Costco's Disruptor Ball Appears Dead, What Did We Learn?

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Kudos to MyGolfSpy for reporting the likely demise of Costco's Kirkland ball sold for so little and performing so admirably.  I've been trying to track down details on the Kirkland story and my reporting mirrors that of MyGolfSpy in all but one key area. This we agree on: it's unlikely we'll see Costco replicate such a ball at the same price.

To recap, the $15-a-dozen ball is no longer even pictured on Costco's website after supplies became constrained, largely after MyGolfSpy's rave November 7th, 2016 review comparing the pellet favorably to Titleist's Pro-V1.

Tony Covey writes:

Our source inside Costco has not responded to our calls, however, a source familiar with the situation has told us that Costco has suspended production of the Kirkland Signature until further notice. Whether you want to call it a shortage or a total outage, the lack of Kirkland golf balls available to the consumer is being blamed on supply chain issues.

We're told that, internally, Coscto is saying that production will resume at a later date (and that an email will be sent to customers when stock is available), but we have good reason to believe that is an unlikely scenario.

Essentially Costco was the recipient of a one-time bargain-buy on golf ball cores that allowed them to produce the ball inexpensively. Any Trader Joes shopper knows that vineyards with extra stock but not wanting to taint their brand selling their wine at a lower price will sell otherwise nice product to the chain. Trader Joes then slaps their label on what amounts to limited editions, tells us where the grapes were grown and teases us about its heritage without ever outing the vineyard. Some of the wines are better than others, but they are almost always an excellent value.

So which vineyard dumped these cores on Costco at a low, unlikely-to-be-replicated price? Covey writes:

A representative of Nassau Golf (originally listed as the manufacturer of the Kirkland Signature Ball on the USGA conforming list) has told MyGolfSpy that Costco purchased overruns of Nassau's European-market-exclusive Quattro ball. There is some indication the sale was made through a third party, and that Nassau may not have been directly involved in the deal. The same source confirms that while the Costco balls have a different core color, the material composition and layer thickness are absolutely identical to the Quattro.

With the initial supply of overruns exhausted, Costco effectively has nothing left to sell.

Multiple sources I contacted felt that cores were from an overrun of Taylor Mades that needed to be disposed of when Adidas demanded that their subsidiary squeeze cash out of anything they could. The intent was not to disrupt the industry, but instead to cash in however they could on unused inventory. When GolfWRX noted the initial frenzy and MyGolfSpy's review hit, the ball became a disruptor.

Covey does note that the Kirkland ball's manufacturing location is now back to its mission of making Taylor Made golf balls and that a similar situation to the 2016 "K-Sig" is unlikely anytime soon, if at all.

I mention TaylorMade in particular because the company's tour balls are produced at the same factory as the Costco/Nassau balls, and there are some indications that production of new TP5 has pushed smaller companies to the back of the production line. Even if Costco otherwise had the capability to produce balls immediately, which it appears it doesn’t, the K-Sig wouldn’t be given priority over larger brands and long-term customers.

So what have we learned from this brief disruption of the ball market?

--MyGolfSpy's review was incredibly powerful, GolfWRX once again fueled interest in a product and the tide may have turned for golf equipment reviews. As other sluggish traditional publications sat on the sidelines, perhaps for fear of upsetting major manufacturers or simply because Costco is not a potential advertiser, independent internet reviews fueled the frenzy. (GolfWRX first posted about a "frenzy" on October 28th and while Mark Crossfield only posted a review three days ago, internet influencers established even greater power thanks to the Kirkland ball.)

--A lot of people don't like Titleist. There was much behind-the-scenes joy at Titleist facing a scary competitive hit around the time of their IPO. Some of the hostility could be chalked up to their longtime spot atop golf ball sales. Some of the glee was over the incredible brand loyalty Titleist inspires. Some of it related to their hostile position toward distance rollback advocates. But most hostility centered around about the price of a dozen ProV's compared to others and was aired on forums. However... 

--A lot of people don't know what goes into the cost of a golf ball. The anger ignored how much Titleist and other major manufacturers spend on R&D and manufacturing in the USA. That's right, unlike the Costco ball, we are talking about an American made product. I was amazed how many golfers were not aware that ProV's and Callaway Chrome Softs are made in Massachusetts by American workers. If you like to buy "Made in the USA" products, this episode was an eye-opener.

--Costco now looms as a potential market disruptor under the right conditions. Yes, it took some luck and timing, but they do have the ability to inflict temporary damage on major manufacturers. On the other hand, the episode may have legitimized them as a seller of golf equipment of any kind.

--Golfers and their brand loyalties were tested. Many pushed back on Twitter at my intial skepticism over the long term success potential of the ball. I questioned whether golfers could announce they were playing "a Kirkland 3 on the first tee." While I'm all for anything that lowers prices and increases competition, common sense says most golfers are attracted to their favorite brands for reasons both sane and insane.

--The episode did at least include one fun viral video. And look at it this way Wally, there were much worse clips they could have used!

