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Golfer Media Consumption & Consumer Insights 2014 Agenda

 How Golfers Consume Media

– Unique strengths by media type

– Engagement levels across mediums

 Golfer expectaons for 2014: percepons, parcipaon, spending and retail channel preferences

 Golfer atudes in 2014, ﬁve year trends and their implicaons for the industry

2 Beth Scholze August 22, 2013

3 OVERVIEW

1,400 GOLFERS (Avid, Core & Casual) • Demonstrate how modern-day golfers consume golf media across all platforms • Measure the value of multi-platform for golfers • Segment golfers by behavioral & demographic variables to determine key subgroups of media consumers • Gain perspective on how selected representative golfers consume media

4 VORACIOUS. Golfers are increasing their usage of all media channels to enhance their golf experience, and television, print and websites are most prevalent. ADDITIVE. In a fragmented environment, new media channels have seen slow but steady adoption. However, new media consumption isn’t coming at the expense of traditional media. DIFFERENT. Golfers prioritize their media for golf in different ways than they do for other sports. DIVERSE. Cross platform usage patterns show golfers perceiving different media having unique strengths across various content areas. ENGAGEMENT. Print golf media shows particular strength in delivering content in an undistracted environment, while heavy DVR usage and multi-tasking behaviors create a conundrum for television advertisers.

5 65% REGULARLY USE MAGAZINES OR INTERNET…one of the biggest combinations.

TELEVISION LAPTOP/ DESKTOP INTERNET 63% SMART- PHONE 43% APPS SOCIAL MEDIA 19% MAGAZINES 18% EMAIL 45% MOBILE INTERNET NEWSPAPERS 25% 15% TABLET APPS 37%

% of golfers regularly 12% consuming each media for golf content

• Television and magazines are the two highest consumed golf media • Magazines’ performance is particularly strong among avid golfers

6 MEDIA’S NEW INFLECTION POINT:

With the proliferation of new media—those most engaged see new media as additive rather than as replacements for traditional, trusted sources. “ – November 12th, 2013 ” In fact, it appears to have FUELED the consumption level of golfing consumers.

7 VERAGE OF EDIA A # M SINGLE SOURCES DIGIT HANDICAP GOLFERS PRIVATE CLUB 4.6 MEMBERS

4.8

GOLFERS HHI $150K AVID + GOLFERS

GOLFERS 4.5 4.1 HHI < $50K

3.4 CORE GOLFERS CASUAL GOLFERS 3.8 2.8 Average # of media sources regularly used for golf content

8 1ST TIER MEDIA

FOLLOWING GOLF ON LAPTOP/DESKTOP

READING MAGAZINES WATCHING GOLF ON TELEVISION

Golfers are spending more time than a year ago consuming golf content across all 1st Tier media—including all key golfer groups: Avids, Single Digit Golfers, and st those with HHI $150K+ Golfers are twice as likely to be 1 Tier Media outperforms new spending more time vs. less time with media in the more time/less time 1st Tier Media (Index 199) aggregate Index (199 vs. 172)

9 • 3 in 4 own or use a smartphone on a regular basis • More than 6 in 10 (62%) own or use a tablet on a regular basis • Younger golfers and private club members are the most likely to own or use mobile devices Apple iPad Apple iPhone 37% 38%

Android Phone 40% Amazon Kindle Fire Google Nexus, B&N Tablet or Other 23% Touchscreen Tablet

27% 10 THE ROLE, USAGE AND PRIORITIZATION OF GOLF MEDIA

11 MAGAZINES ARE #1 ACROSS ALL MEDIA IN PROVIDING THE BEST INFORMATION ABOUT NEW GOLF EQUIPMENT.

Magazines also excel in travel and instruction-related content.

TOP CONTENT AREAS TOP PERFORMING GROUPS

Entertains me. Older Golfers (50+) Casual Golfers

Provides the best news coverage and analysis Older Golfers (50+) of golf tournaments. Casual Golfers

Casual Golfers Makes me want to play more golf. Non-Private Club Members

14 MAGAZINES AND INTERNET WORK TOGETHER AND DELIVER COMPOUNDED AD EFFECTIVENESS.

They excel in similar attributes such as containing the most information that can’t be found elsewhere and being the most informative.

