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Endorsement Dollars vs Major Success

Will Anderson poses the question of whether endorsement deals are damaging performance of professional golf?

Endorsement deals with top sports stars can provide companies with priceless exposure for their brands to the global market. To have the top star wearing your clothes or using your  equipment drives huge sales as consumers trust the faces they recognise and want to replicate the world’s best by wearing the same clothes and using the same equipment as their idols.

Golf has traditionally always had endorsement deals between manufacturers and its leading professionals. The golfing greats from the early 20th Century, Walter Hagen and Bobby Jones, endorsed clubs with their names and signatures featuring on the clubs manufactured by Wilson and Spalding. Ben Hogan started his own club making businesses in the 1950s and the late great Severiano Ballesteros put his name to Slazenger clubs. Modern day players are almost exclusively seen wearing their branded baseball caps or visors and with sponsors’ logos on their clothing. Watch any golf event on television and you will be bombarded during advert breaks with the leading golfers in the world explaining why they wear the shoes they do and how the clubs they use are the best on the market. The golf club market alone is estimated to be worth some US$6 billion in worldwide sales by 2020. It is seriously big business.

Of course the players in these adverts are being paid handsomely by the brands to wear their clothes and shoes and to use their clubs and golf balls. The maximum number of clubs a golfer can carry in competition is 14. Golfers typically sign endorsement contracts either to play exclusively all of a manufacturer’s clubs or to use a certain number of that manufacturer’s clubs within the permitted allocation.

Something interesting has been happening this year in relation to golf equipment. What do Patrick Reed, Brooks Koepka and Francesco Molinari all have in common?

Yes, they are all professional golfers. Yes they have been the winners of golf’s last three major championships (the 2018 Masters, the 2018 U.S. Open and the 2018 Open Championship). Yes, they each have worldwide exemptions to play in the biggest events in the world and will go down in golf’s history books as winners of majors. Those are all true but they are not the most interesting thing they have in common.

What is most interesting about these three golfers and what brings them together in an exclusive club is that they have no endorsement deal to play a certain manufacturer’s golf clubs in competition. Other than Molinari’s putter (he has a contract with Bettinardi), these three players won the first three majors of the 2018 season being free to choose whatever combination of clubs in their golf bags they wanted.

This surely cannot be a coincidence. It has often been the case that after a top player signs a new endorsement deal their performance dips. Rory McIlroy struggled when he moved from Titleist to Nike in the biggest deal of its time. The same was true with Phil Mickelson on his move to Callaway in what was a controversial deal when he changed brand shortly before the Ryder Cup. Not long after McIlroy’s struggles with Nike golf equipment, the sports giant announced that it would no longer manufacture clubs. Perhaps a sign of the difficulties that they were having with design. It was no secret that the top players who were signed with Nike had issues with the clubs provided to them. Our three major winners all wear Nike golf clothing but do not have any Nike clubs to play as a result of the manufacturer pulling their clubs and so the three players are free to choose whatever equipment they want and play any combination of brands which best suit their game.

Does this therefore mean that the top golf professionals are putting financial gain with lucrative endorsement deals ahead of performance by being able to choose the clubs which best suit their game, rather than their sponsor’s equipment? Well, if the evidence of the last three majors is anything to go by this may well be the case. The big question is whether others will follow suit. At the moment, it doesn’t seem likely that players will cut off a healthy revenue stream by ditching their endorsement deals to freely choose their equipment. However, if the majors continue to go to those who are able to make a free choice then others might start to follow suit and try to negotiate different deals with the manufacturers to allow more flexibility with the equipment they use in the quest to join the elite club of the major golf champions. Manufacturers may well be looking at the current trend with a worry and some inventive thinking to keep the top names playing their clubs.

Authors

Will Anderson
Will Anderson
Senior Associate
Edinburgh