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
From the Print Edition:
Vince McMahon, Nov/Dec 99
Ely Callaway is talking about spirit, an easy thing to do considering he has enough of it to lead a dozen marching bands. In this case he's talking about the essence of golf, something of which he is a part. "We will not run afoul of the spirit of the game," he declares. "We run afoul of the spirit of the game in the opinion of 12 members of the Executive Committee of the USGA. We may do that. But we will not run afoul of the desires of 40 million golfers around the world because they want pleasure out of their game."
Feisty, opinionated, gentlemanly, Ely Callaway is the chairman of the Callaway Golf Co., the world's largest clubmaker. He is the man who brought you Big Bertha and its progeny. He is the man who led high tech to the forefront of the golf equipment market. And he is the man who took on the United States Golf Association last summer over the issue of the "trampoline effect." The USGA was concerned about the clubfaces of oversized drivers, such as Callaway's Biggest Big Bertha. It was concerned that these drivers imparted extra thrust to the ball. Callaway didn't think this was any of the USGA's concern and wasn't afraid to say so. Never has been, never will be.
"We ran an advertising campaign stating to the golfers of this country that we couldn't see any good reason why the USGA should deprive them of the pleasure of using their Big Bertha clubs or anything else like it," says Callaway in a Southern gentleman's high dudgeon. "The integrity of the game, the spirit of the game, is not threatened by the average player having more pleasure out of hitting his shots."
The USGA has since backed off the issue, and you can bet that Callaway had much to do with it. He won't tolerate someone fiddling with the business of amateur golf, which he contends is a world apart from the professional world, anymore than he countenances counterfeiters selling fake Callaways or rivals claims in print ads that their clubs are better than his. Amateurs, after all, propelled his company from a $5 million business in 1988 to an industry leading $698 million by 1998.
Even though he spends $20 million a year to have all manner of professionals play his clubs in competition, Callaway believes that the professional and the amateur game are distinct and shouldn't be governed by the same rules. He will also tell you he doesn't have to hire the pros, he just does. "There is no such thing as one game of golf." Callaway is rolling now.
"Competitive golf, which is primarily professional, affects 300 people in the world. Then there is golf for the rest of us, that's 40 million"--million ripples off his tongue. "If the professional community wants to put restrictions on itself, that's OK. In fact, that's probably the best idea, rather than having the average golfer penalized"--penalized explodes from his mouth--"by inhibiting design improvements that would enable him to enjoy the game more. The [average golfer] is accustomed to playing the game based on equipment advances and he's going to want to continue to do so. You can't take that away from them unless there is a good reason. There isn't one. Doesn't exist."
You can almost hear a chorus of angels singing hallelujahs.
There is a difference to Ely Callaway. You notice it almost immediately. In his modest office he creates a force field that makes your pants cling to your socks, the hair on your neck straighten and nerves in your stomach fray. When, in the English of his native Georgia, he says "Hi, how you all doin'?" it's as if he's turned the lights up and aimed them squarely at you.
Dick Helmstetter has been in Ely Callaway's spotlight a thousand times. Helmstetter, a former pool cue maker, is the chief club designer for Callaway and the man who conceived the Big Bertha driver. He has been enticed by the force of Callaway's personality. "Ely has an unequaled ability to focus on you when you're talking," says Helmstetter. "That's an extremely powerful personal tool. Some guys' eyes wander. If a phone rings, some guys have to pick it up. When Ely is talking with you, he's talking to you alone. Nothing else matters except what you're telling him, or he's telling you."
There is enough energy in Ely Callaway to run a small town for a week. His innovative and mischievous style has carried him to success in three different businesses--textiles, wine and golf. Though the specifics of the businesses may be drastically different, Callaway's operating philosophy has remained the same over five decades: "Demonstrably superior and pleasingly different."
That's the motto, the mantra, of Callaway Golf Co. There is nary a soul who works for Callaway--and Callaway knows every soul who works for him--who doesn't know that motto. It's imbedded in the Callaway culture, a living, breathing (some might say haunting) reminder of what makes Callaway Golf so successful. It also serves as the perfect description of Callaway the man.
At 80 years of age, Callaway has deep lines that etch the entire Mississippi River basin in his face. His dress is conservative--a blue blazer, a repp tie and gray slacks. His office impresses not with elegant appointments, but with artifacts: a picture of Callaway with President Clinton; a photograph from Madonna (whose book, Sex, was printed by one of Callaway's subsidiaries) inscribed "Keep it long and straight"; a placard from the University of California-Riverside awarding Callaway a chair in social responsibility "in recognition of the values and vision he has demonstrated in his life and work"; a picture of Bobby Jones, the immortal amateur who is a distant relative of Callaway; and a photo of a huge war cannon, a frightening part of Germany's arsenal in the First World War that the Allies referred to as Big Bertha.