Thinking for a moment about golf-specific advertising on various Q: media, which of the following types of advertising do you find to be:

MAGAZINES INTERNET

• Least intrusive • Containing the most • Containing the most information that can’t be information that can’t be found elsewhere found elsewhere • Most informative • Most informative • Most useful • Most credible • Most trustworthy

15 GOLF MEDIA USAGE OVERALL VS. MEDIA USAGE IN ALL SPORTS:

MAGAZINES RANK HIGHER

Magazines and email both rank 2 spots higher for golf content as compared to All Sports in general.

Media sources used to RANKING GOLF ∆ VS. ALL SPORTS ALL SPORTS follow THESE SPORTS, 1st TV +2 TV over the past six 2nd Magazines Computer Internet Sites months: 3rd Computer Internet Sites Newspapers 4th Newspapers +2 Magazines 5th Email Radio

6th Mobile Smartphone Apps Mobile Smartphone Apps

7th Social Media Email

8th Mobile Internet Sites Social Media

9th Radio Mobile Internet Sites

10th Mobile Tablet Apps Mobile Tablet Apps

16 Golfers Watch 25% of Golf TV Content Via DVR and Skip Over Half of Ads—Resulting in Net Inefficiencies of Around 15% % Time Watching % Advertising Net Avoidance Recorded Skipped Over Telecast

Total Golfers 24% 58% 14%

Avid golfers under 50 30% 52% 16%

Private Club members 36% 51% 19%

HHI $150K+ 28% 55% 15%

Golfers Are 63% More Likely to Multi-Task When Watching Golf on TV vs. When Reading Golf Magazines

17 MORE IS MORE. New Media consumption is not coming at the expense of 1st Tier Media; Golfers are consuming more across all channels

UNIQUE BENEFITS. Although they consume more across all channels, golfers recognize that each form of media brings unique benefits

ENGAGEMENT. Print golf media shows particular strength in delivering content in a uniquely undistracted environment

DIFFERENT STROKES. Golfer prioritization of media differs from that observed for other sports verticals; with a unique synergy between online and print media.

18 The Year Ahead

• Golfer Perspecves on Retail, The Sport and The Economy:

19 Two Minute Take-Aways

 The TOURs Resonate: Interest and popularity show growth, strength, and lack of saturaon  Golf Related Parcipaon–More of the Same: Flat is the new up, as parcipaon intent connues to be bullish. Parcipaon growth concerns are more pronounced.  Slight Dip in Ancipated Spending Suggests Connued Market Share Bales: Less golfers expect to buy, but those who will, expect to spend more.  When does product innovaon hit the wall? Slightly lower buy-in regarding new product innovaon. However, product trial trends and a purchase process that remains more complicated, suggest acve OEM parcipaon in that process.

20 Two Minute Take-Aways

 Finally—Golfer opmism about the overall economy and their own future prospects, align: Golfers demonstrate ﬁve year highs in consumer conﬁdence  Private Clubs—An end to the negavity, but sll work to be done: Net membership gains driven by focus on younger members and families, as discounng subsides. Women remain a relavely untapped opportunity  Are we geng comfortable with Life’s Frenec Pace? Golfers sll largely acknowledge a society of connuous updates, but their capacity to deal with the barrage seems to be improving their outlook.

21 Background, Objecves and Methodology

 Winter 2014 SLRG Sports Omnibus – Assess the atudes and percepons of golfers

 Iniated by Sports and Leisure Research Group in 2009

 2014 online survey of over 1,200 golfer respondents – Fielded January 3-7, 2014 – All golfers played a minimum of twice per month in season during 2013

22 Tour Popularity and Fans: Posive Movement Across Tours

More Popular I Watch and Follow Closely

43% 72% 64% 43% PGA TOUR PGA TOUR 66% 29% 2014 26% 64% 2013 2012 19% 14% 2011 14% 12% LPGA TOUR LPGA 15% 14% 11% 13%

2014 2013 2012 2011 Private Club Members, Mid Westerners, beer players out index golfers at large

23 Parcipaon/Spending Trends: More of the Same?

 Golfer bullishness regarding intended parcipaon increases in 2014 is ﬂat to slightly oﬀ

Do you expect to/Did you actually play the Do you expect to spend the same amount or same amount or more in…? more next year?

