Sports Business: GOLF
HOW DO YOU SAY `FORE' IN RUSSIAN?
Cold-war rocket scientists blast into the titanium clubs business
As the Mir space station lurches from one crisis to another, beleaguered Russian scientists fear heads will roll at Mission Control in the Moscow suburb of Korolyov. But in a converted missile factory nearby, the only heads rolling are on an assembly line. Using missile-grade titanium, workers at the privately owned Metal-Park Co. are producing tens of thousands of golf club heads for U.S. and Asian companies.
Russian rocket scientists barely know the difference between a fairway and a freeway. But their expertise in titanium technology is helping forge ties to top-flight Western golf companies. Lighter and stronger than wood or stainless steel, titanium has been revolutionizing the golf club business since the early 1990s. Metal-Park was a pioneer in making titanium club heads for American golfers in 1994. But when the market for titanium clubs exploded in 1995 and 1996, Metal-Park lost its early edge to bigger, homegrown rivals.
Now, thanks to new equipment and a big contract with Taylor Made Golf Co. in Carlsbad, Calif., the second-largest U.S. producer of titanium clubs, Metal-Park is ready for takeoff. Says Richard Rugge, product-development manager of Taylor Made: "If they can meet our quality standards, they can supply anybody else in the business."
HEAD START. Metal-Park is one of the few spin-offs of a Russian defense company to succeed in the consumer marketplace. As the cold war was winding down in 1992, titanium became available for commercial use for the first time. That year, a group of 10 scientists from the Strela Aviation plant quit their jobs making MiGs and missiles to open up shop in an empty vocational school.
The scientists experimented and had some success building titanium bicycles, prostheses, and watch cases. Then, in 1992, a South Korean businessman suggested golf clubs. They never looked back. Says Viktor Bannikov, 48, Strela's chief designer before becoming president of Metal-Park: "We did some research and discovered that more than $1 billion of golf clubs are sold every year."
The first clubs designed and produced by Metal-Park scientists were snapped up by companies in South Korea. But Bannikov had his eye on the American market, whose 25 million golfers outnumber those of any other country, even golf-mad Japan. To make inroads in America, Metal-Park needed a partner.
Bannikov started haunting golf trade shows. But, he says, "no one could believe that a small company in Russia...could make a good-quality club." Finally, in 1993, at a show in Munich, he met James Shea, CEO of Bob Toski Corp., a small mail-order golf outfit in Ohio. Metal-Park sent Toski test samples, and the two were in business.
Even in a rich person's sport such as golf, titanium clubs are pricey. A single titanium driver costs about $400--over twice the price of a stainless steel model. A set of titanium irons goes for as much as $2,000. But they're selling faster than tickets to a tournament featuring Tiger Woods--with total sales expected to approach $500 million in the U.S. this year.
What's the draw? Titanium golf club heads are bigger and more powerful than wood or steel, and that's a plus for golfers who want to impress fellow duffers with a soaring tee shot. The bigger surface also helps preventing embarrassing whiffs. When Toski introduced its "Czar" driver in 1994, titanium drivers were virtually unknown in America. Today, Metal-Park supplies about $100,000 worth of titanium heads a month to Toski, says Bannikov.
Although more than 50 companies sell titanium clubs, the market is dominated by Taylor Made, now part of Adidas International, and the No.1 maker, Callaway Golf Co., also of Carlsbad. Says Ely Callaway, founder and chairman: "The demand for titanium-head golf clubs is big for Callaway and Taylor Made, but that's it."
Taylor Made and Metal-Park were brought together by Chicago commodities trader Joseph Demme, whose Mantraco International Inc. bought an interest in Metal-Park in 1995 and invested $250,000 in new equipment. That helped to improve quality--and snag the Taylor Made contract. Bannikov won't disclose current sales but estimates that monthly sales in 1998 will exceed $2 million. If all goes well, Metal-Park could be supplying heads for 20% of Taylor Made's titanium drivers by yearend, Demme figures. Taylor Made calls that an exaggeration.
What isn't an exaggeration is the role that future tech played in the deal. Says TM's Rugge: "Metal-Park is a window that allows us access to Russian technology. The new metals that could be the next titanium could be coming out of the former Soviet Union."
In Moscow these days, rich biznesmeni have taken up the capitalist game of golf with gusto. The Moscow Country Club, with a $27,000 annual membership fee, boasts one of the best courses in Europe, designed by Robert Trent Jones Jr. You won't see Bannikov on the links: His game is confined to indoor putting. But don't let anyone tell you that golf isn't rocket science.By Patricia Kranz in Moscow