Down & Dirty – The Story of the Lost Golf Ball Kings

Down & Dirty – The Story of the Lost Golf Ball Kings

It’s a fairly small, undistinguished grey building amidst a group of other indistinguishable grey buildings in an industrial sprawl in a southwest suburb, with a door that bears barely any logo, and tall, dark glass windows that conceal a minimal storefront. Small might not be the correct word – the building is actually a behemoth, three-story concrete fortress that stretches more than 150 yards from north to south and has to be at least 30 yards wide – but it is certainly inconspicuous. A few giant steel loading dock doors adorn the building’s eastern wall, but when they are closed up, the entire place looks as stoic, inanimate and abandoned as a condemned structure. There is nary a sign on the outer wall or a logo or insignia of any kind. If you are searching for the business that resides in Suite 200 of 12505 Reed Road in Sugar Land, you better well know exactly where you are going, lest you miss it entirely.

But, you know what they say about books and covers and judging, right? Because when you do find the proper single person-sized glass door, or happen to get a look inside through one of the giant loading dock entry ways, you’ll realize that appearances aren’t what they seem in the 12000 block of Reed Road. In fact, they are quite the opposite.

When you peer in through the one of the loading dock doors, your eyes will be greeted with a sea of white orbs, stacked to the ceiling in giant sacks in countless rows throughout the warehouse. The orbs are golf balls, and the business is PG Professional Golf.

 

If you are a golf nut, the PG Professional Golf headquarters will be like walking into a dream. Think Scrooge McDuck diving into his giant safe of money, or Templeton the Rat running wild amongst the trash at the county fair in E.B. White’s classic children’s novel, “Charlotte’s Web.” But multiply that by a thousand. Or a million. Or 10 million. And, when things are really going well, 20 million. Yeah, you read that right – 20 million golf balls. Have we died and gone to Heaven?

PG Professional Golf is the largest seller of refurbished and refinished golf balls in the country. Last year, roughly 43 million golf balls cycled through the company’s 60,000-square-foot mega-center. And we aren’t talking dirty Pinnacles or beat up Top Flights, PG deals in cleaned up, shiny-like-new premium balls. Titleist, Callaway, Bridgestone, Srixon, TaylorMade, Nike … you name it, PG has found it, cleaned it, refinished it (on occasion) and sold it.

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Have you ever seen the 15- or 18-packs of golf balls at Academy or Walmart with the “Reload” brand on the box? That’s PG Professional Golf. Or, have you ever bought golf balls from LostGolfBalls.com or Knetgolf.com? That’s them as well. Over the past two decades, PG Professional Golf has grown into the industry leader in the refurbished/refinished golf ball industry. They do business world wide, and as long as we keep dunking balls into the water, the guys at PG will be there snatch them up.

PG is lead by its two founders, long-time Texans Gary Krueger (CEO) and David Jones (Vice President/Partner), who is a Sugar Land native. Their story isn’t that dissimilar from that of other great companies built from the ground up – a couple of young guys, toying around with a fun idea in their spare time suddenly realize they have a major opportunity on their hands, drop everything else and embark on creating a global empire. The American dream at its finest.

To discover the genesis of PG Professional Golf, we have to go back more than 25 years to a couple of guys in their early 30s, some golf balls salvaged from a golf course lake, and an old laundry washing machine.

 

Gary Krueger and David Jones met in the early 1980s while as student-athletes on the Texas A&M University golf team. Krueger, originally from Indiana, was a two-time All-American under coach Bob Ellis, and graduated in 1983. Jones, a local kid from Missouri City, was a little younger than Krueger, and graduated a few years later. The two remained friends after school but went their separate ways.

Krueger tried his hand as a Tour professional. Upon graduating, he immediately went to Q-School, rolling through the finals at TPC Sawgrass in the winter of ’83 and earned his Tour card. He played professionally for the next six years, bouncing between the PGA Tour (he had his card for the 1984 and 1987 seasons) and the mini-tours. There came a point, however, when he realized the stars on Tour were at a level he wouldn’t reach.

“After talking it out with my wife, we realized that making a living playing golf professionally just wasn’t something I was able to do, so I sort of hung up the sticks for a while and went into the real world,” Krueger said.

When he left the Tour in 1989, he went to work as a headhunter, and reconnected with his college buddy, Jones. In the early ‘90s, Jones was working in the restaurant business when Krueger and his family moved back to Texas, and the two lamented about how great it would be to get back into the golf business in some way, since it was, after all, their first love. But the question was, how?

