SBJ/February 28 - March 6, 2005/Other News

Can’t swing price of new clubs? Firms offer lease option

Two new companies are marketing a new way to get your hands on a set of golf clubs: leasing.

Styx Capital Inc. leases high-quality clubs to courses, who rent them to golfers.
Top Swing Leasing is offering leased clubs to the consumer market, and Styx Capital is doing the same for the golf course market, which buys clubs to offer as rentals.

The companies come to market at a time when golf clubs are actually getting easier to buy. Retail prices for woods were down 8.7 percent last year nationwide thanks to significant price competition led by Callaway Golf, according to Tim Stine, founder of Golf Datatech, an industry consultancy. Prices for other clubs were down between 0.6 percent and 1.6 percent, part of a three-year trend of lowered prices.

Still, both Styx Capital and Top Swing Leasing believe there’s a demand for programs that guarantee top-quality clubs for regular, small payments.

Minneapolis-based Top Swing Leasing offers lease deals as low as 4.7 percent of the equipment’s retail price per month, over 18 months. Thus a $549 TaylorMade R7 Quad driver costs $25 a month, and you can purchase it at lease-end for half of the retail price.

Like most leases, the deal is best for buyers who tend to turn over equipment often and don’t want the hassle of having to sell it eventually — or for those who just can’t afford one big outlay.

“I’ve had a lot of customers say, ‘I can’t buy it — my wife will kill me — but a [monthly] payment on my credit card, she’ll never know,’” said CEO Damian Novak.

The company, founded on less than $1 million in private funding, launched last fall and has roughly 170 leases in effect now. It is in discussions with a major golf retailer to become its leasing outlet — one of several strategy shifts the company has had since launching in the fall, including lowering prices.

Austin, Texas-based Styx Capital was founded on private investment by a group of former Dell Financial Services executives, and launched this winter with this premise: Golf courses economize on rental clubs because they are expensive and frequently are mistreated or stolen; leasing is a way for them to improve the clubs and the revenue.

Mission Viejo (Calif.) Country Club is one client, paying $68 a month per set for five top-of-the-line sets, which cost $40 to rent. “Even in a slow month, each set goes out two or three times, so it’s a profit center, and the members, by the way, are thrilled,” said Brad Shupe, director of golf at the club.

The advantage, he said, is that it’s easier to sell a smallish monthly fee to his board than the large outlay necessary for many sets of new clubs. And Styx Capital replaces broken or worn-out clubs during the lease.

But both companies acknowledge that leasing goes against consumer habits. “We don’t get, ‘This isn’t a good idea,’ we get, ‘Wait, this is different,’” said Jim Williams, CEO of Styx Capital. “It’s not a one-call sale.”

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