The Decline Of MacGregor Golf

Charlottesville

July 18, 2022

Kodak. Sears. Bed Bath & Beyond. Kmart. See the bottom of this post for more companies that have failed or are close to failing as well as a video about the demise of Sears.

I have a tendency to extrapolate from today into the future. That means that because the College Inn was on the Corner for so long, I figure it will always be there. Not so, of course. The College Inn is gone (as is Littlejohn's but Mincer's seems to continue to thrive (as does the Virginian).

Starting a business and the running the business are often viewed as requiring two different skill sets. To start a business you need an entrepreneur, a risk taker, a visionary. To run a business, you need someone who is an expert in processes and systems -- someone who focuses on the details and the quarterly results.

Or perhaps not? An established company also needs a leader who has a vision for the future, who can see how the market is changing and can chart a new course to success.

Or is it also that some businesses have a natural life cycle and their demise is a function of the business they are in? Could Sears have become Amazon? Even if Kmart had evolved, would we still shop there or would we still prefer Target? Sometimes it is just easier to build a new ship than to reconfigure an old one.

The older I get, the more I like the idea of an exit strategy. Grow a company and before it hits hard times, sell the sucker to a sucker who through their rose-colored glasses see more value in the business.

The MacGregor Golf story:

Welcome to the first official installment of what we at MyGolfSpy hope will become a favorite of yours: History’s Mysteries.

It’s easy to care only about today. But historical perspective helps us connect certain dots while disconnecting others. By peering through the lens of time, we can better understand just why the golf industry is the way it is and how it got here.

Our first subject is, next to Wilson Staff, the most iconic name in golf’s long, fascinating history: MacGregor Golf.

HISTORY’S MYSTERIES: MACGREGOR GOLF

Wilson Staff famously touts more majors won than any other brand. Their total of 62 is mostly front loaded but it is an impressive number.

But did you know MacGregor is No. 2 with 59?

MacGregor’s history dates all the way back to 1829. That’s when English immigrants and expert wood craftsmen Archibald and Ziba Crawford founded the Dayton Last Company in Dayton, Ohio. A last is a wooden, foot-shaped form used in shoe manufacturing and repair and the Crawfords made good ones. They were also quite innovative, developing a unique lathe that could make lasts faster and more precisely. That lathe would later play a huge role in golf history.

FROM SHOES TO GOLF

The Crawford heirs eventually brought in two new partners to their company: John McGregor (note the spelling) in 1875 and Edward Canby in 1886 to eventually form the Crawford, McGregor and Canby Company. McGregor was a Scottish immigrant from St Andrews and a hardcore golfer. He eventually got Canby hooked on the game, setting the wheels in motion. In 1897, Crawford, McGregor and Canby introduced its first golf club—a wood made using the Crawford lathe.

By 1910, Crawford, McGregor and Canby had become a major force in golf as well as the world’s largest shoe last maker. In fact, the company was exporting more than 100,000 clubs a year to the U.K. By the Roaring ’20s, golf blew past shoe lasts in revenue. And by the end of the decade, Archibald and Ziba’s company had made its last shoe last.

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THE MARKET CHANGES

By 1927, retail golf sales exceeded pro shop sales for the very first time. Crawford, McGregor and Canby went all in, mass-producing low-cost, high-profit clubs. Record sales and profits followed and everything was looking rosy.

Until the Great Depression.

By 1932, the bottom had dropped out of retail and, by 1934, Crawford, McGregor and Canby was facing bankruptcy. Edward Canby died and the company went up for sale. Chief competitor Wilson put in a bid but the company was ultimately sold to sporting goods giant Goldsmith. A new management team was brought in, headed up by Clarence Rickey (cousin of Branch Rickey, who would later break baseball’s color barrier by signing Jackie Robinson).

Rickey’s team officially renamed and re-spelled the company “MacGregor.” The reason was simple. The Depression wiped out retail but club pros were still moving product. Most of those pros were Scottish immigrants and “MacGregor”, quite simply, sounded more Scottish. One Scotsman, in particular, was in Rickey’s crosshairs: Medinah head professional Tommy Armour.

Rickey knew Armour from Medinah and from his days with the Burke Golf Company in Chicago. Their partnership would produce the very first Tommy Armour Silver Scot irons. And just to show history has a sense of humor, decades later Burke would morph, ironically, into the Tommy Armour Company.

MACGREGOR GOES KA-BOOM!

With Armour and his assistant, Toney Penna, onboard, MacGregor soon exploded. Penna played MacGregor clubs on the PGA TOUR and recruited other Tour players to join him. He hit the jackpot in 1939 when he signed Jimmy Demaret, Byron Nelson and Ben Hogan.

