game, will soon start cutting the fairways in a back-and-forth pattern, instead of the more decorative crisscross. The adjustment will save about 100 gallons of diesel fuel a month, or about $2,300 a year, said Ken Mangum, the grounds superintendent.

“You’re looking at every little thing you can to save a dollar,” Mangum said. Fewer flowers will be planted, something “spoiled” golfers will have to get used to, he said.

For television networks, Woods’s return will be a lift. His participation in a tournament usually brings a 30 percent to 40 percent ratings increase, said Neal Pilson, a former head of CBS Sports who is now a New York-based broadcasting consultant.

With Woods competing, the Match Play may sell as many as 20,000 tickets a day, up from 17,000 last year, according to Wade Dunagan, executive director of the event.

Accenture Ltd., the Hamilton, Bermuda-based technology- consulting which sponsors the golf star, will extend its backing of the event to 2014 from 2010, the PGA Tour’s Finchem said yesterday.

At the Whippoorwill in Armonk, where the initiation fee is $58,000, Marino said he may be able to make up for membership losses.

“We think we could get some overflow from other clubs that will go under,” he said.

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