In Response to John Barba’s Blog, “Hogan’s Rough Week: Rebirth or Death Knell?” January 7, 2017 at http://www.mygolfspy.com.
I had the privilege of being the president and CEO of the Ben Hogan Company when it was at its peak in the late 1980s and early 1990s. Back then, Hogan was a second tier company, but everyone thought that we were bigger than we really were because of the promotional investment made in the Ben Hogan Tour and the fact that we had a very high profile professionals playing on the PGA TOUR. We also had a record selling iron, the Hogan Edge, which I inherited shortly after it had been introduced when the Japanese bought the company.
Notably, the Hogan company was a profitable until the cash drain related to the acquisition of Pebble Beach and another real estate investment, the Four Seasons Hualalai. This is described in my book, In the Rough: The Business Game of Golf, which has been published recently by Texas Christian University (available online from major book retailers and on my book website at www.intherough.golf).
The new “Ben Hogan Company” founder, Terry Koehler, licensed the Hogan brand from Perry Ellis, who had acquired it from Callaway. Unfortunately, Terry only had the rights for the sale of golf clubs and accessories. Perry Ellis retained the Hogan brand for apparel and golf balls for sale through their distribution channels.
In my opinion, Terry did an outstanding job in designing the new Ben Hogan irons. Mr. Hogan would have been proud. Unfortunately, the new company’s problem wasn’t the product; it was marketing that product in a changing business environment. And, like so many start-up golf equipment companies, there is a tendency to try to grow too quickly and to compete with the big boys, however, it isn’t a level playing field.
The golf equipment business has transitioned from 80% of sales being green grass (golf course) distribution in the 1960s and 1970s, to 80% being off-course shops in the 1980s and 1990s. Today, the direct marketing of golf equipment online is transforming the business once again, which will cull the herd of brick and mortar stores as it has in other industries. The cost of golf equipment is expensive and the savings online for big ticket items encourage consumers to buy online. The big companies in the golf business have the financial wherewithal and promotional prowess to market their product in this changing marketplace. How they do business today and tomorrow will change, because how golfers are buying golf equipment is changing.
It is easy to nitpick how the new Ben Hogan Company did business. Having lofts rather than numbers on the irons is something that everyone thought was a mistake. It’s fair to say that how they marketed golf clubs didn’t reflect the new dynamics in the golf marketplace. Further, one can surmise that the margins in licensing a brand aren’t enough for a start-up company, even with the venerable Ben Hogan brand. Scott White has a major challenge ahead and the draconian measures that he is forced to make are necessary…hopefully, there is enough time and the new Ben Hogan Company will survive and thrive. David Hueber, Ph.D at www.mindseyegolf.com.