Through another mutual friend, Jones and Krueger learned of a man in Lufkin, Texas, who owned a small golf ball retrieval business with contracts at some of the local golf courses. After a quick analysis of the business, the two agreed to meet the guy at the TPC course at The Woodlands. It was 1992.

cover-story-3“We are standing out along the water hazard by the 18th green [of the TPC course], and the guy has a couple of his employees in the water in scuba gear retrieving golf balls,” Jones said. “The first two guys come up out of the water with small sacks of golf balls, but the third guy pops up with two giant bags stuffed full of balls, and we said, ‘We’ll buy the business, but THAT guy comes with it!’”

That year, Jones and Krueger started small, retrieving golf balls from the lakes at local courses across south Texas (not themselves, however; if you ask either man if they have ever donned the scuba gear and jumped in, they both just laugh and shake their heads in a resounding “No way”) and washing them in laundry machines. It was a side job for both men – a hobby, really – and for a few years it was just that.

Even though the going was slow to start, Jones had a feeling there was more to come.

“When I was a kid, I had spent my summers working at Quail Valley Golf Course near my house, and the head pro would have me and some of the other guys jump into the ponds and pull out golf balls with a rake or something, and then he would sell them in the pro shop,” Jones said. “The golfers were always fascinated by that bag of used golf balls on the counter, and would always buy them. So, when we started this thing, I didn’t necessarily know how much we could sell the balls for, but I knew people would buy them.”

For the next few years, PG was a sidebar company, selling about 300,000 salvaged golf balls in bulk to other wholesalers, without even cleaning or refinishing them. Then in 1995, something happened that forced PG into the proverbial spotlight – the companies Krueger and Jones had been selling their dirty golf balls to left the business, leaving the two Aggies with thousands of golf balls and nowhere to unload them.

“[PG] was a fun side business for us, then all of a sudden we were kind of forced to take it on full time and expand and grow the business,” Krueger said. “We had to hire a staff and figure out exactly how we were going to run this thing as a full-fledged company.”

Their work was only beginning.

 

The idea for a company such as PG Professional Golf – who, at their core, sell refurbished (i.e. washed and cleaned) and refinished (i.e. repainted and repaired) golf balls pulled from the water hazards at 2,000 golf courses across the U.S. – wasn’t necessarily an original idea. As long as golfers have been hitting balls into water hazards, people have been grabbing them from the shallows and keeping them or selling them in pro shops. But in the ‘70s and ‘80s, the industry (if you can even call it that) was fragmented and almost nonexistent, and the golf ball technology was such that a golf ball that sat in water for more than a few hours became misshapen, water-logged and unusable.

Fast forward to the year 2000. PG Professional Golf now has five years under its belt as a full-fledged company, and has built relationships with golf courses all across the country, who have agreed to allow them to dive for golf balls in their water hazards (currently, PG has dive contracts with approximately 2,000 golf courses in 43 states). Krueger and Jones have made some key hires in their sales division, out of which came contracts to sell their Reload-brand golf balls to Walmart and Academy, adding almost $10 million in sales to their ledger.

Around that same time, a certain golf ball hit the streets that would revolutionize the game – the Pro V1. We know the effect the Pro V1 has had on the player side – Titleist’s ability to create a performance multi-piece golf ball with a solid core has changed the game. But it also revolutionized the used golf ball business.

“The Pro V1 changed the game for us,” Jones said. “Not only the ball itself and its popularity, but the evolution from liquid center premium golf balls to solid core premium golf balls created a more durable golf ball that retained its value.”

Since its release, the Pro V1 has grown to be one of the largest parts of PG’s business. While Krueger and Jones declined to reveal exactly what percentage of their sales come from the Pro V1 (and Pro V1x), Krueger did say the number was “substantial.” About 10 percent of all golf balls retrieved by PG’s contracted diving companies are Pro V1s, and about a third of all the golf balls are in the Titleist family, which matches up well with Titleist’s roughly 40 percent market share on new golf balls.

But how do you price them? Since PG Professional Golf is the pioneer in the market (there are no other companies currently in the market that come even close to matching PG’s size and scope), Krueger and Jones have had to simply experiment with pricing as the years have gone by. Eventually, they settled on a general rule of thumb – all their golf balls are discounted at roughly 50 percent of what a consumer would pay for new balls in a retail store. Currently on their retail website, LostGolfBalls.com, you can purchase one dozen 2016 Pro V1s or Pro V1xs for about $20. That is a discount of about 58 percent.

