The Economics of Everyday Things - 32. Used Golf Balls

Episode Date: January 15, 2024

American golfers lose 300 million balls a year — and all those bad swings are someone else’s business opportunity. Zachary Crockett hits the links. SOURCES:Todd Hutchinson, president and owner of BallHawker.Lashan Wanigatunga, founder of Two Guys With Balls. RESOURCES:"BallHawker, Challenge Enterprises Turn Wayward Golf Shots Into Successful Endeavor," Natalie Gilstrap (Clay Today, 2023)."Temecula Golf Ball Diver Nets $100,000 a Year," by Jeff Zevely (CBS8, 2022)."Golf’s Recycled Ball Market is Big Business," by Erik Matuszewski (Link, 2021)."The Inside Story of What the Original Titleist Pro V1 Launch Was Really Like," Andrew Tursky (Golf Digest, 2020)."Head of Golf Ball Retrieval Company Sentenced for Manslaughter After Diving Death at Wales Golf Course," by Alex Myers (Golf Digest, 2017)."Man Dies While Illegally Diving for Golf Balls," by Alex Myers (Golf Digest, 2015). EXTRAS:"Greg Norman Takes On the P.G.A. Tour," by People I (Mostly) Admire (2023).

By his own admission, Lushan, Wanyu, is no tiger woods. I've been, let's say, a struggling golfer for a long time. That's a lot of golf balls. In fact, you might say that Wanyu is an expert in losing golf balls. He loses around six of them every time he goes to the course. His shots end up in the woods, somewhere in the rough, or at the bottom of a pond. And as it turns out, that's not much worse than most golfers fare. On average golfers lose 4-5 balls around.

If you're a really bad player, that number goes up. If you're a really good player, that number goes up. If you're a really good player, that number goes down. When you consider that more than 25 million Americans golf each year, well, that is a lot of golf balls. By one estimate, golfers in the US lose 300 million golf balls every year. If you could find them all and lay them end-to-end, the line of golf balls would stretch from New York City all the way to Hong Kong. For golfers like Wanigatunga, this is an expensive problem.

Buying new balls can add up, and for the golf courses, all those lost balls are a never ending environmental nuisance. So golfers and courses would both like to recover those lost balls. And if you're willing to brave the alligators, rusty beer cans and murky waters, there's money to be made. When you dive, it looks like just pearls, just the white spot just showing. You can do it every three months and load up 20,000 golf balls must guarantee it.

For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Krockett. Today, use golf balls. As any golfer knows, new golf balls don't come cheap. On the low end, you can buy a dozen for $20 or so. But a lot of golfers don't come cheap. On the low end you can buy a dozen for $20 or so, but a lot of golfers don't mess around with the low end. They like the good stuff. At the highest end we could call them the Tour Level Performance golf balls, so these are balls like the Provi won the Calaway Chrome Soft, the Taliban DP5. Again that's Lashon, Wanigatunga. These balls would cost on average $50 or doesn't. The best golf balls work out to around $4-$5 each.

If you have a bad day out on the links, you can easily hack away 20 or 30 bucks worth of balls in a few hours. And when you lose one, you can't spend a whole lot of time looking for it. If you're playing a competitive tournament, then I believe it's three minutes or something like that. If you're playing with a group of friends, it's until your body start yelling at you saying, hey, come on, let's keep things moving. The etiquette is even if it's a five dollar ball, just move on. But thrifty golfers have another option. They can go online and buy used golf balls for a fraction of the price.

Now, people have been foraging for lost golf balls for more than a hundred years. In the early 1900s, so-called ball hawkers would train dogs to find balls. They'd sell them for ten cents a piece at the clubhouse. Most of these entrepreneurs didn't have permission from the courses to romp around on the greens, and they were seen as petty thieves. Over the years, a few businesses made deals with courses to collect and sell lost balls. But it wasn't until the early 2000s when the used golf ball market really took off. I think a few things happened right the advent of the internet and e-commerce and at the same time

the technology behind golf balls increased and made the golf balls much better. One golf ball in particular really changed the game. The titleist Pro V1. particular really changed the game. The title is Pro V1. Its solid core construction and urethane coating made it more consistent and durable than other golf balls. And soon other equipment makers started to compete for the high end of the market. After the Pro V1 was launched, a lot of the golf ball manufacturers started using better material, better technology in making

sure the cover of the ball was really insulated. So what that meant was when a golf ball was lost or when it went in the water, those balls will last a really long time without it being damaged or without the performance being impacted. Today, it's estimated that used golf balls are a $200 million industry. More than a dozen companies now retrieve, clean, and sell them on the internet. The biggest of those companies is called PG Golf.

