• Redingus And The Golf Ball Factory

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    Redingus and the Golf Ball Factory

    What, they had canceled the Dean Martin Tucson Open? “Well not exactly, but they did change the name to the Glen Campbell Tucson Open”. Once again I could see we were headed down below. Steve was a good friend and fellow invester.
    About six months ago, in an attempt to get money back from yet another failed venture he had come up with this latest scheme.

    He had a friend with contacts at the Dean Martin Tucson Open. We could get a booth right at the entrance as people came in to watch the tournament. We found that no one was selling visors at the event, and this was going to be our ticket to success. Steve could buy the visors, imprinted with the name of the outing, for $2, and we could sell them for $10. Sounded good to me. We ordered 5000 and were already counting the profits. Hey, it’s always sunny in Tucson. Very hot actually; people would need protection from the sun. 50,000 were supposed to show up, so all we had to do was to have a 10% market penetration. Nothing could stop us.

    It rained two of the tournament days and was overcast and threatening on the other. No one needed or bought a visor. Okay, a slight setback, but there was always next year. Right. Steve’s news of a name change came about a month later. So now it was the Glen Campbell Tucson Open. Hey, but look what we had, collector’s memorabilia with Dean Martin’s name on it – Hmmm, found that there weren’t too many ready collectors looking for that particular item. In the end Steve ended up selling most of them at the Orange County Swap Meet for $.50 a visor.
    Over the years we were prime investors in a number of ill thought out ventures. Cybernumb (name changed to protect the stupid) never really understood what computer thing they did, but the Dean of the business school had invested $100,000. That meant something didn’t it? Didn’t it mean that we should follow him? The company filed for bankruptcy shortly after the president, a charismatic looney, called me during a spiritual experience on a mountaintop in Malaysia begging for more money. The only good that came out of it was that the company owed a Chicago Law Firm $724,000 when they filed bankruptcy with no assets.

    Harrier Corp. had a variety of Swiss inventions including the biontron lamp which, when shown on a body part could cure anything from head lice to arthritis. It actually caused skin cancer if used for more than ten minutes. Black Gnat Mining, a Gilsonite mine, where we had a student with a motorcycle ride over the desert looking for black streaks in the sand, reopened a shaft and found the bones of the previous owner (that was the highlight).

    Nissan trucks into Nigeria? At $10,000 profit per truck I looked at every risk this time. The only thing that could cause a slight loss was the Central Bank of Nigeria failing. Sort of like the Federal Reserve. Okay, a little different than our Federal Reserve. Yup, first time in history. Joe and Steve each had Nissan key chains and the titles to five pickups as a memento. The trucks were last seen in Lagos driven by Somali Pirates on their way to the motherland. We even tried importing and selling mistletoe using the Boy Scouts as our distribution system. Wow, never knew how sticky mistletoe is, and that it really isn’t an item to be sold door to door. The Boy Scouts do not allow a multi-level marketing scheme.

    Each adventure made for great stories, credit card debt, and tighter bonds of misery. The companies and the investments continued, always sure that the next deal would make us whole.
    It had all started a long, long time ago with the New York Steaks. There I was, an adjunct professor at BYU minding my own business – strutting around like Mussolini in front of 150 freshly scrubbed, bright-eyed students doing my stuff – teaching marketing at the bottom of a bear pit with stadium seating.

    The second week one of my students – somewhat older – came up after class and ask, “Did I like New York Steaks”? Being less of a fool than he thought, I said “of course”. He then spun out a tale of getting these steaks through Miller Beef in Hyrum, Utah and that they were free, had to get rid of them, fell off the truck, on and on. An obvious bribe to influence his grade. Deciding on whether my taste for a Prime New York overrode my moral qualms, I quickly replied, “How many steaks are we talking about?”