Of course, the price will fluctuate as the inventory numbers ebb and flow in PG’s warehouse, but you can count on deep discounts all year round.

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If you walk through the giant, 60,000-square-foot warehouse in Sugar Land, you are apt to feel like you are walking through an industrialized version of Willy Wonka’s chocolate factory.

In one section, golf balls that have been brought in are dumped into a giant machine that shuttles them through a washing process, cleaning off dirt and debris collected on the watery floor of the hazard. Nearly 180,000 golf balls go through this cleaning process every day before being set aside for sorting.

Once cleaned and dry, the golf balls are then brought into a giant room on one side of the warehouse where the sorting begins. For years, the golf balls had to be 100 percent sorted by hand. With PG offering consumers the option to buy specific models of golf ball within almost every brand – Titleist NTX Tour or Callaway SR3 or TaylorMade Tour Preferred X, for example – and the year in which they were produced, that required many hands and thousands of man-hours.

Recently, however, PG implemented a proprietary computer technology system that, through the use of multiple cameras, is able to identify a golf ball by brand and model with 99 percent accuracy, eliminating nearly 50 percent of the previous time spent sorting.

Frankly, it is an impressive piece of new age-tech. As the golf balls move through the sorting process on a small conveyor belt, cameras are strategically placed to capture logos and model stamps as the golf balls whiz by. The computer then compares the camera images to logos and information encoded into the system to determine where each specific golf ball is sent down the line. Imagine a large bank of long PVC pipes with golf ball logos taped above one end, and a conveyor belt running by and dumping golf balls into the specific pipe that matches up with the brand and model.

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Following the initial computer sorting process, employees man various other stations along the sorting line, fine-tuning the inventory, drilling down by model, release year, and, finally, sorting by quality grade. Golf balls are given one of three grades – Factory Refinished, 1st Quality, 2nd Quality or 3rd Quality – based on the condition of the cover, the color of the golf ball, and the presence of pen marks, logos or other written blemishes.

Once properly sorted, the golf balls are then packaged for shipping to retail stores under the Reload brand, or are organized for sale through the company’s websites.

 

Krueger and Jones have seen it all in the last 20+ years of growing PG Golf Professional, both the good and the bad. Shortly after they committed to the business full time, they began to hear whisperings of some nebulous entity called “The Internet” that could serve as a medium for selling goods directly to customers over long distances. As the Internet grew, PG began to experiment with the idea of selling their refurbished/refinished golf balls directly to the consumer.

“The arrival of the Internet was HUGE for us,” Krueger said. “We started hearing about it in the late ‘90s, so we put some golf balls up to see if they sold, and they did. We thought, ‘Hey, that’s kinda cool,’ so we did it again, and it kept working.”

In the last five years, PG has focused a large portion of its attention on direct-to-consumer sales. What was an immeasurably small part of their business 15 years ago has now grown to about 33 percent of the company’s sales.

On the negative side of things, you have the “Nighthawks.” Cool name, terrible concept. Nighthawks is the term coined to represent other parties that illegally come on to golf course property – usually at night – and dive for golf balls. While it may sound like a silly concept, it is a serious threat to the used golf ball business. Krueger and Jones – in conjunction with their contracted golf courses – have done everything they can to prevent, stop and discourage these “Nighthawks,” including having a few of them arrested. You can’t police every hazard at every golf course, however, and the risk of lost inventory is one they have to live with.

Then there are the golf ball manufacturers to deal with, of which PG Professional Golf (and other used golf ball sellers) have zero relationship with. You can bet companies like Titleist, Bridgestone and TaylorMade would like nothing more than to see companies such as PG go away for good. In the past, litigation has popped up in attempts to accomplish just that, but to no avail. There are rules and requirements set in place to protect the original manufacturers however, mandating language on packaging and the inability to use the companies’ logos in any way.

All in all, it probably wouldn’t be a stretch to say that Krueger and Jones are living every amateur golfer’s dream (other than being a Tour pro, of course). The used golf ball empire they have built is unmatched across the globe, and as long as there are golfers rocketing pristine white golf balls into ponds, lakes and streams, they will be there to retrieve them.

As we finished our tour of the PG warehouse, I searched far and wide for the Scrooge McDuck-type fault filled with golf balls and equipped with a diving board, but to no avail. Like they said, they leave the golf ball diving to the professionals.