New Sergio Garcia equipment deal could be a sign of a new economy in golf
TaylorMade and 2017 Masters champion Sergio Garcia have mutually parted ways, making Garcia an equipment endorsement “free agent.” His next deal may not be as lucrative as his last one because of the exit of major athletic equipment manufacturers from the golf industry.
Just days after Adidas sold its last remaining shares of golf equipment brand TaylorMade, the value of the company could drop even further with the announcement that Sergio Garcia has been released from his contract with TaylorMade early.
Amateur and professional golfers who prefer TaylorMade products shouldn’t worry. The company isn’t going anywhere, as KPS Capital Partners purchased Adidas’ interests in the brand. KPS has made no announcements of intentions to even reduce, much less cease, TaylorMade’s operations. In fact, the investment could be seen as a potential commitment to increase those operations.
Those plans obviously don’t include Garcia. After 15 years as a TaylorMade brand ambassador on the golf course, the company has agreed to let Garcia out of his contract early, although Garcia will continue to wear Adidas headwear, apparel and footwear. It’s unknown at this point whether Garcia requested the release or if there was a buyout that he exercised. What’s certain is that Garcia is now free to sign a new deal with any company he chooses.
What’s also clear is that there are fewer options for Garcia now than existed a decade and a half ago. Not only are they fewer, but the remaining players aren’t as robust as the options that existed in 2002 either.
Since Garcia inked his deal with TaylorMade, Nike has discontinued its golf operations. Partially because of that brand exodus, stores which sell golf apparel and equipment have seen decreasing sales numbers in the vertical. It’s a doomsday cycle.
Fewer sales means retailers are going to devote less of their capital and space on the vertical, which means distributors will order less product, which means manufacturers will produce less, which means distributors will have less to send to stores, which means consumers will have fewer options, which will curtail sales, and the whole cycle repeats itself.
That’s why major players like Nike have made their exits, leaving what remains of the market to niche manufacturers like TaylorMade. Less competition is great for those companies but can hurt the richness of the endorsement deals that Garcia is now seeking.
Even with the backing of companies like KPS, these smaller manufacturers don’t have the capital that Nike possesses. That means endorsement contracts like the one that Garcia may soon get from Callaway, as Garcia was spotted using Callaway drivers and putters over the past month, will probably feature less cash value.
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With the trend of fewer resources devoted to the sport of golf by major athletic apparel and equipment brands, relegating the industry to more niche manufacturers who have less capital, one of the results is that endorsement free agents like Garcia won’t get as big of a payday when they sign new or renew existing contracts.