They sell around 50 million used balls every year through their website, lastgolfballs.com. PG Golf is owned by the same King Glamour that owns Titleist, the maker of the ProVee one. So they get to sell the same balls over and over again. But the rest of the used ball market is fragmented, made up of much smaller companies, with names like golf ball planet,

golf ball monkey, and golf ball nut. In addition to being a struggling golfer, Juan de Guitonga runs one of those companies himself. It's called Two Guys with Balls. He got into the business seven years ago. I was hanging out in the Gagaj of a neighbor who lived down the street. He had a bunch of golf balls that he had collected playing golf and we were looking at the balls and thinking what do we do with all these balls.

Wanna Gatunga? Set up a simple website and started selling them. When we started, the way we got our golf balls was by finding golf balls when we played golf. But that was not sustainable when we needed thousands of golf balls. So why don't you tune in? Started working his way up the used golf ball supply chain. But go to golf courses and ask them who retrieves your golf balls. Can you put me in touch with them? What he found was a large and thriving ecosystem of people who make a living, hunting and diving for golf balls.

We had like 30,000 golf balls in the garage. That's coming up. Todd Hutchinson spent more than 20 years working as an executive in the tobacco industry. To unwind, he'd go for walks on the golf course behind his house in Florida. And he started finding so many golf balls that he decided to change careers. I own the company, ball locker. We're a recovery and recycling company for golf balls.

The recovery process begins with a contract. Hutchinson typically signs a two-year agreement with a golf course, giving him the exclusive right to collect balls on their land. Ballhucker now has deals with 70 golf courses in Florida. They get a little money, but not much. I normally pay them 12 cents a ball. But Hutchinson says that most courses aren't motivated by the money. The courses that we have, that means very little to them when you're, remember, have to

give a million dollars just to join up. The more valuable service is the free cleanup, because we're not talking about a few golf balls here and there. On many courses, there are tens of thousands of them at any given time. You can just sit there for 20 minutes just digging in one pile of golf balls. It's like a graveyard. Hutchinson and his crew visit each course three to four times per year. On each visit, they can collect anywhere from 20 to 40,000 balls.

Some of those are sitting right out in the open, in the woods or on preserves next to the green. But the real halls come from the water. Most people are right-handed, so golf balls tend to go right. If the lakes are on the right-hand side, you're going to load up. Some companies use tractors to recover golf balls from the water. But most of them, like ballhawker, enlists the services of freelance golf ball divers. The type of diving is not for everybody. If you do commercial diving in a sea, lace you can see what you're working on, right? But this, you don't see it's just blind diving, and it's books a lot of people.

Divers are hooked up to floating oxygen tanks called hukas. For several hours, they repeatedly dive down into the cloudy water, scraping the bottom of the pond with a lobster trap. Each two-minute dive can yield 300 golf balls. That's not the only thing they find. We're claiming out the bonds. I'm not just golf balls, but trash. I mean, cell phones, unbrellas, old dial phones. So with the one again, we found so many clubs, it's crazy. I guess some family had an argument, a man and a wife.

And I was pulling clothes out of the lakes that were still on hangers. I mean, it's amazing, a whole wardrobe. Hutchinson says he pays his divers the same thing he pays the course, 10 to 12 cents per ball. On a good day, a diver can recover 7,000 balls and earn around 800 bucks. Divers who retrieve golf balls full time can make six figures a year, but it's dangerous work. In recent years, at least half a dozen divers have died while attempting to retrieve golf balls.

