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Golf Equipment Chronicles 2008 (Part 7)

New Clubs for Your Bag this Summer?

By Leith Anderson

The New Year is here. Welcome to 2008. In Northern California golf clubs are holding their “New Members” tournaments. We’re scraping off the rust from the “chilly season” – and planning our travel and tournament schedules.

Hope springs eternal. Will your universal golfer’s prayer be answered this year? “Please grant me just one more low gross.” That becomes much more unlikely when you pass 60 – but senior – and super senior events count. Will this be the year that I win my first NCGA points? Forget the resolutions; it’s too late for that.

Will this be the year we find the elusive and mysterious “Magic Clubs” to help us play better and score lower?

In the “Old Days” We Loved Our Clubs

If you count up all of the golfers in the world, and then count up all of the sets of clubs stored in factories, warehouses, showrooms and retail stores – there are surely at least three sets of clubs for every golfer. I’m doing my part to help solve the homeless club problem. I’ve got a couple of hundred classic sets on my shelves. They’re warm and dry. You can help by adopting a few sets yourself.

Younger readers may not remember, but golf clubs used to be expensive. Back in the 60’s they cost as much as a good used car. The top brands (Wilson, Hogan, MacGregor) were sold in small volume and only through pro shops - the “green grass” sales channel. There were no “off course” outlets – discount was a dirty word – and the Internet wasn’t even a dream.

No beginning golfer ever bought a new set of clubs in those days. The “unwritten rules” dictated that you couldn’t own clubs that were better than your ability. My first irons were a used set of Hagan Ultras that my father bought for me at the Fresh Meadows golf course so I could try out for the freshman team. I remember the day we picked them up and how much we paid - $150 – a lot of money for a used set of irons in 1960. I also inherited my father’s hand-me-down driver on that day. It was a little knocked up so I refinished it myself in the basement. A foreboding . . .

I played those clubs straight through high school. They were good enough to help Hinsdale High win a State Championship in Illinois. I didn’t get my first brand new set until I was playing on the golf team at Stanford. I agonized over that purchase for six months. 1962 Wilson Staffs, 1 inch over, X-100 shafts, full cord grips (we played in the rain then). That was “custom fitted” in those days. I don’t remember anyone ever talking about grip size or lie angles.

I traded that set for worthless, Confidence “game improvement” irons years ago – I still regret that. Meantime, the woods that came with the set are still in my garage along with the putter I used forty five years ago. What is the emotion that makes golfers to save their old clubs for fifty years? Great memories and “perceived value”.

Mass Marketing in the Golf Industry

Not too long ago, golf equipment companies were small and built their products mostly by hand in the United States. Costs were high. Then came “Tigermania” in the 90’s. Golf became “popular” and demand surged. Companies moved production China. Costs went down. Way down.

Golf is now big business. Consider Nike. They’re trying to catch Callaway and Taylor Made and not doing a bad job of it. In a few years, they’ve grown their total golf sales to around $650 million. “Big Nike” is beginning to notice the golf division. Like all public companies in the golf industry, they’re looking for the “home run” that moves the stock price. When you see Tiger tee up a square driver, buy Nike stock.

Let’s postulate that Nike has 10,000 accounts worldwide. Imagine this scenario to understand the enormous scale, complexity - and risk - of the “new” golf industry. Nike hopes the 2008 SUMO 5900 will be a hot product in 2008. They luck into three wins at the end of 2007 with the “pre-release” 2008 SUMO. They crank up the hype machine. Every one of their accounts orders at least a couple of dozen – anticipating that Nike marketing will bring buyers in the door. Big accounts load up with hundreds - or thousands – so as not to be caught short, just in case. The sales reps come back from their fall trips and fill the order books. Nike needs at least 250,000 SUMO 5900s just to stock the sales channel. If the club is a “hit” Nike executives dream of selling a million SUMO 5900s or more.