Club Corp Headed For Breakup?

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Greg Roumeliotis and Lauren Hirsch of Reuters report that investors are pushing for ClubCorp to be broken up and that the company has formed a committee to carry out a review.

They write:

It is a serial acquirer in the golf course industry, buying 12 new clubs in 2015 and 2016. It looks to buy locally-owned golf courses and then refurbish them by adding or improving amenities such as up-scale dining and event rooms.

Shareholder FrontFour Capital Group LLC in September published a letter highlighting ClubCorp's low trading multiple as compared with leisure industry peers such Six Flags Entertainment Corp (SIX.N). It questioned some of its business decisions such as ClubCorp's model to pour money into refurbishing its golf course acquisitions.

"It is obvious to us that ClubCorp's reinvention capital expenditures are transformative in nature and are in no shape or form 'maintenance,'" the letter wrote.

How dare they try to transform their properties for a new generation!

Private equity firm KSL Capital bought ClubCorp for $1.8 billion in October 2006 before taking it public in 2013. The company operates more than 200 properties but it saddled with major debt issues.

More Splashy Signings: Bubba To Volvik Ball, Lydia To PXG For $10 Million Over Five Years

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The high profile switches continue, and while we know Bubba Watson has moved the equipment needle before, can he make golf ball buyers go pink?

Golf.com's Michael Chawra says that's the color Bubba hopes to play even though the model he's selected is not sold in pink.

Bubba says it was his idea to play the Volvik ball after watching the World Long Drive. Jeff Babineau reports from Maui for Golfweek.com on Bubba's claim and notes this about world top ten golf ball usage:

With Watson playing a Volvik ball, five companies now are represented among the top 10 players in the world. With Rory McIlroy expected to return to Titleist (Pro V1x) when he competes in South Africa this month, Titleist will have four of the top 10 (two playing Pro V1, two playing Pro V1x). Also represented are TaylorMade (two), Callaway (two), Srixon (one) and now Volvik.

Continuing its high profile splash into the equipment business, my sources say PXG's Bob Parsons has signed Lydia Ko for a whopping $10 million over five years, while also adding Brittany Lang, Christina Kim and Ryan O’Toole as new members of the staff.

Beth Ann Baldry, reporting for Golfweek.com says Parsons is going after LPGA players in search of international sales:

“In 2016 we saw remarkable growth in international sales,” PXG founder Bob Parsons said in a news release, “but we recognize that we have only scratched the surface. Tour validation is important, and the ladies tour is wildly popular in many countries.”

Here is Lydia discussing her switch on Morning Drive, which will also include a PXG putter:

Ko also did a nice demo on Aimpoint Express, using Golf Channel's new virtual putting green.

The full PXG press release:

PXG Adds #1 Ranked Golfer Lydia Ko to Its Roster of Champions
2017 Tour Lineup Supports PXG’s International Growth Strategy
 
Scottsdale, AZ (January 3, 2017) – Today, PXG (Parsons Xtreme Golf) revealed a tour strategy designed to help accelerate and capitalize on global excitement surrounding the company’s brand and revolutionary equipment. In a bold move, PXG has focused solely on signing LPGA Tour talent for the 2017 season. At the top of the list is world number one, Lydia Ko.

“This year PXG is looking at golf and the tour from a global perspective,” said PXG founder and American entrepreneur Bob Parsons. “In 2016 we saw remarkable growth in international sales, but we recognize that we have only scratched the surface. Tour validation is important, and the ladies tour is wildly popular in many countries. We had five exceptional ladies on staff in 2016 and this year that number has grown to nine. These players, as well as our top-notch PGA TOUR pros, will help us bring PXG’s unmatched technology to passionate golfers around the globe.”

New #PXGTroops include:
    •    Lydia Ko, 14 time LPGA Tour Winner
    •    Brittany Lang, Reigning U.S. Women’s Open Champion
    •    Christina Kim, 3 time LPGA Tour Winner
    •    Ryan O’Toole, 2011 Solheim Cup Team Member

“It was always my dream goal to become world number one,” Lydia Ko shared. “Now that I have reached that benchmark in my career, I am focused on consistently playing the best golf I can. When I first hit PXG’s clubs I was extremely impressed by how they felt. They felt solid and the performance was – wow!”

Known for developing leading technology that delivers indisputable performance. The company invests heavily in research and development, and does not prescribe to traditional product cycles.

“I’ve had PXG clubs in my bag for several months and all I can say is they are the real deal,” said Christina Kim. “The wedges have got to be the best I’ve ever played and the rest of the clubs are simply excellent. I couldn’t be more excited about being part of a company that is disrupting norms and taking risks in the name of innovation and performance.”

PXG’s professionals represent some of the very best talent on the PGA TOUR and LPGA Tour. The new players will join current #PXGTroops James Hahn, Billy Horschel, Charles Howell III, Zach Johnson, Chris Kirk, Ryan Moore, Charl Schwartzel, Cristie Kerr, Alison Lee, Sadena Parks, Gerina Piller and Beatriz Recari.

