Note to Readers:  The CalBizBlog and California Business Minute Teams will be providing updates
to the Maverick's competition for 2009.  In the meantime check out www.maverickssurf.com.
 
TJ
     
             
                   The Big Surf’s Up: A Review of California’s Surfing Industry



Introduction
Californians recently had the opportunity to witness a big wave surfing competition. The competition known
as Maverick’s is a world-famous competition located a half mile from shore at Pillar Point Harbor, north of
Half Moon Bay.  The competition occurs only during the winter, just after a strong winter storm has occurred
in the northern Pacific Ocean that creates waves between 25 and 50 feet in height.

Maverick’s is a competition (invitational) for the world’s finest big wave surfers.  Very few riders are experienced
in this activity and of those that are, only a select few are willing to risk the hazardous conditions at this competition
that occur when the conditions are right. 

The all-day competition drew an estimated crowd of 40,000 to 50,000 that gathered on the cliffs and beaches
to watch, while another 10,000 spectators wanting to avoid the traffic jams gathered to watch it at AT&T Park in
downtown San Francisco to see it on the stadium’s big screen in center field.  And yet thousands more from
across the state, nation and world watched  the competition streaming live on the Internet site You Tube all
fascinated with the daredevil antics of these surfers.

Maverick’s, illustrates that surfing is still very much intertwined as part of the culture of California.  And for
California and its economy, surfing has not just endured but matured into a sophisticated subsector of
the sports industry that continues to see significant growth.

                            


Surfing History
Surfing can be dated back as far as 1500 A.D where it was part of ancient Polynesian culture. Rituals were
all based around surfing, special chants, dances, songs and even prayers show how important surfing was
to these people. Tribal chiefs would use it to prove their skills and rank and would have their own breaks that
nobody else would surf. Their boards could be as large as 25ft and the type of wood used to make the board
would depend upon the riders’ status in society.

The first actual recorded sighting of surfing was in 1879 when Captain James Cook was on his 3rd expedition
of the Pacific. Cook was sailing around the Hawaiian chain of Islands and brought his crew to the Island of Hawaii
(Main Island).  During his stay, he and crew entered several pages into the ships log explaining how the locals at
Kealakekua Bay rode giant waves into shore. They noticed how they would paddle out through large surf to where
the sea was calm. As the swell built they would paddle and catch large waves, riding them to shore. After Cook's
findings of Hawaii it became a destination for Captains, adventurers and missionaries. The effect of Western
Culture on the Hawaiian Islands impacted their rituals and traditions. The traditions were less followed and along
with those the ritual of surfing.

By the mid 1900's surfing almost died out, with only a dedicated few still practicing the art of wave riding. However,
a teenager named Duke Kahanamoko and his friends would meet and surf at Waikiki beach in 1905 and later they
formed their own surf club named ‘The Club Of Waves' and later named the Beach Boys of Waikiki. During 1908
the Hawaiian Outrigger Canoe Club was also founded and the two clubs would have friendly competitions.
Beach huts where erected and by 1915 the club had over 1000 members.
 
By this time Duke Kahanamoko was famous for his surfing and as a fantastic athlete. Duke was a 3 time
record holder in swimming. While traveling through California, en-route to the summer Olympics, he gave surf
demonstrations in Santa Monica and Corona Del Mar which caused great interest. Duke soon became world
famous for his achievements in the Olympics and would use his celebrity status and new found fame to introduce
surfing to the world.

Australia was vaguely knowledgeable about surfing but in 1915 after a visit from the Duke, riding waves along
the coast at Manly, Australians immediately became hooked and shortly would became one of the great surfing
powers of the world.

During the 20's and 30's in California, surfing found its beginnings, but it would not be until after World War II
specifically in the early 50’s that surfing would see significant interest.  Dr. John H. Ball or ‘Doc Ball’ as he was
known, was a surfer and photographer and found surfing to be the perfect method of stress relief from his daily
profession as a dentist. If he wasn't working or surfing you could find him documenting sessions in the surf with
a waterproof camera. Jack O’Neill, who now presides over the internationally recognized family sportswear business
that bears his name, remembers his entre into the surfing.  He opened a surf shop along San Francisco’s coastline;
selling surf boards made of redwood never thinking that the passion of surfing would blossom into the billion dollar
industry that it has become. In a interview with the San Francisco Chronicle, he recalls that surfers were consider
outcasts. O’Neill identified that people looked at surfers as bums and nonproductive.  Surf and surfers were a dirty
word.