Expected Actual

94% 96% 96% 95% 96% 76% 76% 77% 78% 77% 76% 80% 79%

28% 28% 32% 28% MORE

2010 2011 2012 2013 2014 2011 2012 2013 2014

24 Why Golfers Are Playing More

Its about people and game improvement: Needed upck in family golf is a posive

43% 44% 37% 38% 34% 30% 31% 25% 21% 18% 16% 13% 11% 12% 7% 9%

I have more golf partners to My game has improved My family is more involved in I'm playing more business play with golf golf

2011 2012 2013 2014

25 Sharp Drop in Conﬁdence Regarding Parcipaon Growth

 Aer 2013’s Posive Spike, Golfer concerns exceed 2012 levels of 67% agreement

Agreement with statement: “The game of golf is facing major challenges in regards to growing overall parcipaon”

Median Median Agreement: Agreement: Disagree Disagree Disagree 6 of 10 7 of 10 15% Strongly 15% 22% Agree Strongly Strongly Agree Neutral Agree Neutral 35% 40% 15% 44% Neutral 18% 18% Agree Agree Agree 27% 25% 27% Agreement: 60% Agreement: 71% 2013 2014

26 Percepons On New Equipment Purchasing

 Slight drop in perceived equipment innovaon accompanied by upck in buyer confusion as proliferaon of new product introducons connues

2011 2012 2013 2014 AGREEMENT WITH FOLLOWING STATEMENTS: Top 3 Box Top 3 Box Top 3 Box Top 3 Box

New golf equipment connues to become more 56% 52% 59% 54% technologically innovave every year

Buying new golf equipment has become a more complicated 38% 36% 35% 37% process in recent years

Buying the right new golf equipment can help me to 30% 25% 29% 27% immediately improve my game

I've found one brand of golf equipment that I plan to sck 24% 24% 26% 24% with, when I make my next purchase

I won't buy new golf equipment without trying it out ﬁrst on NA 23% 22% 24% the golf course

27 Golf Purchasing Trends

 2014 is shaping up to see connued bales for market share as expectaons for purchasing golf equipment is ﬂat to down in most categories.  However, those looking to buy expect to spend at meaningfully higher per cap levels in seven of eleven categories  While less golfers look to purchase irons and puers in 2014, those who will expect to spend nearly 9% more on each category.  This indicates a connuaon of the observed increase in 2013 vs. 2012 per cap price achievement observed in six of the eleven measured categories  Golf balls and golf shoes are showing parcular strength

28 Key Year-Over-Year Trends

Category Purchasing:

2013 vs. 2012 Meaningful Increases in % Purchasing • Golf Shoes • Replacement grips

2014 vs. 2013 Meaningful Purchase Expectaon Decreases • Irons • Puers

29 Key Year-Over-Year Trends

Per Cap Price Achievement: Reported 2013 Per Cap Dollars Spent Higher than Expected 2013 Spending • Golf Shoes • Puers • Wedges

Reported 2013 Per Cap Price Achievement Increases Over YAG • Golf Balls (+11.7%) • Golf Bags (+8.3%) • Irons (+7.1%) • Golf Shoes (+5.0%) • Drivers (+3.8%) • Wedges (+3.6%) Expected 2014 Year-Over-Year Per Cap Spending Increases in Seven of 11 Measured Categories Up >5%: Up 4-5%: • Wedges • Fairway Metals • Puers • Golf Shoes • Irons • Golf Balls • Hybrids

30 Overall Spending Expectaons on Golf Equipment Are Flat

Q Overall, compared to 2013 do you expect that your 2014 total golf related spending for equipment and apparel will be…?

Less 23% More 28%

The Same Amount 49%

31 Retail Decisions Sll About Value, Though Value Percepons Abound

TOP 3 BOX AGREEMENT

65% 67% Quality service can make the 61% 64% 63% ulmate diﬀerence in what I buy

If I see something I like, I don't 23% 21% 20% worry about the price 16% 19%

Purchase decisions for me are 65% 65% 67% more about substance than 63% about style 41% 37% There are so many good deals 31% these days, that I rarely ever pay full price anymore

2010 2011 2012 2013 2014

32 Golf Retail Preference: “Concrete” Strong; Green Grass Rebounds

Q Where are you most likely to make your next golf equipment purchase?