Meantime, Nike is committed to creating a “level playing field” for all of its dealers. That means that there’s no favored treatment – no “fast horse and a three hour head start”. Every account receives their order within few days of the official release date – “SUMO Saturday” in early February. Imagine filling a pipeline with hundreds of thousands of drivers and delivering them so every retailer can start selling on the same day - worldwide. The Chinese factories run full steam for months to get the initial inventory ready. A fleet of FEDEX jets is launched for delivery. Then, remember that you have dozens of other models – including the SUMO 5000 – SUMO fairway woods, utilities and irons. All brand new styles. A “logistical nightmare” is an understatement. It’s big business indeed.

Over Production - Prices Plummet

Nike introduced the SUMO2 on “SUMO Saturday” in February 2007 at $469 “retail”. None sold at that price. The real selling price was the “MAP” (Minimum Advertised Price) – also known as the “street price”. That was $399 on day one. MAP is a form of price control that most manufacturers have adopted to prevent unhealthy price cutting – a symptom of oversupply. Nike threatens to cancel any account that sells below MAP.

When there’s unsold merchandise in the retail channel – an environment where there is going to be a “longer, straighter and more expensive” model next year – retailers get very nervous by the middle of the season. Selling golf clubs these days is a game of “musical chairs”. When the music stops, you don’t want to be holding much inventory. If you do, you’ll lose money. Nike tries to flush the channel by lowering MAP. The 2007 SUMO2 dropped to $299 at Thanksgiving and then to $249 at Christmas. How do companies protect their dealers in a declining market? They give them more of the same product to sell – a marketing invention known as “net down”. The music stops when MAP comes off and the SUMO2 can sell for any price. Then, the model year is finished.

But by then, Nike hopes that the new 2008 SUMO 5900 will be selling briskly at $499.

Taylor Made is Nuttier than Nike

“Mass production” is by definition, “over production”. The goal is to strike it rich with a “hit” driver. If that happens, the stock price will go up and all of the executives will receive big bonuses. Their greatest fear is that they might create a hit and then run out of inventory. That’s the ultimate disgrace.

Consider Taylor Made. Taylor Made is the undisputed leader in selling drivers. They’ve had the most convincing marketing story the last couple of years. The original R7 set the bar with “MWT” – moveable weight technology.

Taylor Made understands golfer psychology better than any other company. The breakthrough was discovering that some golfers WANT to pay more for their clubs. They bifurcated their lines into “consumer” and “Tour Proven” models. With drivers, the Tour Proven or “TP” version has the nifty checkered flags on the toe. They accept a .335 diameter shaft – the standard on the PGA Tour. (“Consumer” versions accept a .350 diameter shaft – aimed at limiting breakage and keeping warranty claims down.) You pay an extra two or three hundred dollars for those checkered flags but no serious Taylor Made tournament player would be caught dead without the “TP” under their head covers. The TP models hold their value much better.

At present, Taylor Made has nine driver models featured on their website. That doesn’t include the ones that just scrolled off the page. Taylor Made releases three or four new drivers a season to the consternation of their competitors. Alas, they are not immune from the “collapsing price virus”. They released the 425 R7 in 2005. The TP model was priced at $699. They’re 100 bucks today. The “new and improved” R7 460 – also in two versions - didn’t last that long. It got tagged as “spinny and hook-prone”. They’re now going for a song on eBay. Then came the R7 460 “Super Quad” – this time in three versions. It was a cool, black and merged the 460 cc size with the four weight ports. Out at $699, now down to $150 on eBay. It lasted eight months in the line. The CG Max then came out in two versions to grab the high end back. Also in the mix were a couple of versions of the restyled Burner and another model of the R7 with a “draw bias” – for players who hope that a driver can cure their slice. And that just covers the last year. Do you want one of each?

Taylor Made smothers the competition with multiple driver models. But that’s not good for preserving value. Each new driver is introduced with the promise that it obsoletes all that came before. The first week of December, 2007 there were more than 1600 Taylor Made R7 drivers for sale on eBay. One conclusion is certain: Drivers are not a good long-term investment.

