The COMING golf ball wars - golf industry

Golf Digest, Feb, 1999 by Mark Seal

Enter the Raiders

Staring up at Kohlberg Kravis Roberts & Co.'s sleek glass headquarters- on the 41st and 42nd floors of the 9 West 57th Street skyscraper in the heart of Manhattan-you can sense the pulsing of testosterone, the stealthy power of pinstripes, the snapping suspenders of Buy and Sell. KKR headquarters is a galaxy away from the humble home of Spalding Sports, which is housed in a 1940s schoolroom-style brick building in the tiny town of Chicopee, Mass., where the dress code is as casual as the down-home attitude. But in the Ball Wars, Main Street is inextricably tied to Wall Street, and there is no clearer testament than Spalding, through which KKR has entered the Ball Wars with a bang.

The takeover titan profiled in the book and TV movie Barbarians at the Gate, KKR was the original corporate raider, snatching up private companies and selling off slices for a hefty profit. In 1996, a spiffed-up-for-the '90s KKR ponied up close to $1 billion to buy the Evenflo & Spalding Holdings Corp. from a Venezuelan company, fueling speculation that it would sell off the golf-ball division, possibly to the just-minted Callaway Golf Ball Company.

KKR did eventually separate Spalding from Evenflo, manufacturer of child-care products, in August 1998. Spalding, which produces balls under the Top-Flite logo and golf shoes under the Etonic brand, was a tantalizing ball KKR couldn't resist playing itself. Spalding executive vice president Scott Creelman insists that the takeover titan has let the company run its own business. But in KKR's two-year ownership, Spalding has switched presidents twice-quite a record for a company led for 23 years by president (now chairman of the board emeritus) George Dickerman.

For Spalding, 1998 had already been tumultuous: ball sales up only 2 percent in a market that grew by 4 percent; overall Spalding Sports Worldwide sales down by 3 percent, mostly due to declines in international sales. Then, on Dec. 1, Spalding's key officers left behind the shirtsleeve world of Chicopee to join the suits at KKR, where an announcement was made: Kevin Martin, Spalding's president for barely more than a year, had resigned. But Spalding wouldn't suffer, insisted the suits; the company would be beefed up with-what else?-more meat, more muscle! Ed Artzt, the former CEO of Proctor and Gamble, a director of American Express, GTE and Delta, and a Spalding board member since 1997, would become chairman of the board. Then, Spalding's new president and CEO, James Craigie, walked into the boardroom, resume humming: fresh from the presidency of the beverage and desserts division of Kraft (a division of Phillip Morris), a U.S. Navy and Department of Energy veteran and Harvard M.B.A.-an increasingly obligatory sheepskin to lead a charge in the Ball Wars.

"I spent 15 years working for the Kraft side of Phillip Morris, where I rose up from the ranks in marketing doing a wide variety of their different brands," says Craigie. "I've developed many new products in my time. In my history, Jell-O fat-free puddings have come out . . . Country Time [lemonade]. I'm a mild golfer. I've got a lot more to learn. But I love the game. I think it's one of the most intriguing and difficult games in sports."