Big Bertha, the cannon, did not swing the balance of power to Germany. Big Bertha, the driver, swung the balance of power in the golf industry to Ely Callaway. In overseeing the development of the Big Bertha in the late 1980s, Callaway, an uncommon man, became the champion of the common golfer in America, and around the world, for that matter. Sure, professional players loved it, played it, and got paid to use it. But it was the everyday player, from single-to double-digit handicappers, who embraced the club, who found for themselves it was demonstrably superior and pleasingly different. They could hit it, and that was the key.
Perhaps that's the reason that so many of Callaway's celebrity endorsers are not professional golfers, but duffers who happen to be well known. The unlikely crew comprises the likes of Bill Gates, Alice Cooper, Sugar Ray Leonard, Tommy Smothers, Graham Nash, Kenny G, Smokey Robinson, Mac Davis and Celine Dion.
With a voice that's a little tinny, a little raspy, Callaway extols the virtues of his golf clubs. His delivery, with nouns and verbs occasionally exploding like firecrackers, is somewhere between speech and preach. It's pleasingly different, even it takes a minute or two to adapt to the sudden onrush of information and emotion wrapped up in sentences that end a decibel or two above where they start.
"Up until 1991, what was wrong with drivers is that everybody hated them," says Callaway, noting the year that the Big Bertha was introduced. "The driver was the least favored club in the bag, or the most feared. They bought them but they didn't like them. They had no confidence they were going to enjoy them. I'm talking about the attitudes of most golfers. That's what I knew. Big Bertha changed the attitude of the masses from one of fear about the driver to one of affection. Today, I think it's a fact that the driver is the most favored club in the bag. They love to drive now because they get more satisfaction and less fear. That's what we did. You can't do that with an ordinary driver. The public is smart."
Callaway had always been a good player, starting at the age of 15 in his hometown of LaGrange, Georgia. He won the club championship at the Highland Country Club from 1936 to 1939 when his parents were members. He remains an above-average player--don't give him any strokes in a $2 Nassau today. And don't try to take him on in business. Callaway has shown he is not afraid to go to court--even in Korea--to protect the integrity of his clubs.
The Callaway style was shaped during his five decades in American corporate life. He graduated from Emory University in Atlanta in 1940 with a degree in history, then jumped right into the Second World War.
His family had been in the textile business (Callaway Mills), and he didn't intend to follow the familial path. But the Army decided to capitalize on his family business history, sending him to the central procurement office for all textiles and apparel. By the time he was 24 he had been promoted to major in the Quartermaster Corps. He was selecting garments and authorizing the spending of as much as $700 million a year, as well as convincing large companies that it was their patriotic duty to allow the Army to take over their mills to make uniforms. He learned the textile business, and the textile business learned about him.
After the Army he took a job in Atlanta as a salesman for Deering, Milliken & Co., a large textile firm. In 1949, he was sent to New York to run the company's woolen and worsted division. It was in New York that Callaway began to brand his name on the hide of corporate America. Under his watch, Deering, Milliken took a recently developed fabric from Dupont called Dacron polyester and blended it with light worsted wool. The resulting fabric, called Viracle, was touted as an improvement in men's summer dress clothing. It was lighter, wrinkle resistant and repelled the rain drops of summer showers, a performance characteristic that Callaway, an inveterate showman, demonstrated one day at a Connecticut country club.
For a special Life magazine article on Viracle, Callaway arranged a photo shoot with models at the Wee Burn Country Club in Darien. He invited the Life staffers to a lunch, but before it began he took them outside to see the models in their Viracle suits. Using one of the club's irrigation hoses, he drenched the models, then asked everyone back into the clubhouse for lunch. After lunch he paraded the dried-out models before the rather astonished magazine staffers. "It was demonstrably superior," says Callaway of the fabric, which is still widely used today.
Callaway stayed in New York while moving, in 1954, to textile giant Burlington Industries, where he would serve as president from 1968 to 1973. There he developed the idea that textiles, previously thought of as commodities, could be brand fabrics, and Burlington became a sought-after household name across America. He was also quickly developing a taste for good food, good wine and good cigars. Cubans were legal and Callaway loved them. "I started smoking cigars when I was 30, about the time I started paying attention to serious food," he says. "At Burlington I used to smoke six to eight a day in the office. Long before Castro I was hooked on Havana cigars. Ramon Allones, that was a great old brand. I couldn't afford them but I smoked them anyway. Partagas and Ramon Allones. Today, Cohiba, a little contraband."