39% 37% 37% 38% 35%

28% 23% 20% 21% 21% 21% 25% 17% 20% 19% 20% 15% 16% 14% 13%

Summer 2009 Winter 2010 Winter 2011 Winter 2012 Winter 2013 Winter 2014

Off-Course Specialty Sporting Goods Retail Over the Internet Green Grass

► Online purchases signiﬁcantly more likely for golfers under age 35 (18%); Green grass remains a mainstay for private club golfers (58%); Mainline Sporng goods has resonance for less aﬄuent and NorthEast golfers

33 …Golfers’ Outlook is on the Rise

 Five Year Highs in Short and Long Term Opmism

TOP 3 BOX AGREEMENT

58% 53% 56% 50% 50% 49% 49% 51% 44% 39% 37% 33% 33% 28% 30% 30%

I plan to connue working even in I invest so I can rere early This year will be a beer year for I plan to spend acvely on useful rerement me than last year pasmes, in my rerement

2011 2012 2013 2014

34 Private Club Member Retenon vs. Arion: Return to Posive Turf

MEMBERSHIP LEVELS OVER THE PAST 3 YEARS

Lost Membership Flat or Consistent Gained Membership

Report a loss in membership Report a gain in membership 2014 26% 35% 39%

Report a loss in membership Report a gain in membership 2013 36% 31% 33%

Report a gain in Report a loss in membership membership 2012 52% 26% 22%

Report a gain in membership 2011 Report a loss in membership 51% 29% 19%

Base: National Sample of Private Club Members

35 The State of Private Clubs: Distancing the Depths

 The worst appears behind us

TOP 3 BOX AGREEMENT

56% Private clubs in general, need to make 58% aggressive changes to remain relevant in the coming years 60% 49%

40% My club must make aggressive changes to 39% remain viable in the coming years 46% 35%

31% I'm concerned about the ﬁnancial stability 36% of my club 41% 35%

2014 2013 2012 2011 Mean: 10 point scale Base: National Sample of Private Club Members

36 Private Clubs: Heeding the Call to Aract Younger Members

 Welcome emphasis on juniors, family, stems the de towards discounng.....But are Women Sll A Second Thought?

TOP 3 BOX AGREEMENT 57% 53% 49% 43% 42% 39% 40% 33% 35% 34% 30% 31% 27% 28% 29% 27% 25% 24% 20% 17%

My club has made concerted My club has aggressively My club has been pung more My club recently instuted a My club has been pung more eﬀorts to aract younger reduced the cost of membership emphasis on junior golf variety of new non-golf emphasis on women's golf members in the past few years to aract new members over programs recently programs to aract families programs recently recent years

2011 2012 2013 2014 Mean: 10 point scale Base: National Sample of Private Club Members

37 Golfers’ Overall Economic Outlook…Finally, a Posive Reversal

 …Perspecves on Employment are Parcularly Impressive

The % of golfers who strongly believe that the US will TOP 3 BOX AGREEMENT fully avoid recession in 2014 doubles from 2013

60% 59% 60% 61%

40% 34% 34% 27% 24% 23% 19% 16% 8% 4% 2% 5%

There's really no such thing as job We have seen the U.S. I feel beer about my ﬁnancial People will go back to spending security any more unemployment rate reach situaon today than I did a year freely on luxuries again this year boom, and it will add jobs this ago year

2011 2012 2013 2014

38 Could Life’s Pace be Normalizing?

 Golf remains an “oasis” for many

TOP 3 BOX AGREEMENT

82% 81% 73% 75% 62% 64% 55% 59% 41% 42% 36% 36% 37% 39% 40% 40% 39% Sll the strongest 29% 33% 31% overall agreement among 44 statements

We live in an age of constant Golf is my personal "oasis" from There's too much new I'm spending more me these Today there is more of a priority updates day-to-day chaos technology to keep up with days with friends and family, on geng things done more than I did in the past quickly with less resources

2011 2012 2013 2014

39 The Year Ahead on TOUR

 Olympic Golf not a threat to Ryder Cup/Presidents Cup  Golfer Appete for TOUR telecasts is Insaable  Four in Ten Connue to Believe that Tiger will win another Major in 2014

TOP 3 BOX AGREEMENT

I expect Tiger Woods to 41% win a Major in 2014 39%

The inclusion of golf in the Olympics will 17% diminish excitement surrounding the Ryder Cup and President's Cup 2014

There's too much golf on 2% 2013 television

40 Final Thoughts

The Market:

 The Equipment Market: Less Diﬀerenaon, More Choices, Tougher Decisions: 2014 may be a more compeve marketplace, but the rewards may also be greater for those who can break through the cluer.

 An End to the Malaise: Upcks in consumer senment and perspecves on the macro-economy may enable golf facilies to take a more inward look.

Media Consumpon:

 Golfers and Media: More Is More: New Media consumpon is not coming at the expense of 1st Tier Media; Golfers are consuming more across all channels.

 Golf Media—Unique Beneﬁts: Although they consume more across all channels, golfers recognize that each form of media brings unique beneﬁts.