Tuesday, August 12, 2008

Good News! Golf Club Prices are Going Down!

Bad news for the golf companies means good news for you, the golfer, if you've been waiting to get some new clubs.

Adam Schupak at Golfweek unveils the mysterious reasons for the decline:

Equipment makers and retailers agree golfers are postponing purchases. To spark sales, some manufacturers are cutting prices: Callaway has lowered its FT-i driver to $399 from $499, and its FT-5 to $299 from $425. From May to July, Callaway also offered consumers who purchased a driver a gift card to purchase as much as $100 of gas. Mark Marney, CEO of The Golf Warehouse, expects such incentives to become more prevalent during the second half of the year.
It's not rocket science - if you price a club to cost way too much, no one will buy it except morons. Golf clubs are like cars because they are long-term investments that depreciate in value the day you take them off of the showroom floor. Therefore, you want modern technology at the lowest price possible and you'll wait until you get the price you want.

But, the club companies see things a different way. They're blaming USGA regulations for slow sales.
Another persistent complaint: USGA restrictions are hindering product innovation. In an analyst report on Callaway, Casey Alexander of New York-based Gilford Securities wrote: “The U.S. market looks like it could produce a year where equipment sales come in down 7 percent to 8 percent, which may not sound that bad until you judge it against 10 years of equipment sales that were plus or minus 2 percent regardless of what the economy was doing.”
Those two sentences do not compute. There are myriad factors more important in determining the golf economy - weak dollar, foreclosures, credit crisis, oil, commodity prices. Just because you can't make a 550cc driver that has a max distance of 400 yards doesn't mean you should blame the USGA. Hell, they should be thanking the USGA. In 2014, we'll all have to have new equipment anyway!

One thing that did bum me out, though, was that people are not warming up to adjustable clubs as I may have hoped. Still, interviews I have conducted across the industry suggested that might be the case. (Catch The 19th Hole Golf Show archives on iTunes for the audio.)

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