    It seemed that the supply, perhaps, could be endless. Thus began a 40-year friendship where we found humor in most everything and lost serious money together on a bunch of investments. This first one was the very worst. Steve came up about mid term and ask, “How would I like to buy a golf ball factory”? Being a brilliant professor and considerably fattened up on New York’s, I said I might just be in the market.

    We flew to LA where the so-called golf ball factory was located – Pasadena – worst section, on about an acre in the owner’s back yard. Buildings, machinery that dated to 1893 (no kidding), chemicals, liquid transfer lines and electrical conduit running everywhere. Guns on the walls to protect against gang intruders.

    The basic operation ran around the procedure of recapping used, sliced and pretty much destroyed golf balls. The owner had a supplier who I later believed was hiring thugs to raid local golf courses at night then using a machete to rough the balls up a bit. The idea being to recap the golf centers with a new white cover and then print whatever the customer might require. “Oh Hell” seemed to be the favorite – that wasn’t really the most favorite, but this is a family story. There were also private brands that were takeoff’s on real brand names
    Tittlist, Macflight, Salenger, Proflit – you get the picture – in fact the name of the company was Proflit Golf. Or the buyer could request whatever name he wanted – name of his golf course, driving range, etc.

    The finished product looked pretty much like any other golf ball, however the performance varied dramatically – sometimes the balls went far, sometimes not so far, and occasionally needed recapping again after a first hit. Some of the centers separated from the newly applied outside cover when whacked, and the elastic wrapped center would dance all over the course until fully unwound. You might have guessed that the only warranties we offered were the ones given to us by our suppliers/thieves/druggies. Most recaps were purchased for range balls, , and the price was right – to the wholesale buyer – $1 a ball.
    Once a batch of several hundred had rolled off the final phase of the recapping process, then the owner, manager, manufacturer, and marketer would sell them throughout Southern California.

    His method? Each year he bought a new four door Cadillac, removed the rear seat and panel so that there was a complete space from the back of the front seat to the end of the trunk. Then load as many golf balls as possible into the open area and set off for a run to all of the golf courses, ranges, pro shops, etc. on the list. Most balls were loose and were bucketed out to the clients, who then resold them with a 100% markup. When the Caddy was empty, return, manufacture the next bunch and make the run all over again.
    Employees? Just the owner, his wife, two parolees, and the owner’s 83 year old brother – Homer by name. Why was it for sale? Owner had a stroke and was in the hospital – wife wanted to sell the business. Price, $200,000 all cash. Represented with full power of attorney by their lawyer, a Mr. Alfonso Redingus, Esq., who we got to know all too well over the ensuing years.

    We negotiated with Mr. Redingus and the owner through his oxygen mask for three days – finally arriving at a price of $75,000. $25,000 down and the rest monthly over three years – Cadillac not included. What was included besides all equipment were 25 gunnysacks full of balls in various stages of disintegration ready to be recapped and about 5000 balls ready for brand name application. However we had to move the factory off his land.

    We celebrated to High Heaven, congratulating ourselves on our negotiating skills. What a steal, we were going to make millions. How could this fail, me armed with my Stanford MBA, (think about it – I was a really smart, graduating in the top 95% of my class), and Steve with a coming Masters in Recreation. We were going to be in deep clover.

    Our first really, really bad move was to decide to move the factory to Utah – giving us more control and naturally moving completely away from the established market. Aw, we thought, freight, a minor item.

    Steve had a friend (married to a French woman, which should have been warning enough) who was a master mechanic. He agreed to come with us, disassemble the factory, help us load it on to some semis and reassemble in Utah. We started on a Monday and began the dismantling. No drawings, no recording of what went where. Just unbolt, uproot, sever, and sledgehammer – sawz-alls, cutting torches and giant snipers. Three or four times I ask the master mechanic if he was sure that he could reassemble everything. I got a disbelieving look of disdain, something that he had no doubt picked up from the French wife. This was the second major mistake.