Scarce and Expensive Options

Bombsquadgolf.com is unique. They captured the high end of the Internet custom business – catering to golf geeks with unlimited Paypal accounts. Who else can boast selling a set of clubs for $24,000? They make $3000 drivers sound routine. Price records are set by developing close relationships with Taylor Made and Callaway. The key to astronomic prices is access to “Tour” heads – not otherwise available. Scarcity always drives prices up.

In early December 2007, Taylor Made released a new R7 “Super Quad on Steroids” to Bombsquad. In testing, Bombsquad reported that the new “Super Quad 282” heads were delivering 3-5 MPH higher ball speed than their former best performers, the Callaway FT-5 and (deleted) the Adams BUL. That testing was subjective, performed by the Bombsquad staff and some close friends.

You can buy your own “Super Quad 282 on Steroids” from Bombsquad. The head will cost you $2000 and you can match that up with a “custom-fitted” (over the telephone and Internet) Matrix OZIK shaft for another $500 to $1000. If all goes right, that extra 5 MPH might get you 10 yards of carry distance. That’s $10 per inch.

So, is 10 yards of (potential) carry distance worth $3000 to you? If not, don’t worry. The “282” will surely be out in a “TP” version sometime this spring for $699 or so. Wait another year and you’ll buy it for $150 on eBay.

By then, Bombsquad will have the new “Super Duper Quad on Steroids” for $3500.

The Golf Industry’s Customer Training Program

How long are golfers going to stand in line to buy the “latest and greatest” new driver at top price – for the promise of 5 MPH of increased ball speed? The majority will wait a few weeks until the round of markdowns begins. Massive oversupply is causing the selling season to get shorter and shorter. The race to grab a few full price sales and then dump the remaining inventory is intense.

The question is not unique to drivers. In a world of mass production, where the product line changes yearly, will we fall in love with our clubs and protect them for 50 years? It doesn’t seem likely.

The golf industry now follows the pattern of most other mass-produced and mass-marketed products. New models are introduced in the “premium” sales channels to satisfy the customers who want the “latest and greatest”. Within a few months, the prices come down, distribution is expanded, and all of the buyers looking for lower prices get what they want. Closeouts ensue, the pipeline is emptied and the whole cycle starts anew.

Protect an Endangered Species

While the big companies are churning their product lines yearly, there is another class of manufacturer that can’t afford to do business that way. These are “specialty and component companies” – small, privately held businesses that make good quality products. A few Big Name manufacturers eschew multiple annual new product releases.

If Miura, KZG, SMT, Scratch, Wishon, Alpha, Infiniti or Nakashima create a new product that they know is good, it stays in the line – sometimes for several years.

Mizuno usually brings out one new forged model each year and it stays in the line as long as it continues to sell. It should be no surprise that Miura and Mizuno hold their value better than other irons. No end of season dumping for them.

The danger is that the giant manufacturers will kill the smaller companies. When heavily-advertised products are available in large quantities at low prices at the end of every season, it steals business from smaller companies who can’t afford to flush their sales channel every year. Neither can they afford to design and produce an entirely new product line every year.

It’s tough to turn down a brand new SUMO2 for $249 or less when a custom fitted SMT, KZG or Nakashima driver will cost at least $100 more. Small manufacturers are an endangered species. I hope you will find something that you can buy from a small company. The upside? You won’t be out of style in a year and you’ll support a different kind of innovation. It’s good for the industry to help the little guys survive. If you need ideas and inspiration, look back on past Chronicles articles, archived on www.calgolftech.com. Over the years, I have profiled dozens of small companies that deserve your support.

“Discontinuous Innovation”

Golf Equipment Chronicles readers might remember that I spent twenty years in the software industry. I swam in a steady stream of innovation – with stakes much higher than the golf industry ever imagined.