After World War Two, MacGregor moved from Dayton to Cincinnati. Tommy Armour was the game’s top-selling pro club while Nelson, Hogan, Demaret and LPGA original Louise Suggs all had their names on MacGregor clubs. From 1947 through 1960, more touring pros used MacGregor clubs and balls than all others combined.

In 1950, MacGregor introduced the Penna-designed MT irons. As a designer, Penna was ahead of his time. His MT irons were compact blades with a relatively thick topline. They featured a very low CG and—prepare to be outraged—jacked lofts. They were so popular that MacGregor had to stop making tennis equipment to free up more space for golf club production.

Other MacGregor firsts during the 1950s: Oversized Eye-O-Matic woods with tri-colored inserts, Colorkrom irons with a copper face, the Pro-Pel shaft, colorful kangaroo leather bags and shoes and the first all-weather rubber and cord grip.

BRUNSWICK, JACK AND THE BEGINNING OF THE END

In 1958, MacGregor was sold to bowling giant Brunswick. Owner Ted Bensginer made a killing when he developed the first automatic pinsetter and started buying up companies to grow his empire.

One of the new ownership’s first moves was to shift golf production out of Cincinnati and away from its labor unions to Albany, Ga. Golf ball, basketball and football manufacturing was moved to Covington, Ga. While the move did quadruple production capacity, it also required an entirely new workforce.

The first few years under Brunswick were a mess. A new accounting system nearly killed the company, causing $12 million in losses in just three months. Salespeople saw their pay structure changed, prompting many to leave MacGregor for Acushnet.

The ship eventually stopped rocking long enough for MacGregor to sign Jack Nicklaus in 1962 to one of the first big-money equipment deals in golf: a staggering $100,000 for five years.

MacGregor had the hottest new golfer on the planet in its stable of professionals. With Jack about to embark on the greatest run of golf ever, MacGregor should have been sitting pretty. In truth, however, MacGregor was sitting on a house of cards.

THE NOT-SO-SWINGIN’ 60S

“Those who cannot remember the past are doomed to repeat it.” Philosopher George Santayana

As far as decades go, the ’60s were not all that kind to golf. Over-production was an industry-wide problem and, in 1964, MacGregor was forced to liquidate 50 percent of that year’s product. The equipment glut led to the birth of off-course discount golf retailers. Those retailers would scoop up excess inventory at a bargain and sell it for less than club pros could buy it for.

As it did in 1927, MacGregor dove headfirst into retail. And, just as in 1927, club pros were understandably pissed. MacGregor’s pro shop gear was all custom made and of higher quality than the retail stuff but average golfers only saw the 25-percent premium.

At the same time, Karsten Solheim was making investment casting a thing. It was faster, easier, less expensive and made perimeter weighting doable. Penna, in fact, brought up the idea of investment casting in the ’50s but management dismissed the idea. Frustrated, Penna eventually left MacGregor to start his own company.

Moreover, Brunswick’s schizophrenic management style was taking its toll. At one point, MacGregor had five different presidents during an 18-month span. The company also struggled with quality issues at the new Albany plant, issues that would plague the company on and off for the rest of its existence.

THE OWNERSHIP CAROUSEL

In 1978, Brunswick sold MacGregor to the Wickes Corporation. Wickes was a world leader in lumber sales and owned Snyder Drug and Red Owl supermarkets. Several of Wickes’s top brass were golf nuts so MacGregor seemed like the perfect toy.

Unfortunately, Wickes was swimming in debt. In April of 1982, Wickes sold the company to Nicklaus and Wickes VP Clark Johnson. Thirty days later, Wickes filed for Chapter 11, at the time the largest bankruptcy filing in U.S. history.

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Nicklaus had been heavily involved in MacGregor throughout the ’70s. He brought Jack Wullkotte, his personal club maker, back from Toney Penna in ’74 to oversee operations and he hired David Graham as chief designer. Together, they designed the VIP irons, which Graham used to win his two majors, and the Jack Nicklaus Limited Edition irons. Jack won two majors with those.

Clay Long was also part of the MacGregor team during those years. Chi Chi Rodriguez used Long’s oversized CG-1800 irons to win a bunch of Senior Tour events. And Long is best known for the Response ZT putter Jack used to win the ’86 Masters. The company figured it might sell about 6,000 Response ZTs but, by noon the day after the Masters, MacGregor had orders for 5,000. The company sold 150,000 the first year and 350,000 over three years. It was the single biggest seller in MacGregor history.

