Let's make a deal: before you make that set of irons part of a tag sale, consider using them as a trade-in

Golf Digest, May, 2005 by Caroline Stetler, Isaac Gruber

REMEMBER WHEN USED CLUBS WERE HIDDEN in a quiet corner in the local golf shop, useless, valueless? Not anymore. Used clubs have emerged as the coin of the realm for the savvy consumer, making golf 's newest high-price products suddenly a little more affordable.

The clubs in your garage from 1999 could subsidize the cost of a new driver or set of irons. The world of online retail has created an opportunity. And with the growing presence of brand-loyalty programs such as Callaway Pre-Owned and retailer-friendly options such as the PGA Trade-In Network, used clubs are real money. How much? Roughly $100 for a driver and $300 for a set of irons are not unusual figures.

The idea isn't revolutionary. The second-hand market has been part of golf from the moment someone decided to buy a new set and wondered what to do with the old one. But the last few years have seen a dramatic reorganization of that process, led by the gigantic presence of eBay, which accounted for used club sales of approximately $100 million last year. According to the company, more than one million buyers have made a golf purchase on eBay.

"The value of old clubs had proven itself," says Leigh Bader, co-owner of Joe and Leigh's Discount Golf Shop at Pine Oaks Golf Course in South Easton, Mass. "It existed, although not very efficiently. The Internet has provided an infrastructure to lubricate this process and make it mainstream."

The used-club market exists in many forms on local and regional levels, but it the success of large retail websites that driving this new consumer opportunity.

Bader has played a major role in the development of the online used-club market. He sells used equipment on eBay and through his 3balls.com online store. He also helped create the PGA Trade-In Network, which features a free trade-in and resale value guide for most clubs. The PGA.com Value Guide helps consumers and retailers benefit from trade-ins. The consumer pays less out of pocket, the retailer earns a margin and the manufacturer's total sales increase.

"What the secondary market has needed is standards and credibility," Bader says. "What this initiative has done is empower the consumer in the same way a car buyer can use a trade-in to get the new car he wants."

Club manufacturers are dealing with the same problem luxury-car manufacturers faced in the 1980s. When business plateaus, how do you increase sales? Car makers began buying back their used cars, refurbishing them, and selling them as "certified pre-owned." The program made luxury cars affordable for a new demographic and fostered brand loyalty by encouraging wealthy consumers to trade in their old cars for the newest model.

Callaway Golf became the first major clubmaker to establish a certified pre-owned program with callawaypreowned.com and the "Trade In! Trade Up!" program, established in 2002. Today you could purchase a new Callaway Big Bertha 454 Ti driver at your local retailer for about $300, or you could trade in an old 1997 Biggest Big Bertha driver and a set of Big Bertha irons from 1994, and the new club could cost you about $50. And that's assuming you want a new one. Used drivers in "like-new" condition are available for even less. Manufacturers releasing new clubs are counting on more people purchasing the highest-end clubs because those people can take advantage of what had been a lost resource -old, unused clubs. It's one reason TaylorMade recently began its "Trade Advantage" program, using the PGA.com Trade-In Network as its reference. Of course, these programs aren't humanitarian outreach. They're designed to do one thing.

"Our goal is to decrease new product cycles," says David Schoffman, who directs the Callaway program. "Manufacturers want to get people to buy a new driver each year rather than every other year."

The online marketplace has put pressure on golf manufacturers, too. "Companies are being forced to roll out their products much quicker-and only keep products at the 'impulse buy' price for a few months," says Casey Alexander, a golf industry analyst with Guilford Securities. Alexander says that eBay has become the biggest competitor to equipment manufacturers -forcing prices in the driver category to drop as fast as possible to keep up with the online market. Still, all of this technological innovation and price slashing is "monstrously good" for consumers, he says.

There's a downside to purchasing used clubs, though. The crucial element of custom-fitting gets lost. Any customization has to be done after the purchase, perhaps mitigating any potential savings.

Still, with this glut of quality equipment, it remains a buyer's market. The key benefit of the used-club market, though, is using the value of your old clubs to buy new ones. Given that the value of used clubs rarely increases, the time to strike is now.

Found money

Those unused clubs could pay off. A sampling
of club trade-in values as of Feb. 28, 2005:

Ping Eye2 irons (BeCu)             $222-$300
TaylorMade r7 quad                 $160-$205
Titleist 975J driver                 $31-$46
Callaway ERC Fusion driver          $94-$135
TaylorMade 200 steel (woods)         $39-$55
Titleist PT (woods)                  $39-$53
Callaway Big Bertha irons (2004)   $258-$400
Titleist/Scotty Cameron
Studio Stainless Newport putter    $108-$111