Every so often a really new idea comes along that flips the world upside down. Personal computers are a good example. Steve Wozniak was working at H-P when he met Steve Jobs. They saw the PC vision and proposed the idea of “personal computers” to Hewlett-Packard. Alas, H-P didn’t think it made sense, rejected the Steves’ proposal to build and market a personal computer, and Apple was born.

USGA rulings can be mysterious. In a world of “ball rollbacks”, “groove rollbacks” and head size, shaft length and COR restrictions – the USGA approved the concept of interchangeable shafts. On January first 2008, golf clubs with interchangeable shafts will be legal for play in all USGA events. Until that ruling, such systems were not interesting to serious players. It made no sense to own a club you couldn’t play in tournaments.

How many drivers are in your garage? How much money have you spent on clubs you no longer use? All confessions are confidential.

Suppose you find a driver head you really like? Suppose that it has just the right face angle to fit your eye. Suppose that it is the correct loft and produces a perfect trajectory. Better yet, suppose that you could adjust the head weight so you could match it up with lighter weight shafts in longer lengths and heavier shafts in shorter lengths and still get a swingweight that felt right.

What if you could change all of the options yourself with a screwdriver? Imagine altering face angle, shaft weight, shaft length, shaft flex, swingweight, bend profile and orientation. What if you could test all of those parameters without buying, or building a new club for each test? Theoretically, you could have a custom driver configuration for every course and all weather conditions.

This might be “discontinuous innovation”. The big question? Do players really want adjustable drivers? Research indicates that few players bother to change the weight configuration in their “interchangeable weight” Taylor Made drivers more than once or twice. Are “interchangeable shaft” drivers different?

“Interchangeable shafts” to the big OEM (Original Equipment Manufacturer) companies has simply been a fitting tool – up until now. The player does all the work. You screw together a head and a shaft, whack it a few times, maybe with launch monitor help, and make your choice. For years, golfers have been disappointed after “fittings” at a demo day. Too frequently, the driver they received did not perform the same as the driver they tested. Why is that a surprise? The OEM custom departments are focused on delivering a stock product to match a custom fitting. They would never take responsibility to deliver a driver with a precise CPM (frequency) reading. They don’t “tip” shafts to alter flex, spin or trajectory. That’s beyond their capabilities. Forget your fitting, you’re getting a “R”, “S”, or “X”.

Take Home the Exact Club You Test

The major OEM’s love “self service”. It’s an efficient sales process if a player can fit himself from a cart full of shafts and heads. Until now, they haven’t contemplated delivering the actual club from the fitting cart. But that will change.

The “component” companies started with the assumption that a player would want to buy the exact club that he tests. Alpha and Nakashima deliver the exact club you test for sale. No waiting, no uncertainty. That’s a huge competitive advantage that the OEMs cannot allow to persist.

The sales process is due for an exponential increase in complexity. Today, most golf clubs are sold by Big Box mass merchandisers. They want to get the fitting done in fifteen minutes. A player tests a few clubs and makes his choice. If he’s wrong, no problem. Just bring the club for a free swap within 90 days. Retailers are used to selling a stock, “one size fits all” product.

In the future, a player who wants to go “interchangeable” is going to have to decide which manufacturer’s heads he likes the best. Each system is proprietary. Callaway shafts will never fit Taylor Made clubs.

After making a head choice, he’s got multiple shafts to test. Then, he might want to try different shaft weights, flexes and lengths. While he’s at it, why not test different swing weights? Perhaps a counterweight? And how about custom grips? Custom shops are used to working with a player for hours in the fitting process, testing all alternatives and comparing the results with launch monitor data. That’s way beyond what mass merchandisers are used to. They try to get the sale completed in fifteen minutes. Will they be able to accommodate the new sales process?

My Opinion and Recommendation

I like the interchangeable shaft concept. It means less for me because I can swap parts easily. Epoxy is not that much slower than a screwdriver if you have a shaft puller. When a shaft doesn’t work, it can be recycled. I can try the shaft with different heads. Once in a while, I stumble on a great combination. But a screwdriver is a lot easier to use for most golfers.

