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TaylorMade CEO talks about state of golf industry

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If the golf industry were an economic indicator, analysts would have a reason to celebrate. But Mike King, the chief executive of Carlsbad-based TaylorMade, said he isn’t hailing the end of the recession just yet.

“We’re definitely anticipating that the economy does not get better,” King said. “We’re not predicting doom and gloom, but we’re definitely thinking it’s not going to get better, especially in leisure products like golf equipment, which nobody needs to have.”

That said, TaylorMade has been on the upswing recently. From 2008 to 2009, luxury goods in the United States saw a 40 percent decline. In that time, TaylorMade stayed basically even. The company saw losses of 18 percent in the first quarter of last year, but this year business is up 20 percent on the top line, and 300 percent on the bottom line.

“We’re off to a wonderful start in 2010,” King acknowledged. “We don’t really know why we’re off to a wonderful start, but we are, so we’re pretty excited about it.”

King told students at California State University, San Marcos that despite good early returns, the company is bracing for more jolts to the economy. This means keeping the company light and streamlined, and focusing on emerging markets.

“There are emerging markets in golf like China, like India where we’re definitely investing in infrastructure, because if golf ever catches on in India, it would change the economic conditions of golf. If it catches on in China, same thing,” he explained. “There’s basically no golf in those two big countries today.”

King said in an interview after speaking with students that his company is working with governments abroad to do things like build more golf courses and start youth academies.

But TaylorMade’s home is here in the United States, in San Diego County, and here King said the shrinking market is taking a toll. He was taking part in a business class at CSUSM that lets students talk with the CEOs of large local companies. One student asked him about his biggest regrets, and he said that while downsizing is sometimes vital to keeping the company afloat, he hates the process.

“It’s the most painful thing, and in beginning of 2008 we probably laid off 150 people. People that have been with our company a long time, people who rely on working to pay their bills and to bring their kids up,” he said. “Laying people off is really hard.”

King took over as CEO of TaylorMade in 1999, after spending nearly 20 years with the company, mostly in the sales department. Before the economic downturn in 2008, King’s time with the company was a success, bringing sales to a high of $1.2 billion worldwide.

Carlsbad is something like the Silicon Valley of golf, with TaylorMade and its biggest competitor Callaway both headquartered there, and Titleist’s club division is located there and in nearby Vista. King had the unique opportunity of spending some time with his main competitor when he worked for Callaway for a year in the late 1990s, but he returned to TaylorMade, where he had worked since it was a small company.

King said he likes having his competitors so close because they keep his aggressiveness honed.

"In the world where we compete in, in golf equipment (whether it's) Adidas versus Nike, or TaylorMade versus Callaway, it’s like a football game,” he said. “It’s who’s more aggressive and who’s more competitive and who fights harder and who comes up with better ideas faster.”

TaylorMade is owned by Adidas, the athletic apparel and equipment-maker, but King said his own company has nearly complete authority.

One area in which companies in close competition need to take great care, King said, is their branding. TaylorMade especially chose the leading golfer they sponsor, Sergio Garcia, because he is young, athletic and international -- all qualities the company wants to be associated with.

A student asked King what he would have done if TaylorMade sponsored Tiger Woods, who lost many sponsors in the wake of a salacious infidelity scandal.

“I’m glad I didn’t have to make that decision because I don’t think you could win,” King said. “I know what I’d like to say. I’d like to say that we would drop him. But the reality is I don’t know unless I’d be put in that spot.”

* Video: Interview with Mark King

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