While at Burlington, Callaway's developing sense of taste for wine led him to plant the root stock, so to speak, of a different career, one that accelerated a little more quickly than he had planned. When he was denied the chairmanship of Burlington in 1973, at age 54, Callaway resigned to devote his time to the tiny company he founded in 1969, the first one to bear his name. Callaway had established Callaway Vineyards in Temecula, California, not far from where his golf company is today, in Carlsbad. The move was bold and brazen, though carefully calculated.
Acting on research by scientists at the University of California at Davis, Callaway planted a 140-acre vineyard in an area where no one had made wine before. Callaway beat the Southern California heat by plowing in the Rainbow Gap, where cooling Pacific winds counter the coastal desert heat. He hired a German winemaker away from the Napa Valley and set about producing wines that were demonstrably superior and pleasingly different.
And he bucked the wisdom of patrician winemakers to the north, who deemed Southern California only good for freeways, amusement parks and orange growing. "We had a policy that we were not trying to duplicate European wines," says Callaway. "We have our own soil, our own climate. We won't pretend to make wine like the Europeans do. We sold the difference, not the sameness."
Callaway still knew the value of a great story in helping to promote a venture. In 1976, England's Queen Elizabeth II was coming to New York for America's Bicentennial celebration and would be the guest of honor at a gala luncheon at the Waldorf Astoria. Grayson Kirk, the president of Columbia University and a wine expert, was on a committee that was selecting a wine for the luncheon.
Kirk also happened to be a member of New York's University Club, as was Callaway. The story, according to Callaway, goes like this: When Kirk tasted Callaway's 1974 White Riesling for the first time, he called Callaway at the vineyard. "We've picked your White Riesling to go on the University Club wine list," Callaway recalls Kirk as saying. "How many cases do you have?"
After a quick consultation in the vineyard's tiny office, Callaway replied, "About 60."
"Hold them if you can," said Kirk, "so that I can recommend that the wine be served at a special luncheon for the Bicentennial at the Waldorf."
Three weeks later Kirk called back to tell Callaway that he had convinced the selection committee, which included members of the Pilgrims Society and the English Speaking Union, that this daring Southern California white wine should be served to the queen. It stunned the wine world that the queen should be served anything but French grand cru.
Callaway was accused of bribing the committee by giving the wine away or using his influence with former President Richard Nixon. He denies it, with exploding verbiage. "The committee wanted me to give it away, but I said I wouldn't do that," says Callaway. "I said I'd pay a corkage fee to the Waldorf Astoria since it wasn't on the hotel's wine list. And I didn't have any influence at all with Richard Nixon. It didn't taste like any other wine that Dr. Kirk and his committee had tasted. The wine appealed to a key person, and that was why it was selected."
The story got even better after a high-ranking English official told Callaway at the luncheon that the queen had very much enjoyed the wine, had asked for a second glass, and had asked to meet Callaway. At the introduction, Kirk happened to be there, along with several members of the press. It was a public relations bonanza. In 1981, Callaway sold his vineyard to Hiram Walker & Sons for a $9 million profit.
The sale of the vineyard left Callaway free to do something, or nothing at all. He was a well-to-do man, comfortable in the Southern California lifestyle, a frequent visitor to Palm Springs. It was at the Vintage Club in Indian Wells, where he is a member, that his next career began. In the pro shop he happened to catch a glimpse of what at first appeared to be vintage golf clubs. Rather they were newly manufactured clubs, a putter and a wedge with hickory veneer over their steel shafts. They were new relics. He played them, found them different, and two weeks later bought the struggling company, Hickory Sticks USA.
That story, and how Hickory Sticks grew into Callaway Golf, has been told a thousand times. The key element to Callaway's success was the recruitment of an eclectic group of researchers and marketers who eventually designed and sold the Big Bertha driver to a golf community hungry for superior performance even if it came at a superior price. One of the recruited (or was it converted?) was Dick Helmstetter.
Helmstetter's chief occupation was designing and building cue sticks in Japan, though he also had experience designing wooden golf clubs for the high-end Japanese market. Through a mutual acquaintance, Callaway and Helmstetter played a round of golf together at the Vintage Club. Callaway talked with him about the use of wood in golf clubs, followed that up with phone calls to Japan, and eventually went to Japan to see Helmstetter's cue stick operation. In 1985 Callaway talked Helmstetter into not only going to work for him, but even writing Callaway a check for $52,000 for stock in the new company. "It ticked off my wife," says Helmstetter, "but I had attached myself to Ely's rocketship because his track record in business was so awesome. Ely had left a trail of gold dust wherever he went."
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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