Your investment in a “driver system” will be substantial. To start, the heads all command a premium prices. Then, you have to buy the shafts – and they can’t be recycled.

What will customers pay for? Nakashima has one feature that I really like. The hosel insert that they designed can be rotated to alter the face angle. It’s similar to the “clocking” hosel insert that allows you to change the face angle of Callaway drivers and fairway metals. I will pay for that feature because for me, experimenting with face angles is more interesting than testing shafts. Changing face angles will influence shot shape and trajectory. That’s really hard to do without a box full of measured heads. So far, that feature is unique to Nakashima.

An important requirement is “adjustable head weight” in addition to “swappable shafts”. It makes sense to swap shafts if you can make the head lighter for longer shafts and heavier for shorter shafts. At present, the “component” companies accommodate this requirement by providing bolts of different weights to attach the shaft fixture to the head. The Nike and Optifit systems, at this point, have not addressed the problem.

If you add it up, you’re going to spend at least a thousand and possibly a couple of thousand dollars to build out an interchangeable shaft driver system, complete with fittings and extra shafts – assuming that you’re buying premium, high performance shafts.. Eventually you’ll find one loft isn’t enough. So, you’ll buy another head or two to optimize trajectory for all available shaft options and all playing conditions. The interchangeable shaft system will only be interesting to players who want to tinker with their clubs, practice enough to see the difference and have plenty of money to spend on their toys. Ultimately, it will be more economical than having fifteen drivers in your garage.

Uncertainty is a negative. Due to the proprietary nature of each system, choosing which system to buy is a commitment. Nakashima might be a good choice today, but they only have one head style. What if Taylor Made or Callaway enables their entire line for interchangeable shafts? That could be tempting.

I will track all options. Nakashima is a logical starting point because we have our original stock of Nakashima heads. We’ve had them for over a year but found no market for drivers that were both expensive and non-conforming. That’s changed. Alpha samples are on the way. Meantime, Callaway, Taylor Made, Nike, Nickent and Adams have not made their plans clear. Same with the big component houses: Golfsmith and Golfworks. Will the winner redefine the way drivers are sold?

Late Breaking News: At press time, I heard from a reliable source that Taylor Made was planning to release a version of their popular Burner driver, with three interchangeable shafts for about $1000. Taylor Made is unique among major OEM’s in that their MWT – moveable weight technology – option permits the head weight to be adjusted. It looks like the “driver kit” is just around the corner.

Reconsidering “Value”

As I mentioned earlier, “value” is usually reflected in the resale price on the used market. If golf clubs sell for a quarter of their price a year after introduction, there isn’t much “value” in that equation. But why care about the surfeit of mass-produced equipment sloshing around in the market?

It shouldn’t matter what your golf clubs are worth used. The ultimate value is to find a set of clubs that fit, that feel right and that perform. You will love those clubs. You’ll play with them for hundreds of rounds and maybe even win a tournament or two. You’ll surely win your share of bets with your friends. When you do that, you’ll never sell them so what they’re worth on the used market is irrelevant. To you, they’re “priceless”.

To achieve that level of satisfaction, it’s an advantage to start with high quality parts from a company that you like. Add a good fitting and try enough custom made demos to understand the “feel” that’s best for you. Then test the recommendations on your course with the balls that you play. Don’t be fooled, insist on taking your demo to your course. Then, you’ll know for sure.

Once you know what fits and what feels right, have your set built carefully by hand to match your specifications from your personal fitting. You’ll know that the clubs you are playing won’t hold you back and are fun to play. You’ll then be able to forget your golf clubs and concentrate on improving your golf game. Your clubs will never find their way to eBay until your grandchildren sell them, fifty years from now.

Leith Anderson is a Partner in the Golf Lab, Palo Alto, CA.
He will answer any and all questions about club fitting and club making. Contact: Leith@calgolftech.com. Or by phone (650) 493-1770