Is There Gold In Your Garage?

By E. Michael Johnson
Illustrations By William Rieser January 18, 2008

Those old golf clubs banished to your basement or garage aren't really golf clubs. Sure, they have a grip, shaft and head, but the moment they started gathering dust, they became something else: a gift card toward your next purchase.

The idea of trade-ins might be foreign to many golfers, but they bring American-dollar value. That TaylorMade r7 460 driver you bought two years ago? It's worth $62. And instead of breaking that Scotty Cameron Futura putter over your knee after that last four-putt, you might want to take the $59 trade-in instead. Clubs don't have to be recent to be worth something, either. If you have a set of beryllium copper Ping Eye2's you can bear to part with, they're currently fetching $209. That's right: Two. Hundred. Nine. Dollars.

Bottom line: If you're not trading in your old clubs, you're leaving money on the table. You're also not alone. Despite an increase in methods for consumers to avail themselves of trade-ins, estimates by several retailers indicate only 10 to 20 percent of new-club purchasers take advantage of the opportunity.

The reason is a lack of consumer education. The PGA.com Value Guide is used by more than 6,000 golf facilities. Large retailers such as Golfsmith, Edwin Watts, Dick's Sporting Goods and Golf Galaxy all take clubs in trade. Even some manufacturers, such as Callaway Golf with its Trade In! Trade Up! program, have stepped up. But consumers still have not entirely warmed to the idea.

"People need to wake up and realize those bags of clubs they never use have value," says Ken Morton Jr. of Haggin Oaks Golf Super Shop in Sacramento, Calif. "Only eight to 10 percent of our sales include a trade-in. That's not all that many." Part of the problem is mindset. Golf clubs are not a disposable item, but rather a durable good that retains some of its value. But for years equipment manufacturers -- primarily because there was no outlet for used clubs -- wanted consumers to view golf clubs as disposable. And consumers did.

The year 1999 marked a shift in that thinking. That was when Golfsmith launched its trade-in program by creating an online blue book on the trade-in value of golf clubs -- the first retailer to do so. "It took a while, but I think the industry finally realized that trade-ins were significantly important to the sale of new clubs," says Fred Quandt, senior VP of merchandising for Golfsmith. "Golf clubs are not like other products. They don't break or wear out. It's an aspirational purchase. Trade-ins help lower the barrier to that purchase. It's an area of steady growth."

Three years later Callaway launched its Trade In! Trade Up! program to encourage golfers to upgrade to newer technology at a lower cost. "Many green-grass shops were not in the used-club business, and that meant it was difficult to trade in old clubs," says Greg Sabella, senior manager for woods for Callaway. "Our program allows shops to participate in an easy, low-hassle way while providing an opportunity for golfers owning used Callaway equipment to get rid of their old clubs, get value for them, and reduce the cost of a new-club purchase."

Still, while Golfsmith's and Callaway's efforts marked a beginning, trade-ins were limited in scope until 2003 when the PGA.com Value Guide (an online listing of used-club values derived from the selling prices of hundreds of thousands of clubs on auction site eBay) made its debut. Shortly thereafter the PGA Trade-In Network was established, providing PGA professionals the opportunity to effectively wholesale any club they took in trade. The pro would receive the amount listed in the Value Guide and send the club to the Trade-In Network where it would be sold online through 3balls.com (eBay's single-largest seller of golf equipment with more than 231,000 user reviews to date). At any given moment more than 2,000 auctions of used equipment are being conducted -- each a five-day auction with a 99-cent reserve (minimum bid) price. If that sounds like a risk, it isn't -- the average margin on re-sale is 35 percent.

But doesn't all that used product in the marketplace hurt new club sales? For years that was the thought, but it's not the reality. "The golfer looking to purchase used clubs is a totally different animal," says Morton. "You're not going to get them in a $299 driver, no matter what. But what you can do is get them in better equipment than what they might have bought otherwise -- equipment that might help them play a little better or help them enjoy what good shots they do hit. Long-term that might keep them in the game longer, and that's good for everyone."

Sabella adds that Callaway will do between $4.5 million and $6 million per year in business on Trade In! Trade Up! -- the result of 25,000 trades, each of which results in a new-club purchase. And while a lot of the evidence to date is purely anecdotal, Golf Datatech's John Krzynowek contends trade-ins are helping shorten the purchase cycle.