AMER AND IRRELEVANCE

MacGregor was making money again but Jack’s golf course business was in a jam. Specifically, the St. Andrews project in New York was becoming a money pit and Jack needed cash fast. So, in 1988, he sold 80 percent of MacGregor to the Amer Group from Finland for $8 million—the same Amer that would also buy Wilson Sporting Goods. Three years later, fed up with what he felt was lousy retail product, Jack sold his last 20 percent to Amer.

Amer’s stewardship of MacGregor didn’t make it through the ’90s. There was talk of folding MacGregor into Wilson but, in 1996, Amer sold MacGregor to Masters International Ltd. for $20 million. Two years later, Masters sold MacGregor to business maverick Barry Schneider for $42 million.

To his credit, Schneider made sweeping and long overdue changes. He phased out low-end lines, which accounted for millions in revenue, and focused on returning to MacGregor’s forged premium roots.

“I don’t want to be the biggest, just the best,” he was quoted as saying at the time.

SCHNEIDER AND THE SHARK

The Schneider years were a roller coaster for MacGregor. Big TV ad campaigns alternated with big cutbacks. Message and marketing consistency was long gone as MacGregor ran through eight ad agencies in 15 years. Schneider tried dumping the company in 2000 but found no takers. Two years later, he went all in again with a $10-million ad budget, in-store marketing, college team sponsorships and more than 1,200 demo days nationwide.

In 2003 Schneider brought Bobby Grace Putters into the fold and, by 2006, the company thought it had found its savior in Greg Norman. Even when the Shark was under contract with Cobra, he had MacGregor’s legendary Don White grind his irons for him. Within two years, Schneider was out and Norman was named chairman of the board.

“I underestimated the strength of existing brands in a consolidating industry,” Schneider said at the time.

Norman had big plans for a turnaround, dumping the low-end MacTec line and reviving MT irons. And there were plans to resurrect the VIP line in 2009. Unfortunately, the real world intervened in the form of a near-global financial collapse. By spring, the writing was on the wall. The chairman jumped overboard and signed a deal with TaylorMade. And in yet another example of the cosmos having a sense of humor, the former Goldsmith-MacGregor company was sold to golf retailer Golfsmith for less than $2 million.

The 112-year-old industry icon was now a store brand.

GOLFSMITH TO DICK’S

“We have great respect for the history and tradition of the brand,” said Golfsmith VP David Lowe in the May 22nd issue of Golf Digest. “We’re going to make product that is consistent with its history.”

Golfsmith’s heart was in the right place. It assigned R&D to its partner, Jeff Sheets Design. The result was one last gasp, the 2010 MacGregor VIP forged cavity back. A titanium driver with a 360 cup face and a series of hybrids, fairways, wedges and putters followed. But the die was cast. MacGregor was a store brand and real golfers don’t buy store brands.

Golfsmith filed for bankruptcy in 2016. Ultimately, DICK’S Sporting Goods snapped up all its assets.

Where does that leave the MacGregor brand? That’s a good question and one we posed to David Michaels, DICK’S Senior Manager of Business Development. His answer was simple and straightforward.

“I’m not sure of the current situation of that brand.”

As John Cleese might say, this is a dead parrot.

WHAT KILLED MACGREGOR?

As with most business failures, you have the usual suspects: scattershot ownership, rudderless management, late-to-the-party innovation and ineffective marketing. Take your pick. They’re all valid. But the real reason is much simpler.

All businesses ebb and flow but the ones that last constantly challenge themselves by asking, “What business are we really in?” Seems simple enough but it’s an easy question to get wrong. MacGregor thought it was in the business of getting people to buy the golf equipment it made. However, it was most successful when Penna and company were developing golf equipment people wanted to buy.

There’s a difference.

By the ’90s, Callaway, TaylorMade and COBRA were making golf equipment people wanted to buy. They were new, exciting and innovative. MacGregor was viewed as being none of those. Even though it was the first company to design a driver using a computer in the early ’90s, people stayed away in droves.

“They were using something called the Cray Computer,” says Bob Winskowicz, founder of SQAIRZ golf shoes and a regional sales manager for MacGregor during the Amer years. “It analyzed what happened when the ball and club met at impact. What they saw was the clubhead expanding significantly and the ball compressing to about half its size.”

MacGregor used that information to develop the Mad Mac.

“It had these gears on the top of the head and ribs at the bottom and they were connected internally,” Winskowicz tells MyGolfSpy. “The computer showed stress points and those stress points meant a lack of energy being transferred to the ball. Fast forward to today and Callaway is marketing the same thing with Jailbreak. Their rib technology delivers more ball speed.

