A few weeks ago, the husband and wife team that founded Munich-based golf equipment business, Duca del Cosma, filed for bankruptcy.
Antje Elle and Baldovino Mattiazzo started the company in 2003, and for years the couple’s business went really well – boosted by sales of spikeless golf shoes that Mr. Mattiazzo, a designer, successfully introduced. Spiked shoes had been the bane of groundsmen as they tore up manicured greens, and the new plastic studded shoes caught on with golfers.
“We had a monopoly for a long time,” explained Mr. Mattiazzo, an Italian.
In time, he and his German wife wanted more, and expanded their small business to include a range of golf equipment. In addition to shoes they sold clothing and accessories such as golf bags, gloves or socks.
It was a promising strategy – if the golf market had not slumped in recent years. Revenues at Duca del Cosma fell from €5 million ($5.5 million) in its best year 2011, to just €3 million last year.
The couple then tried to find new sources of revenue using their know-how to market a new collection of sporty-looking street shoes. But it was too late and they ran out of money this summer.
The pair weren’t the only ones to completely miscalculate the golf business. Even industry leader Adidas fell flat on its face.
Golf is not the people’s sport and it never will be. Franz Schmid-Preissler, Management consultant, Munich
Last year, revenues for its California-based golf division, which includes the TaylorMade brand, declined by nearly 30 percent to about €900 million. It won’t be much better in 2015. In the second quarter, its golf revenues fell again by more than a quarter.
Herbert Hainer, Adidas' chief executive, has no more appetite for such losses and last week commissioned New York investment bank Guggenheim to find a buyer for the division or parts of it.
“We are looking at all options,” he said.
Mid-sized companies and sports equipment giants are both struggling with lower golf sales. Even Nike, the world’s biggest sports equipment maker, is having a hard time. While the overall company grew by 10 percent in the last business year, its golf division’s revenues were down 2 percent.
In Germany, golf was always the leisure pursuit of the few, and that hasn’t changed. The German golf association has about 640,000 members and is barely growing. In other words, not even 1 percent of Germans play golf.
“Golf is not the people’s sport and it never will be,” said Franz Schmid-Preissler, a management consultant based in Munich.
The lack of new blood is worrying. In 2010, the German golf association had about 53,000 players aged 18 years and under. Last year, there were only 47,000.
Back in 2000, it looked like golf might actually reach the masses. Between 2005 and 2009, the golf association had yearly membership growth of more than 4 percent, and clubs gained more than 90,000 new members. But it didn’t last.
Even Americans, where golf used to be a national pastime among the moneyed classes, are spending less on golf now – and that’s particularly hard for equipment manufacturers.
The United States is by far the world’s biggest golf market. The National Sporting Goods Association estimates that U.S. golfers will spend around $3.4 billion this year on new clubs, footwear, shirts and shorts. But that's $200 million less than two years ago and $300 million less than in 2007.
But people still watch golf on television, even if they don’t play. For the exciting final round of the 2015 U.S. Open, 40 percent more viewers watched than in the previous year.
Viewer numbers like that keep sponsors interested. Last year they spent about $1.6 billion worldwide on the sport – about the same as in 2013 and $300 million more than in 2010. Some of the big German sponsors are automobile manufacturers such as BMW and Porsche, but also the software company SAP.
That’s why U.S.-based UnderArmour, an up-and-coming rival to Adidas, decided to enter the golf business and managed to sign up the sport’s new megastar Jordan Spieth, this year’s Masters and U.S. Open champion. So it would be wrong to write off golf completely.
The bankruptcy administrator for Duca del Cosma is optimistic he will find a buyer for the small company.
“The brand is well established, fashionable and the quality of their products is good,” said Stefan Waldherr, of the Jaffé firm in Landshut, near Munich.
The lawyer has written to more than 200 potential investors worldwide in the last few days. He doesn’t have much time: As long as the mid-sized company has no liquidity, there will be no new products from factories – and the label is slowly disappearing from store shelves.
“We need a solution at short notice,” said Mr. Waldherr.
At Adidas, the company doesn’t live or die on its ailing golf division. But Mr. Hainer is in a hurry to sort out the golf division and wants to present a solution this year.
It is quite possible that the 61-year-old, an avid golfer, will say goodbye to the expensive and risky golf business and return to the roots of his Franconian brand – shoes. For Adidas, it might be a good idea to stick to what they know.
Video: The Adidas asymmetrical golf shoe.