But then in 1959, Hollywood changed all of that with the 1959 movie, ‘Gidget’ the tale of a southern
California tomboy who longed for the camaraderie and exhilaration of the surfing boys of California. This
unleashed an enormous interest into what would become defined as a sport as competitions became
 more frequent and help to drive its growth and legitimacy. 

California was seeing the popularity of surfing increase in the early 60's as surfing broke into the mainstream. 
Journalists, film makers, musicians become interested in surfing. Newspaper articles, magazines, films such
as the documentary ‘The Endless Summer’ and music by the ‘ Beach Boys’ about surfing appeared and the surfing
industry was born. The biggest innovation in the surfing world was probably the modern foam boards. In 1958
the first foam core “blank” for a surfboard was the brain child of Hobie Alter and Gordon ‘Grubby’ Clark. This type
of method of making a board allowed the board to be easily shaped, it was light and when covered with resin and
fiberglass it was unbelievably maneuverable through the water. Boards soon became a lot more available and
surfing was now the ‘in' thing, the beach was the place to be. During the sixties boards got shorter, allowing the
maneuverability on the wave's to increase. And as the technology improved, so did the surfing and its
industry.

The Industry
The Aliso Viejo based Surf Industry Manufacturers Association, SIMA released a report this summer
that identified industry sales have increased nearly 15 percent in two years, and likely continue to grow in the
future.

The report indicated that surf equipment and fashion-related retail sales have increased to $7.48 billion in
2006 up from $6.32 billion in 2004 and $4.5 billion in 2002. The report cited factors contributing to the growth
of the industry were the mainstream popularity of the lifestyle, the growing appeal of surfing to women and
brand diversification, such as the incorporation of new apparel lines under traditional surf labels.

Surfing continues to receive support from Hollywood in 2002 with the movie ‘Blue Crush’ which provided
yet another spike to the industry.  But retailers identify that surfing is a youth oriented industry. SIMA officials
insist that surfing is not just a sport but also a fashion trend, one that has manifested itself into a billion
dollar industry for California. Apparently the trend transcends California to landlocked youth that want to
emulate the fashion statements of California in places like the mid west states of Nebraska, Iowa and
Oklahoma.

Validating this is a frenetic three-day surf industry trade show held twice yearly in Southern California called the
Action Sports Retailer Trade Expo, ASR, One is held at the Long Beach Convention Center and the other at the
San Diego Convention Center; The ASR Expo is where surf companies display their newest wares-everything
from surfboards and surf trunks to water slingshots and sparkling tanning lotion-for surf industry retailers and
the surf industry at large.

Other action sports represented at ASR include skateboarding, snowboarding, climbing, BMX, wakeboarding,
kite boarding, and sail boarding. The cacophonous hive like convention hall atmosphere is filled with rows of
surf company booths, hundreds of TV screens showing repeat-loop DVD and video presentations, pro surfers
in search of sponsors, roving bikini models in thongs and high-heels, and legions of retail buyers.

ASR had its origins in the 1979-founded Action Sports Retailer magazine, published by Southern California
surfers Jeff Wetmore and Steve Lewis. Wetmore was inspired to create a surfing trade show after noticing that
virtually all surf shops had pushed surfboards to the back of the store, and were giving over more display space
to a fast-multiplying assortment of beachwear items and surfing accessories. The first Action Sports Retailer
show was held at the Long Beach Convention Center in February 1981, drawing 150 companies and perhaps
500 registered buyers. The show grew in popularity as the surf industry itself took a sharp turn up in the second
half of the decade; the San Diego show was added in 1989. Fashion shows, book signings, meet-and-greet
celebrity appearances, surfboard auctions, and after-hours concerts all became part of ASR as the shows grew
bigger and more complex.

Today ASR Expos books over 500 companies and draw 20,000 trade and retail attendees.

                                   SIMA’s Top Surf Industry Trends

1.    Brand Penetration:  Retailers have more brand choices but are carrying fewer
        brands and product categories

2.    Internet Sales:  While only 23% of core retailers use Internet/Catalog sales,
        those who use it have seen an increase averaging 29.5%.

3.    Footwear:  Overall shoe sales are down but sandals sales are up to over $300
        million, an increase of over $50 million since 2004.

