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When Tony Utegaard’s construction business slowed down amid the recession of the late 2000s, he built, on a whim, a pool table on top of a 1965 Ford Mustang body. He and his business partner, Ben Mallah, sold just one of the car pool tables in 2009.
But a decade later, the product looks queued up for takeoff thanks to a deal with wholesale powerhouse Costco — and some entrepreneurial spirit, business hustle and the discipline to stick to a good idea.
'Who knew you could create a luxury item that nobody’s ever heard of, thought of or needs, in a terrible recession, and have it take off?' Tony Utegaard, Car Pool Tables Inc.
“We sat there saying, ‘Will anyone buy these?’” Utegaard recalls. “You really don’t know, because there weren’t any, and 2009 wasn’t the most economically advantageous time to start something like this.”
But what started as a side hobby business quickly gained steam as Utegaard went from selling two or three of the tables per year to more than a dozen. Orders, through the company he created, Safety Harbor-based Car Pool Tables Inc., came in from across the United States and around the world, including customers in Canada, Mexico, Japan and Dubai.
“It became this ongoing joke,” says Utegaard, 40. “Who knew you could create a luxury item that nobody’s ever heard of, thought of or needs, in a terrible recession, and have it take off?”
It’s even more ironic because Utegaard is neither a billiards player nor a car guy — “I couldn’t tell a quarter panel from a fender,” he says — and neither are the company’s clientele, which he describes as mostly affluent collectors.
Ford Motor Co. has bought a couple of the tables. Other clients include fashion icon Tommy Hilfiger and the royal family of Abu Dhabi. On a recent weekday, Utegaard had 11 car pool tables in production, with six slated for clients in Dubai.
“What we’ve learned is that the classic car guys are not our customers,” Utegaard says. “They would rather have the actual automobile.”
Car Pool Tables Inc. is about to be exposed to a whole new audience, though, thanks to a deal struck earlier this year with Costco. The Issaquah, Wash.-based chain — second only to Walmart in retail sales — contacted Utegaard in January wanting to know if Car Pool Tables would consider having its 1965 Shelby Mustang GT-350 model marketed and sold via Costco’s website.
“Costco sells a lot of things besides what you see in the store — cars, vacation packages, living room sets,” Utegaard says. “The way they are going to be marketing and selling the car pool tables is more direct. They’re talking about doing an email blast to some 27 million of their high-end customers, and many of them are business owners.”
Utegaard’s answer to Costco’s inquiry, after months of negotiations, was yes. But it doesn’t come without risk — and sacrifice.
When Utegaard sells a car pool table directly to a client, the price tag is around $14,000, including shipping and installation.
Costco, on the other hand, plans to sell them for significantly less — $10,999. That big discount was a sticking point in the negotiations and a testament to how the company, with its member-based warehouse club business model, operates differently than many national retailers. (Costco executives declined to comment for this story.)
“Costco’s No. 1 driving concern is not profit margin,” Utegaard explains. “They want their members to receive the bulk of the margin discount. They make way less than most people would make in retail. That mindset is not something I’d heard of before.”
The deal means Car Pool Tables Inc. will take a haircut on its gross profit margin from each Costco transaction. Utegaard says that number will drop below 20%. But the increase in sales and exposure, he believes, will more than make up the difference.
Where Costco wouldn’t budge on profit margin it, does provide some leeway on production delays that could result from the increase in demand for the product.
Utegaard says the company has been going along steadily over the past half decade, churning out 40 to 50 tables per year and generating about $500,000 in annual revenue. But “the projection right now is that Costco could end up tripling our production. They’re saying they could sell 50 to 100 more than what we already do, and that’s a conservative approach. It’s something we really had to brace for.”
Car Pool Tables Inc.’s products are manufactured with painstaking attention to detail, from real rubber tires to authentic LED lights and fiberglass panels that look like they were pulled right off of the muscle cars of yesteryear. The pool table itself is handmade locally from solid hardwood and pieces of slate provided by Steve Lunsford, a longtime billiards industry supplier.
But it’s risky business to mess around with iconic brands like the Shelby Mustang without its blessing. So Utegaard worked with the team at Shelby American in Gardena, Calif., to make sure his car pool tables would be recognized as officially licensed merchandise and not denigrate the values of the brand associated with Carroll Shelby, whose signature muscle cars came to be synonymous with an era of American auto manufacturing.
“You want something like this to represent your brand,” says Tracey Smith, executive vice president of Caroll Shelby International, who helped negotiate the licensing deal with Car Pool Tables Inc. “Tony has been a great partner with a product that is unique and well put together — you’re not going to see a ton of these things out there. It was a win-win for us, I was very happy to bring them on as a partner and I’m glad we are still doing business with them.”
Smith recalls running across one of Utegaard’s pool tables in 2010 at a Barrett-Jackson auto auction event. “I’d never seen anything like it,” she says, “and so I approached him.”
Smith says Utegaard, at the time, was unaware of the difference between a regular Mustang and a Shelby. “I said, ‘Trust me, there’s a difference. People will know.’ And so we started chatting and eventually it evolved into a deal.”
Car Pool Tables Inc.’s workforce, in general, fluctuates in accordance with demand. But Utegaard says he has up to 11 people on the job at any given time. He expects to hire five to six more with the Costco deal, at least, and has had staff members doing some production work in advance to prepare for the uptick in sales.
More importantly, he says, “we’ve gotten our finances in order” in case the company needs capital to quickly scale up. Utegaard has also spent the past six months simplifying and standardizing production and assembly manuals so new workers can quickly get ready to do more.
Costco executives told Utegaard that in a worst-case scenario where he can’t keep up with demand, the company would “turn off” the marketing and allow him to catch up. “They were really cool,” says Utegaard. “It’s been such a neat experience to work with Costco because they’re so unlike some of the big, cold, corporate companies that I’ve tried to work with before."
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