“MacGregor did this back in the ’90s.”

But, by then, it was too late.

HISTORY’S MYSTERIES: TIME PASSAGES

“Those who fail to learn from history are doomed to repeat it.” Winston Churchill

MacGregor Golf is dead and buried but a few folks do miss it. Every April through July, I screw around with new irons that catch my fancy, hoping to find a new magic bullet. But, like clockwork, August comes and I go back to my one true love: the 2002 MacGregor V-Foil VIPs. They remain MacGregor’s last hurrah.

It’s hard for 100-year-old brands to be thought of as innovative or cutting edge, even if they are. Once the market decides you’re not innovative, you’re not innovative. It’s different now but in the 1950s through the 1990s, breakthrough innovation came from upstarts who had nothing to lose. Mainstays like MacGregor were too invested in the status quo. Their innovations wound up a day too late and a dollar too short.

MacGregor’s foray into metalwoods is a prime example. MacGregor owned the premium woods market from the Crawford Shoe Last days until 1988 when the first metalwoods showed up on Tour. Then it didn’t. In just nine months, MacGregor’s woods production dropped from 1,200 per day to 50 per week.

MacGregor did introduce golf’s first cast titanium driver, the T-920, in 1992. That, however, came a full year after the force of nature that was the Big Bertha, so no one cared. Callaway didn’t go full titanium until the Great Big Bertha in 1995. That year Callaway sold more than 250,000 GBBs. MacGregor sold only 2,500 T-920s.

Today, nearly all innovation comes from the big companies, simply because they have the R&D juice to do it. The New Age Ely Callaways of the world simply don’t. You can debate whether that’s a good thing but it certainly behooves the Big Five and the others to remember Santayana’s and Churchill’s warnings: Learn from the past or repeat it.

And remember what business you’re really in.

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TEN COMPANIES THAT FAILED TO INNOVATE, RESULTING IN BUSINESS FAILURE It’s crazy to think that 88% of the Fortune 500 firms that existed in 1955 are gone. These companies have either gone bankrupt, merged, or still exist but have fallen from the top Fortune 500 companies. Most of the companies on the list in 1955 are unrecognizable, forgotten companies today. As the life expectancies of companies continue to shrink, organisations must be more vigilant than ever in remaining innovative and future-proofing their businesses.

Here are 10 famous companies that failed to innovate, resulting in business failure.

1. BLOCKBUSTER (1985 – 2010)

Home movie and video game rental services giant, Blockbuster Video, was founded in 1985 and arguably one of the most iconic brands in the video rental space. At its peak in 2004, Blockbuster employed 84,300 people worldwide and had 9,094 stores. Unable to transition towards a digital model, Blockbuster filed for bankruptcy in 2010.

In 2000, Netflix approached Blockbuster with an offer to sell their company to Blockbuster for US$50 million. The Blockbuster CEO, was not interested in the offer because he thought it was a "very small niche business" and it was losing money at the time. As of July 2017, Netflix had 103.95 million subscribers worldwide and a revenue of US$8.8bn.

2. POLAROID (1937 – 2001)

Founded in 1937, Polaroid is best known for its Polaroid instant film and cameras. Despite its early success in capturing a market that had few competitors, Polaroid was unable to anticipate the impact that digital cameras would have on its film business. Falling into the ‘success trap’ by exploiting only their (historically successful) business activities, Polaroid neglected the need to explore new territory and enhance their long-term viability. The original Polaroid Corporation was declared bankrupt in 2001 and its brand and assets were sold off. In May 2017, the brand and intellectual property of the Polaroid corporation was acquired by the largest shareholder of the Impossible Project, which had originally started out in 2008 by producing new instant films for Polaroid cameras Impossible Project was renamed Polaroid Originals in September 2017.

3.TOYS R US (1948 – 2017)

Toys “R” Us is a more recent story about the financial struggle one of the world’s largest toy store chains. With the benefit of hindsight, Toys "R" Us may have led to its own undoing when it signed a 10-year contract to be the exclusive vendor of toys on Amazon in 2000. Amazon began to allow other toy vendors to sell on its site in spite of the deal, and Toys "R" Us sued Amazon to end the agreement in 2004. As a result, Toys "R" Us missed the opportunity to develop its own e-commerce presence early on. Far too late, Toys “R” Us announced in May 2017 its plan to revamp its website as part of a $100 million, three-year investment to jump-start its e-commerce business. While filing for bankruptcy in September 2017 under pressure from its debt of US$1bn and fierce online retail competition, it has continued to keep its physical stores open. - 4. PAN AM (1927 – 1991)

Pan American World Airways (aka Pan Am), founded in 1927, was the largest international air carrier in the United States. The company was known as an industry innovator and was the first airline to offer computerised reservation systems and jumbo jets.

