Jan 27, 2010 at 03:04 PM
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Callaway CEO: 'Thankful for Tiger Affect'

Callaway Golf CEO George Fellows took questions last night as part of the company's Q4 call, after reporting better-than-expected quarterly results and 2010 revenue projections that were higher than expectations. Naturally, the turmoil concerning the PGA and Tiger Woods was a hot topic. Fellows said he expects sponsorships to ultimately bounce back and blames the Tour's struggles on the fact that "a very significant portion of the tour was sponsored by financial services companies as well as the automobile companies." In response to Tiger's issues and its ability to impair competitor, Nike, Fellows says that Callaway's approach to business has not been altered by Tiger's personal issues.

Here's Fellows' full responses to two key questions on sponsorship during yesterday's call:

Q: Looking at some of the recent press concerning sharp declines and sponsorships viewerships et cetera, I guess, for George, does this change really another way you approach certain elements of the business in 2010, I guess, in particular maybe endorsements or other kinds of marketing?


Well, we continually shift our marketing spending to reflect what the current marketplace conditions are. But the issue of tournament sponsorships is really a function of the economy and you have to recognize that a very significant portion of the tour was sponsored by financial services companies as well as the automobile companies now that clearly has been impacted very severely over the course of this last year. But what we are seeing it start to comeback a little bit and I suspect while it maybe a couple of rough spots for the balance of 2010, I think, the sponsorships are ultimately going to come back.

Our real issue is less the sponsorships of the events themselves than it is consumer interest and willingness to play the game of golf and just to remind you that the overall rounds played in '09 despite the severity of the economics were relatively flat. So, the fundamental interest in playing the game, playing the game, has really not changed dramatically. And we think that together with the signs that the economy is recovering should bring more consumers back into the market place.

Now, we clearly indicated that we don't anticipate 2010 to restore itself to pre-recession levels we think we are going to make up a significant amount of grounds and we budgeted accordingly and just prudently obviously put the appropriate flexibilities into our overall plan to be able to adjust it upward and downward, depending on how the market opens up and progresses through the year.

So, yeah, we are always making adjustments and I think if '09 taught us anything it's do be bit more agile and be more anticipatory to the market rather than staying with the plan as term of the written. So, we think, we are in a pretty good place actually and based on the early science, I think we planned appropriately.

Q: One thing I got to ask you, the Tiger Woods question, suppose that puts you at a competitive advantage versus Nike and how does that change the way you approach the business from advertising standpoint perhaps sponsorships et cetera?


You know, I think the sensationalism so I mean that has very little to do with the business from our perspective. The industry is very thankful to the Tiger affect if you will that occurred for so long. He is going through a rather important personal crisis but the reality is and your focus should be on the fact that the game is much, much bigger than one individual. The game is going to continue to prosper, there is some extraordinary young players coming up as well as some extraordinary seasoned players such as Phil and so many others.

I think far too much is being placed against that. I expect the golf industry to continue to do well, and we all hope that Tiger is able to resolve the issues that are plaguing him right now. But as far as our business approach is concerned, there is no affect of that.

Parts of this transcript have been reprinted with permission from seekingalpha.com