I’ll admit it. I am a golf nut. I love buying and selling golf clubs primarily for my own use. Usually what I do is buy one set of clubs and use the set for a season. Once I find a replacement, I sell the old set on eBay or GolfWrx for something else. I generally take a small loss, but I keep up with current technology and get to try different types of clubs. Recently however, all of that changed.
How Golf Club Sales Work
Anyone who recently purchased a brand new golf club for full price, please look away. Most stores sell clubs at a huge markup. The club makers introduce new technology and new designs and charge a slightly higher price for basically the same club year after year after year. This is why a driver that was $400 a year ago is sold at $150 after less than 12 months on the market. Excess supply causes the price to go down. Basic Econ, right?
Once the clubs are sold, they depreciate heavily until they hit a wall. This wall is usually around 2-4 years and equals about 60-70 percent of the original club. For example, if you buy a good set of irons for $1000 and use these clubs for two years, they will probably be worth around $600 after this time period. If you tried to sell these clubs within two weeks of purchase, you might only get $700 for them. See the trend? If you are looking for a good set of clubs, I usually recommend buying clubs that are 2-4 years old or right when that deprecation wall sets in.
The story
Note: I pay attention to the secondhand market of golf clubs and have a general idea of what clubs cost new and used.
When I go to brick and mortar stores, they usually have a high markup on used clubs. The reason behind this is twofold. First, box stores have employees and overhead and need to sell clubs at a markup to make a profit. Obviously internet sellers can charge less, but purchasers can’t use the clubs on site, so the system works fairly well. RIP Golfsmith.
The second part of this equation brings the PGA club price interface into play. This is a computer database of suggested values for clubs that most stores use to value clubs. The stores will generally offer you around 40% of the PGA value so they can turn a profit. Kind of like Autotrader for golf clubs.
All of this works unless the box stores get an item that isn’t in the database. What if a customer brings in custom irons or a set of clubs so rare that the database hasn’t valued them? The employee can take a guess and price them based on their initial value…orrrr the employee can value them based on a wild guess. This is how I made my score.
First, I was able to pick up a set of Ben Hogan PTx irons (regularly msrp for $1500 or more) for $120. I asked the employee to double-check that the price was right and he gave me the go ahead. These irons were being sold at less than 10% of their original price after being on the market for less than a year. What gives? These irons are fairly rare and were in great shape. This is the magic of the PGA interface. If clubs are rare or aren’t sold on the used market often, the PGA database wont carry values for those clubs. No values online means the brick and mortar store employees have to price them base don knowledge. Advantage me.
Ok, so I have the irons. How do I sell them? Couple of options: GolfWrx, eBay, Friends. Golfwrx members tend to know their clubs and give fair values, but eBay brings greed into the equation. eBay it is. I listed the irons at $299. If they sold for $299, I still make around $100 in cash for my time. After two days, I had 0 bids. Uh oh. Did I overvalue my irons? Nope.
Once the bids started, I receive over 50 bids and the final price was around $920. After fees, $750 in profit. Pretty good right? I used this money to buy a TaylorMade M1 Driver and a Scotty Cameron putter along with two Titleist Vokey tvd wedges.
But I wasn’t finished.
After about a month, I went back to the brick and mortar store on a Sunday morning and low and behold…Edel Golf Single Length Irons in mint condition for $599. Now these are custom irons that msrp for $2,500.00. Yep that’s not a typo. Over $1700 off msrp. I picked these up and immediately listed them on GolfWrx. The 3iron sold for $200 in one day. The other irons received offers for $1000-$1100, but I wasn’t satisfied. To Ebay we go. I listed all but two irons for 599.99 on eBay. If I sold them for that price, I still come out ahead. After a week of waiting and hundreds of bids, I sold the irons for $1400. That’s $1600 total and I still have two wedges. I plan on selling the wedges on eBay at some point down the road and should be able to get around $350 for them. That’s $1950 total for a $1300 profit.
I used some of the money to get a set of 2017 Titleist AP2 irons for $700 and invested the rest in my Betterment account.
Golf arbitrage. Happy Hunting. Share your stories below.
-B&T