“I have so much respect for PXG and Bob Parsons,” Brittany Lang said. “Being on staff is really a special opportunity.”

“From founder to fitter, every representative of PXG is passionate about golf and dedicated to making sure golfers are able to experience incredible results on the course. I have never been so impressed by a company,” Ryann O’Toole added. 

Costco Golf Ball Insanity: Website Jammed, Sells Out In Two Hours And Going For Silly Prices On Ebay

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Bidding more for a dozen of Costco balls than the top-priced ball on the market?

America the beautiful!

The ebay prices are giggle-worthy. However it's mostly the notion that Costco, which sells a lot of vice-worthy items in bloated sizes, had its website bog down Tuesday as golf junkies jammed the servers trying to order the new low cost ball that has tested well.

Reader Guy reports that the 11 am-to-1 pm ET sales window today did offer the opportunity to buy the ball, but as many noted below, the website was lagging badly. Imagine that, bogging down a site that sells almost anything, only larger.

Who says golf is dead? 

 

 

@costco "Due to inventory changes, item 1081660 in your cart is no longer available" been trying all morning. Kirkland Signature Golf Ball

Behind The Scenes: Little Billy's Viral Interview Of Rory McIlroy

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If you didn't catch "Little Billy" grilling Rory McIlroy as part of the child actor's European Tour series, it's still a keeper.

Because it went viral and because of interest in Little Billy (currently playing a young Prince Charles in The Crown), the European Tour has produced a behind-the-scenes video:

WIRED On PXG: Parsons Predicts $60 Million Annual Run Rate

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Wired's Mark McClusky reviews Bob Parson's PXG clubs and comes away impressed by the irons, not so much by other clubs in the bag.

The story features an extensive look at how the clubs came together, what motivates Parson and how things have been going for the luxury upstart.

The company has grown to 70 people, and Parsons says the response has been beyond what he had hoped. He predicts that the company will finish the year at a $60 million annual run rate. The challenge will be to continue to innovate, and fight a market that’s usually driven by an annual set of new gear to entice golfers to spend more.

“We don’t have a product cycle,” says Parsons. “Our product cycle is that we have to make sure that we have breakthroughs in performance. When we do, we’ll release something new. Who knows when that will be with our irons?” Until then, he’ll sell the same model.

It's noteworthy that Parson cites the annual run rate while also putting down the concept of product cycles. I'm sure you money gurus out there can help us novices better understand his comments.

The story also features this put-down of the annual PGA Show.

“I don’t really compete with the other club companies,” he says. “They have a big trade show in Orlando each year, and we don’t go to that. We don’t go for the same reason that Ferrari doesn’t go to the Detroit Auto Show. They build the absolute best thing they can, and then put a price on it. We’re both in the luxury market.”

Wally's Bullish On Acushnet Stock: Buys $1.19 Million More

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John Dorfman at Gurufocus.com notes Wally Uihlein's purchase of $1.19 million more of GOLF on November 2, adding to the CEO's initial holdings of Acushnet stock. This brought Uihlein's holdings to 702,196 shares with a $13.7 million valuation at Monday's closing price of $19.57 a share.

There was also this:

On the same day as Uihlein made his jumbo purchase, five other Acushnet insiders bought smaller amounts.

Such cluster buying is a good sign more often than not.

The stock has so far peaked at $21.57, with Monday's 2.3% rise helping to soften the blow of last Friday's 5.39% drop.

On IPO launch day, the site featured this Q&A with Acushnet COO David Maher. Gurufocus featured this breakdown of the initial stock purchases on November 2nd.

Nine Days Of Christmas: State Apparel Fairway Pants

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I know what you're not thinking, last Christmas he said the ABC Pant is the greatest thing ever created. And now? I still think they are in spite of the steep price. Pure comfort, brilliance and ingenuity.

But durability for golf?

That's where the ABC Pant may be imperfect. Not that I've found Lululemon's pants to fall apart, but I do wonder if they can handle the rigors of repeated use for a golfer.

It's that concern about durability that has warmed me to the merits of State Apparel's Fairway Pant as the better golf option. The combination of design cleverness, Made-in-California values and an overall stronger fabric makes them an ideal gift to yourself or a golfer.

When I first tried them on, State's heavier and tougher fabric seemed too weighty compared to the Lululemon's. But after trying them out on a course and twice at the range, I realize the toughness stitched into the slacks makes them a better long-term investment for golfers, especially younger players who are more active.

Initially the black, almost-velvet black lining of the pockets and cuffs struck me as an odd design touch. But remembering how quickly pockets turned dirty and frayed, the design touch adds a whiff of brilliance that makes you feel good putting on the slacks for golf.

You can read the State Apparel story here and here for the explanation about one last pre-shot wiping option. The $135 Fairway pant in white is found on their pants page.

Even better, as a courtesy, State Apparel is offering site readers a 30% discount using the code: HOLIDAYGOLF