We have listened to the almost unanimous cries of joy over golf’s inclusion in the 2016 Olympic Games in Rio. From a golf purist standpoint, there can be no argument that golf is a global game and has long been entitled to a place in the Olympic Games. But we judge the benefits to be far less universal or evenly placed as most might think.
We find it hard to fathom any significant revenue opportunities arising from golf’s inclusion before sometime around 2014. It is highly doubtful that golf’s inclusion in the Olympics will make any tangible difference here in the U.S until the Games themselves are actually played. It will be around 2014 that various countries will start running trials to determine who their representatives will be for the games.
Many have and will continue to argue that golf in less golfing developed countries will start to build feeder programs with infrastructure build and instructional programs and that will spur massive equipment sales in geographies where this has not taken place in the past. To that, we say “I don’t think so”.
The larger countries (China, Russia, Brazil, etc.) are sophisticated enough to understand that the equipments companies will be frothing at the mouth to establish a presence in those countries. Therefore, those countries will be interested in selling official sponsorships. And therefore, the golf equipment companies are more likely to initially incur a cost, not generate revenue.
Think about it. The China Olympic Golf Program sponsored by (Nike, Adidas-TaylorMade, Callaway, etc. fill in the blank). It’s almost irresistible to be attached to a program with that type of long term branding potential. That sponsorship could cost an equipment company in the tens of millions of dollars. Especially in terms of the naming rights and the equipment that they will have to give away!
For the biggest countries it is likely that only Nike and Adidas-TaylorMade will even be able to afford to consider it, given their attachment to enterprises that are about much more than just golf. Callaway, as a standalone company, probably cannot even play in a pool that big. The penalty to EPS would be too great. Fortune Brands likely would not consider expending that degree of resources towards a single event. It would be like attending the PGA Merchandise Show over and over again for every country involved.
Some will argue that joint sponsorship bids could be in the works to reduce the cost. Some may hope that this could be the post-Tarp avenue for financial companies to re-enter the golf arena and appear patriotic to boot. The China Olympic Golf Program sponsored by (Citicorp/Callaway, Nike/Morgan Stanley, etc., fill in the blank). That doesn’t change the timing of when the masses will care, and it doesn’t change the calculus that the equipment companies will be asked to donate money and especially, large quantities of the equipment.
When we matriculate down to the lesser developed countries, in many cases the idea that they will be able to build the infrastructure necessary to develop a meaningful program is still problematic. They are going to solicit the money from the outside as well. These green-field programs will have a greater chance of actually developing long term loyalty among brands, but the size of the markets involved make the effort questionable in the first place.
We daresay the one guarantee in all this is that the equipment companies will all declare victory no matter what the outcome. Some will decide they have to be ‘in the game’ and will declare that they have earned ‘mindshare’ and ‘global branding identities’ while others will sit it out and claim that they ‘saved themselves’ from suicidal expenditures. What we know is that those companies that develop innovative products that perform and market them effectively one-on-one to their core constituency will do well whether they are directly involved with the Olympics or not.