The downfall of Pan Am is attributed to was a combination of corporate mismanagement, government indifference to protecting its prime international carrier, and flawed regulatory policy. By over-investing in its existing business model and not investing in future, horizon 3, innovations, Pan Am filed for bankruptcy in 1991. Pan Am is survived only in pop culture through its iconic blue logo, which continues to be printed on purses and T-shirts and as the subject of a TV show on ABC starring Christina Ricci.

5. BORDERS (1971 – 2011)

Borders was an international book and music retailer, founded by two entrepreneurial brothers while at university. With locations all around the world but mounting debt, Border was unable to transition to the new business environment of digital and online books. Its missteps included holding too much debt, opening too many stores as well as jumping into the e-reader business to late.

Sadly, Borders closed all of its retail locations and sold off its customer loyalty list, comprising millions of names, to competitor Barnes & Noble for US$13.9 million. Borders' locations have since been purchased and repurposed by other large retailers. 6. PETS[DOT]COM (1998 – 2000)

Pets.com was an online business that sold pet accessories and supplies direct to consumers over the World Wide Web. Although short-lived, Pets.com managed to find some success during a time when there were no plug and play solutions for ecommerce/warehouse management and customer service that could scale. Pets.com launched in August 1998 and went from an IPO on the Nasdaq stock exchange to liquidation in 268 days. Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble of the early 2000s. US$300 million of investment capital vanished with the company's failure. Pets.com is a memorable cautionary tale of a high-profile marketing campaign coupled with weak fundamentals (and poor timing). Today, the Pets.com URL redirects users to PetSmart's website. ‍ 7. TOWER RECORDS (1960 – 2004)

A pioneer in its time, Tower Records was the first to create the concept of the retail music mega-store. Founded by Russell Solomon in 1960, Tower Records sold CDs, cassette tapes, DVDs, electronic gadgets, video games, accessories and toys. Ahead of its time for a fleeting moment, Tower.com launched in 1995, making it one of the first retailers to move online. It seems the company’s foresights stopped short there as it fell prey excessive debts and ultimately bankruptcy in 2004. Tower Records could not keep up with digital disruptions such as music piracy, iTunes and streaming businesses such as Spotify and Pandora. Its legacy is remembered in the form of the movie 'Empire Records,' which was written by a former Tower Records employee.

8. COMPAQ (1982 – 2002)

Compaq was one of the largest sellers of PCs in the entire world in the 1980s and 1990s. The company produced some of the first IBM PC compatible computers, being the first company to legally reverse engineer the IBM Personal Computer. Compaq ultimately struggled to keep up in the price wars against Dell and was acquired for US$25 billion by HP in 2002. The Compaq brand remained in use by HP for lower-end systems until 2013 when it was discontinued.

9. GENERAL MOTORS (1908 – 2009)

After being one of the most important car manufacturers for more than 100 years, and one of the largest companies in the world, General Motors also resulted in one of history’s largest bankruptcies. Failure to innovate and blatantly ignoring competition were key to the company’s demise. As GM focused predominantly on profiting from finance, the business neglected to improve the quality of its product, failed to adapt GM to changes in customer needs and did not invest in new technologies. Through a major bailout from the US government, the current company, General Motors Company ("new GM"), was formed in 2009 and purchased the majority of the assets of the old GM, including the brand "General Motors".

10. KODAK (1889-2012)‘

At one time the world’s biggest film company, Kodak could not keep up with the digital revolution, for fear of cannibalizing its strongest product lines. The leader of design, production and marketing of photographic equipment had a number of opportunities to steer the company in the right direction but its hesitation to fully embrace the transition to digital led to its demise. For example, Kodak invested billions of dollars into developing technology for taking pictures using mobile phones and other digital devices. However, it held back from developing digital cameras for the mass market for fear of eradicating its all-important film business. Competitors, such as the Japanese firm Canon, grasped this opportunity and has consequently outlived the giant. Another example is Kodak’s acquisition of a photo sharing site called Ofoto in 2001. However, instead of pioneering what might have been a predecessor of Instagram, Kodak used Ofoto to try to get more people to print digital images. Kodak filed for bankruptcy in 2012 and after exiting most of its product streams, re-emerged in 2013 as a much smaller, consolidated company focused on serving commercial customers.

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The Fall of Sears: