04/13/15 09:29 AM EDT

Retail Callouts (4/13): Golf -- Why It's Broken

Takeaway: Yeah, there's hype around the Masters, Spieth and UA. But we need to find another 5mm golfers (25%) to get to pre Tiger-gate levels.

WHY GOLF IS BROKEN

While everyone basks in Jordan Spieth’s lights-out victory this weekend in Atlanta, let’s keep one thing in perspective about the Golf Industry. We’re seeing a massive bifurcation in participation, and it’s not particularly healthy. Simply put, a significantly smaller number of golfers are playing a far greater number of rounds. The number of golfers in the US has declined by 5mm, or 16%, in the past six years. On the flip side, the number of rounds per player is up 12% to 19 rounds per year over that same period.

Two factors explain away 80% of this drop. One is the ’07-’09 recession, which took the marginal golfer out of the game (‘core’ golfers will golf in any economy, weather, zombie apocalypse, or whatever…). Then just as the US emerged from a crippling recession (6/09), Tiger Woods fell from grace (11/09), thereby removing the biggest positive mass-marketing force the game has ever seen.

Fortunately, what we call ‘core’ golfers (plays at least 8 times a year) accounts for about 56% of golfers, and 85% of spending. For the most part, this is a healthy demographic. But someone who plays 20, 30, or even 50 rounds per year almost certainly does not go to a Golf Galaxy or a Dick’s. They likely belong to a Club, and buy gear at the Club’s pro shop.

It’s the ‘non-core’ golfer (less than 8x per year) who uses mass channels, and that group has been decimated – accounting for almost all the decline in players over the past six years. Before the Recession/Tiger Debacle, there were 13.2mm ‘non-core’ golfers. Now there’s closer to 10mm. That’s roughly a 25% decline in a customer base for the mass golf retailers.

Could they come back? Of course. But we’re going to need a lot more than Tiger passing the torch to Rory McIlroy, or UA’s Spieth crushing the field at the Masters.

UA - Jordan Spieth is Masters Champ, Big Win for UA

Takeaway: Spieth and Under Armour had a good week last week. With Spieth leading the masters after every round and ultimately winning by 4 shots, the UA logo, which is seen on every piece of Spieth's clothing, spent many hours front and center on national TV.

In January, Under Armour presciently signed a new 10 year contract with Spieth and just 3 months later he wins the season's first major championship in record fashion. Spieth's contract likely had built in performance incentives which means UA will have to pay him extra after his victory, but after showcasing the brand at the top level Kevin Plank will be happy to write him the check.