4.    Apparel: Largest product category with an increase of 9.9% in sales in 2006. 
        Men’s boardshorts have continued to see strong growth as well.

5.    Wetsuits: While wetsuits represent a small percent of core sales, dollars are
        up 30% due to price points.

6.    Accessories: This high-margin business (which includes sunglasses, watches, 
        bags, hats and belts) saw slight sales growth of 4.3%. The make-up of what
        contributes to accessory sales is shifting, with the sunglass category
        contribution up 9% from 2004 while all other category contributions remained
        relatively flat.   

7.    Hard Goods: Sales are up over 24%, from $901 million in 2004 to $1,118 billion 
        in 2006 

Main Street and Surfing
When one thinks of the surfing in California, the communities of Ocean Beach, Pacific Beach, La Jolla, Malibu,
Redondo Beach, Huntington Beach, Santa Cruz and Pacific Palisades are just some that come to the forefront.  
No community in California does a better job of understanding the economic impacts of surfing on its economy
than Huntington Beach.  And impart that could be the reason why they have chosen the self proclaimed moniker
as ‘Surf City’.

Huntington Beach hosts fifteen pro-surfing events each year and as many as 70 amateur contests, but the annual
U.S. Open accounts for nearly 60 percent of the revenue generated from these events. On average, close to 250,000
people attend the contest and its associated expo each year. Certainly local hotel rates are highest during the week
 of the U.S. Open, and retailers do more business during that week than they do at Christmas.

City number crunchers estimate that each contest spectator spends an average of eight dollars in downtown in
addition to other expenses for parking and hotel/motel accommodations. Huntington Beach officials identify that
the U.S. Open adds $50,000  in tax revenue to the city coffers.

Previously,  Huntington Beach had never tried to assess surfing's total contribution to the overall local
economy.   But they got intereted in the impacts. Today the city constantly assesses the citywide economic impacts
from events specifically the US Open. This assessment tracks hotel rooms booked, food consumed, length of stay,
and all the multipliers associated with large events.

Lifeguards count beach users along the entire eight miles of its beach. Based on their count, it is estimated that
an average of 5,000 to 10,000 surfers use the beach per day - or more than three-million surf days per year. This
works out to be about 25 percent of the eleven-million total beach-user days per year.

In 2000, the city collected around $26 million in sales tax and the beach area accounted for around 40 percent
of that total. A city assumption is that if surfing represents more than 25 percent of beach activities, then surfing
probably directly accounts for ten percent of the city's sales tax.
 
Other revenue streams from surfing include hotel/motel taxes and revenues from parking or beach concessions. 
It was identified by city officials that surf-related expenditures generate about $17.3 million in revenue -- or more
than fifteen percent of the city's total General Fund budget of $112 million.

The city believes that surfing directly contributes between ten to fifteen percent of the entire economic gross
product of Huntington Beach. The city’s beaches generated $135 million in federal tax revenues and $25 million
in sales-tax revenues. So surfing in Huntington Beach -- assuming that it's ten to fifteen percent of all economic
activity -- generates close to $20 million tax dollars a year for the federal government on top of its $17.3 million
contribution.

Huntington Beach is an anomaly in understanding the impacts. All along the California Coast the story repeats
itself, but unfortunately surfing and its impacts is less clearly defined.

Maverick’s Concluded
Why is it called Maverick’s?  In early March of 1961, three surfers, Alex Matienzo, Jim Thompson and Dick
Knottmeyer, decided to try the distant waves off Pillar Point.  With them was a white-haired German Shepard
named Maverick, owned by a room- mate of Matienzo’s.   Maverick swam with his owner or Matienzo while they
were out surfing.

The trio left Maverick on shore, but he swam out and caught up with them.  Finding the conditions too unsafe
for the dog, Matienzo paddle back in with Maverick and tied him to the car bumper before rejoining his collogues. 
The surfers had limited success that day, surfing the tail end of the breaks and generally deeming the conditions
too dangerous.

The trio decided to name the point after Maverick, who seemed to have gotten the most out of the experience. 
It became known as ‘Maverick Point’ and later simply coined as Maverick’s.

The experience of watching the competitors at Mavericks reaffirms the value of surfing to California, but even
more reasserts the industry as a significant component to the state's economy illustrating why it is a part of
the California culture and always will be.

 
TJohnson@CaliforniaBusinessMinute.com
www.CaliforniaBusinessMinute.com