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TearDrop buys RAM as golf consolidation continues

December 31, 1997

More people spent more money on golf equipment than ever before in 1997, which led to one logical result: There were fewer equipment companies at the end of the year than at the beginning.

The number of brand names didn’t dwindle, but the number of corporate entities pulling the strings did.

TearDrop Golf Company on Tuesday finalized its takeover of RAM Golf, adding the 50-year-old equipment company to Tommy Armour Golf, which TearDrop acquired last month.

Both the Armour and RAM brand name will continue to exist, but the RAM operation will be consolidated into the Armour production facilities near Chicago.

Virtually at the same time as TearDrop was buying Armour in November, Spalding Sports Worldwide picked off the Ben Hogan Co.

This end-of-the-year flurry was part of a consolidation in the industry that started two years ago when what was then American Brands _ parent company of Titleist, Pinnacle and Foot-Joy _ took over Cobra Golf.

Earlier this year, U.S. Industries, Armour’s parent company, sold Odyssey Golf to Callaway Golf, giving the folks who made their name with the Big Bertha line of drivers a highly recognized brand of putters.

Also earlier this year, apparel maker Adidas purchased Taylor Made Golf.

And it seems as if the best of the excitement is yet to come.

``I think there will be more and more consolidation,″ Rudy Slucker, chairman and chief executive officer of TearDrop Golf, said Tuesday shortly after acquiring RAM for $2.7 million in cash, 187,357 shares of TearDrop stock and assumption of $1.6 million in liabilities.

Scott Creelman, Spalding vice president and general manager of the golf division, agrees with Slucker.

``No question,″ Creelman said. ``I think you’ll see some big acquisitions. Branding is becoming more important. Callaway had a hard time with putters so they bought Odyssey. We bought Hogan. Titleist bought Cobra.″

In a startlingly short time, the 48-year-old Slucker, who made his money in the import business and purchased TearDrop in September 1996, has taken the putter company from a firm that did $800,000 in sales this year to one that could sell ``$50 to $70 million next year,″ Slucker said.

``I wouldn’t exclude anything,″ Slucker said about the possibility that he might move into the apparel line next. ``The question is: Do I buy Nike or does Nike buy me?″ Slucker said with a laugh. ``Actually,″ he continued, ``a perfect match would be Reebok.″

Creelman agreed that future takeovers in the industry would extend beyond the golfing community.

``Acquisition candidates won’t be just golf companies to golf companies,″ Creelman said. ``I think we will see maybe Nike do something.″

While Slucker and TearDrop are new kids on the block muscling their way into the golf market, the takeover of Hogan by Spalding gave one of the oldest names in American sports a broader platform in the escalating equipment wars.

``This acquisition gives us several things,″ Creelman said after the acquisition of Hogan.

``First, it gives us a great name with a great image that we think has been tarnished not with the consumer but in the trade,″ Creelman said.

He said Hogan also gives Spalding a strong traditional forged iron, ``another bullet in our belt in the ball market,″ some top management pick ups plus Tom Kite and Justin Leonard, who play Hogan irons.

Leonard, 25, who emerged as a star with his victory in the British Open in July, has four more years left on his contract.

``We have had players coming to us and saying now that you have Hogan we want to talk,″ said Creelman who, like Slucker, said it is ``absolutely critical″ to the success of their products to have high-profile players on tour.

The next major battle ground in the golf marketing wars may be the ball. It is likely that Callaway will make news in that area this year, taking on Titleist and Spalding, the giants in the industry.

``We will see a battle of titans on the drivers and the balls,″ Slucker said with a chuckle that indicated he would be content to watch that fight from the sidelines.

One of Slucker’s clear strategies is to revitalize the Tommy Armour 845 irons _ one of the most popular irons ever.

``Over 75 players have ordered 845s right now,″ Slucker said. ``If only half of them use them, we will have the largest army of irons out there.″

Slucker also scrapped the all-titanium irons that wrecked the Armour company. Armour will market a titanium insert iron, he said.

``Michael Magerman took a risk,″ Slucker said about the former head of Armour who gave the go-ahead for the all-titanium iron that flopped.

``He would have been written up by Harvard Business School as the next Ely Callaway if it had worked,″ Slucker said. ``It was a calculated risk and I ended up buying the company because of that.″

Clearly, more risk taking is down the road in the highly competitive golf market. Those risks that work will be the next Callaways _ a company that went from $5 million in sales to $800 million in sales in a decade.

Those risks that fail will be the next Armours _ looking for a rich knight in silver armor to bail them out.

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