One of those divers was William Ryan Earson. He was working for Ballhawker when he drowned at Ponte Vagra in and club in 2021. Ballhawker was later fined $56,000 by OSHA for failing to follow proper safety procedures. Hutchinson says he now employs someone full time to monitor the divers from land, but conditions in the water still pose a threat. But conditions in the water still pose a threat. There really is no visibility on all the pond. Once you stroke the bottom, it starts coming up, so

basically 8 hours to 10 hours a day, you don't see anything. You're only going by feel. That also means that divers can't see the threats that lurk beneath the surface. Hutchinson is a diver himself, and he's had a few harry encounters with snakes and alligators. So we were swimming and not without there, and I felt safe. And I go underneath the water, and I hit something, and I look up. And what do I see? The silhouette of the lips, you know, the white? Oh my. So for safety, we have a pink ball gun and we scare them off like that.

As well as creatures of the deep, companies like Hutchinson's have to contend with human rivals, people who hunt for balls on golf courses without permission. They're known as nighthawks, and collecting balls is something between a hobby and a side hustle for them. They try to play golf without buying any new balls. Some of them donate their extras to junior golf programs. There's a cottage industry of companies that sell products to these night-hawks, special glasses, flashlights, and binoculars that make it easy to spot balls. For many golfers, these ball hunters are a nuisance, but Hutchinson says they're not really a threat to his business.

In fact, he often works with them. There's a lot of people that sell us hot balls that live on the courses. They also can subsidize or living by picking up golf balls and selling them someone like me. You'll have guys bringing in golf balls constantly all the time, 5, 10,000. Once Hutchinson and his team have finished scouring a course, the day's hall is put into giant tubs. Then, they're loaded put into giant tubs.

Then, they're loaded up into a box truck. We keep them in the 20 gallon trash can, and they have holes in the bottoms because you don't want the water to sit there and stink up at everything. The smell is horrible. Then we'll bring them back to the shop. From there, the balls are taken to a cleaning facility. I use a potato washer for the golf balls. It will do 4,000 golf balls in five minutes so you're constantly scooping. I think it's 12 rollers as brushes on and it's just

rotating them and clean them at the same time. Once cleaned the balls are sorted by brand and model and And that's no small task. Because each brand of golf ball might have up to 20 different models. Other balls are one of a kind. I have over 10,000 golf balls that I save with people's pictures or comments or whatever it may be. They may have gotten married. It may be that are bachelor parties. You see pictures of golf balls that you won't show your kids. You see, there's a lot of crazy stuff.

The final stage is categorizing every used golf ball by condition. Hutchinson can sell the highest end balls like ProVi1s for around $2 each online. Around half the price they go for brand new. Some of the bigger companies don't like that, but doing your selling a product that calls $60 a dozen, brand new, and you're selling the same year and the same model golf ball for $30. It's a win win. For every million of these top-end balls sold, a company like Ballhacker

might expect to make around $400,000. But only around 20% of the recovered balls are in flawless condition. Most of them are a little rough around the edges, and those tend to be sold wholesale to guys like Lishan, Wanigatunga. Juan de Getunga's company, two guys with balls, bypasses the divers, the golf courses, the cleaning and the sorting, and buys pre-processed balls in bulk. He pays a flat rate based on the brand and quality. I buy balls anywhere from 15 cents a ball,

going all the way to $25 for the top quality, go we won. Juan E. Gatunga says the economics are a win-win. He sells them on his website, netting a margin of around 50 percent, and golfers get a more affordable alternative to buying a new. But no matter how much he sings the praises of used golf balls, some golfers will always be skeptical. I think there will always be a group of golfers regardless of skill level who will feel that the used golf ball, you know, because it's used because it's been in the water for whatever reason will not perform as well. perform as well. There have been a few informal experiments comparing the performance of used and new golf balls.

And most of them have concluded that used balls don't really have any impact on a golfer's game. But beyond the price savings, Juan de Getunga says the real benefits of buying used is environmental. All these golf balls going into the water getting lost. Golf balls don't degrade. They are in there for a long time, so it's more sustainable to reuse recycle. You know, everything in general, but I guess most of the golf balls. And you know, some of the golf balls that I get have probably gone through that process

several times where it could well be that people who bought balls from me lost them and the divers retrieved them, sold it back to me and I sold it back to them. For others like Todd Hutchinson, it's all about the thrill of the hunt. It's like Easter egg hunting. That would promise you it is. For the economics of everyday things, I'm Zachary Kraken. This episode was produced by Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz-Rapsick.

I think, on of a said hey, we are just two guys with balls trying to sell some balls and then that's kind of how the name stuck. The Frekenomics Radio Network, the hidden side of everything. Stitcher