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Out of the Woods: Callaway Golf

Ely Callaway took golf into the space age. now he plans to keep it on track for the next century

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By 1990 the Big Bertha was conceived, then the Great Big Bertha and the Biggest Big Bertha and Big Bertha Irons and Callaway X-12s irons and Steelhead woods and Hawkeye woods, the biggest trail of gold dust ever laid down in the history of the golf industry. "Demonstrably superior and pleasingly different."
Catching some of the Callaway gold dust was Senior PGA Tour player Bob Murphy. As Murphy prepared to enter the Senior Tour in 1992, he was negotiating club endorsement contracts. He and wife, Gail, visited Callaway in Carlsbad, looking over the operation as Callaway looked over Murphy. Another manufacturer offered more, but Murphy's wife was convinced about Callaway. "Right after we left the office, she said, 'This is where you want to be,'" says Murphy. "I won a couple of tournaments my first year and Ely tripled my contract. He didn't have to do it. He said, 'I told you I'd take care of you, and that's what I'm doing.' That's the way Ely works. You perform for him, he performs for you."  
An accumulation of gold dust gathers a man a measure of respect in a gold standard world. Public service adds a fuller dimension to that respect, and Callaway has been devoted to good works throughout his career. For more than 40 years he has been a major supporter of the United Negro College Fund, an affinity that grew from a childhood in the South. In 1970, just prior to a speech he was to give as chairman of the fund's corporate campaign at a fund-raiser in Atlanta, he was hospitalized. He tape-recorded the speech, which was delivered to an audience that was so hushed by the humility and moved by the charity of Callaway's actions that they made record donations.  
Bob Murphy recalls a day when he toured the plant with Callaway and was introduced to people in all phases of manufacturing and design. "He knew every one of them by name," says Murphy. "Then he apologized because he didn't know the last name of some of them. To think that he calls everybody who works for him by name says a lot about him."  
One employee of Callaway's whom most of us know by name is John Daly. The embattled pro golfer became a cause for Callaway in 1997. Long John, he of the gargantuan swings and monster drives, had found his career threatened by alcoholism, gambling and compulsive behavior. Convinced that Daly was dry, and certain that he was one of the best stories in golf, Callaway signed him to an endorsement contract and helped him pay off millions of dollars of gambling debts.  
"If you associate yourself with a professional golfer, you certainly want to associate yourself with one that's in the public eye, is generally favored and is a great golfer," says Callaway. "He has all those attributes. Those are his pluses. His minuses are his alcoholism [and his gambling]. We became convinced that it was reasonably likely that he had gotten back to the point where he wanted to live, that he wanted to play great golf, that he would depend on Alcoholics Anonymous to help him, and that he loved our golf clubs. We like a lot of the differences in him. He is one of the greatest shot makers ever, and that's a difference. People say, 'Wasn't it a big gamble for Callaway?' Hell, no. The gamble is his. If he drinks, then his life is in jeopardy. He loses support from us."
On September 15, Daly lost that support. Callaway fired him, saying that he violated his contract clause not to drink or gamble, then refused to accept help.  
When the golf industry went into the dumper in 1997 and continued its slump in 1998, Callaway Golf wasn't immune to the downturn. Callaway had retired as president and chief executive officer in 1993 and handed those roles to Donald Dye, though he remained very active as chairman of the board. He maintained his office, separated from Dye's by an electronically operating sliding wall. Under Dye's direction the company continued to grow, then started to diversify into other golf-related businesses, like publishing. With Callaway's stock taking a dive in 1998, the board of directors asked the man who founded the company, who put his name on every product, to replace Dye and find a way to drive up profits again.  
Callaway cut back on the diversification (though he has gone full blast with developing a new golf ball), took some big hits at the end of 1998 when he closed down unprofitable units, and brought in respectable profits to start 1999. The board was counting on the very force of Callaway's personality to lift the company. "I wouldn't quarrel with that assessment," says board member Bill Baker.  
It is likely, though not a certainty, that after Callaway launches his new golf ball in 2000 he will again look to step down from the presidency of his company. It is a company whose success is derived from the quality of its products, and the quality of the name that is stamped on each one of them. When the board of directors asked him to return to the helm in 1998, they did so because he was the man who gave birth to it all.  
"They knew I cared more about the future than anyone else," he says. "This is my baby. I started it. When a person puts their name on a company the products will reflect that person's objectives. A lot of people think it's self serving and egotistical. I don't."
Jeff Williams writes on golf for Newsday.
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