A relative newcomer to the golf club business, PXG continues to add to its stable of endorsed golfers by adding Lydia Ko, world #1 LPGA golfer. t seems that PXG ponied up some major cash, outbidding Callaway in the process of signing Ko.
Since PXG clubs are around 3x as expensive as the major manufacturers’ clubs with probably exactly the same manufacturing cost, PXG only has to sell around 25% of the sets that the others do to make the same profit. This situation is similar to the car industry where luxury cars (Masarati, Ducati, etc) sell for much higher prices than the mainstream cars (Chevy, Ford, Chrysler, etc).
The problem with PXG’s situation is volume:
- Can they sell enough sets to offset the marketing cost of signing 8+ PGA players and the number one LPGA player?
- Can Parsons bankroll the company long enough to reach the tipping point where profits outpace marketing and manufacturing costs?
- Is there even enough market share in the ultra-high-end of the golf club industry to sustain a niche manufacturer even with more modest marketing costs?
2017 may be PXG’s make-or-break year and it looks like they’re going all in.