    There were very large machines, barrels of chemicals, seemingly miles of electric conduit and wire, copper, brass and galvanized pipe. I was glad we had someone to depend on to build this factory back into its efficient form. The 83 year-old Homer helped until he fell backward into a Mulberry Bush and passed out, a common occurrence apparently. We caught the parolees taking finished inventory to their own cars and fired them on the spot. So we were sort of on our own with even less attention to detail and no one around to answer any questions. Three semis were finally loaded and we were off to the South side of Provo, Utah – nice lease in an industrial area next to the RR Tracks.

    As we unloaded all of what now looked like debris from a nuclear explosion, I thought, “Holy Cow, does anyone remember where everything hooks together”. Over the next six months the answer turned out to be a resounding “NO”. The master mechanic was firmly under the thumb of his Le Femme wife, and with his normal job at the BYU ROTC, he spent as little time as possible resembling. It was a disaster. Steve spent a lot of time attempting to teach me how to drive balls down the Railroad track (I did best with a Sand Wedge) next to the building in attempt to assuage our joint sorrows.

    We hired a manager/shop foreman/worker bee/janitor to label and ship balls to our California Market, quickly finding that the shipping cost cut whatever profit there was to zero. The chemicals to be used in the recap process were horribly expensive, highly corrosive, and dangerous (step in a spill, be careful, so caustic that it would eat everything up to the knee if not immediately washed off), but finally we got the factory running so we could actually recap some balls – the main machine looked like a five ton waffle iron. We lost an average of $2 for every ball reskinned, realizing we had moved the operation away from hundreds of golf courses to Utah where there were a grand total of seventeen. We had no backseatless Cadillac for delivery, we never really figured out how to do any serious manufacturing and then there were the relentless calls from Mr. Redingus each month if we were one day late. We were now out $25,000 plus six payments of $2000, plus another $20,000 to get the factory going, plus overhead now of about $8,000 per month. But we had the pride of Ownership of the Proflit Golf Ball Factory.

    After three months of operations and losses approaching $10,000 per month, we knew it was time to get out of Dodge. But who would be as dumb as us to buy such a debacle. We advertised, we promoted, we begged – not a soul was interested. Finally when we were two payments behind on the building rent, and a month arrears with Redingus, we went to the Landlord to explain our plight. We offered to sell him the entire mess – lock stock and barrel – all we wanted was to recover the $60,000 or so that we had put into the factory – he would take over our debts, – sunshine and happiness to abound.

    We used our best selling techniques – Our landlord was much smarter than we (really?), owned the building, had manufacturing experience, on and on. His counter offer to us was he would take over the payments to Mr. Redingus and we could walk, although we were still on Mr. R’s hook if he couldn’t make a go of it. We adjourned to consult one another. Steve looked at me through terror filled eyes and said,” Its an answer to prayer”. “No, No,” I said, we have to make it look good. We’ll tell him, “Give us $10,000 and we’ll walk”. Our Landlord just looked us in the eyes and said, “Take it or leave it” and started to turn away. “Sold”, I croaked, eagerly grasping his hand in a firm businesslike manner to seal the deal.

    The buyer was a man of his word, eventually paying off the note, but unfortunately his success was no better than ours. Two years later, after having enough of this character building experience, he donated the entire factory to Goodwill, taking the tax write off against some of his other legitimate enterprises. However so as to never forget our overwhelming stupidity, forever after Steve referred to me as Redingus and I call him Homer.

    This experience should have been enough for us to part company. We’d each lost $30,000 and he’d run out of steaks, so what was the purpose. I’d proven I was a dumb as a crowbar as his teacher and the tried and true strategies he’d learned in my marketing class were obviously a total academic hoax. But we liked one another and so Redingus and Homer went on to many other adventures – in which we skillfully created tax loss carry forwards for the rest of our lives, providing we can both live to 120.
    Forty years later we are still great, great friends, but don’t ever mention an investment idea to one another. When we go out to eat, we both still like a New York Steak, but we split the bill.

    MAY 2012

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