OT - Callaway to buy rest of Top Golf?

[David_Tepper]

https://www.marketwatch.com/story/callaway-golf-in-talks-to-buy-the-rest-of-topgolf-it-doesnt-own--wsj-2020-10-27?mod=mw_latestnews

[Bernie Bell]

Top Golf valued at $2 billion.  Wow.

[Tony_Muldoon]

Top Golf valued at $2 billion.  Wow.

I went to the first one in Watford. when it opened.
The second was across the street from my then office. Sam Torrance opened it and for ages his name was on a large screen with the highest score. The manager said within the year there would be a short game practice area and a 9 hole P&P.  Neither happened.
They quickly discovered their core market was not regular golfers, there's quite a few still out there.

[Steve_ Shaffer]

Geoff Shackelford chimes in...


“Topgolf is the best thing that happened to golf since Tiger Woods,” Callaway Chief Executive Chip Brewer said in an interview. “It’s going to be the largest source of new golfers for our industry.”

[/size]....[/color][/size]this seems like a steal for Callaway and CEO Brewer given several factors: Topgolf’s popularity, the likelihood of the facilities bouncing back in better times, and the ability to introduce new golfers to Callaway clubs, or sell directly to avid golfers.[/color]


https://www.geoffshackelford.com/homepage/2020/10/27/callaway-buys-topgolf-in-all-stock-deal

[Edward Glidewell]

Geoff Shackelford chimes in...


“Topgolf is the best thing that happened to golf since Tiger Woods,” Callaway Chief Executive Chip Brewer said in an interview. “It’s going to be the largest source of new golfers for our industry.”

....this seems like a steal for Callaway and CEO Brewer given several factors: Topgolf’s popularity, the likelihood of the facilities bouncing back in better times, and the ability to introduce new golfers to Callaway clubs, or sell directly to avid golfers.


https://www.geoffshackelford.com/homepage/2020/10/27/callaway-buys-topgolf-in-all-stock-deal

I assume they have numbers to back that up, but I don't know a single person who has transitioned from TopGolf to real golf. I personally don't enjoy TopGolf at all but I know a lot of people who do like it. None of them have shown any interest in going out to an actual course and playing. It's almost a completely different thing.

[David Wuthrich]

TopGolf is a bar, with golf as a side attraction.

[Mike Bodo]

TopGolf is a bar, with golf as a side attraction.

[Kalen Braley]

I would completely concur that Top Golf is an entirely different niche.  As an established golfer, it was uninteresting to me, just like playing actual golf is uninteresting to most who I went with to Top Golf on 2 different occasions.

[Bernie Bell]

TopGolf is a bar, with golf as a side attraction.

So are some of my favorite golf courses!

[Carl Rogers]

If Top Golf keeps the once every 6 month golfer off the course (5 hour round plus), then I would call Top Golf successful.

[Mike Bodo]

Anytime you go to a Top Golf location you're sure to see a bunch of Callaway branded equipment and apparel. I'm sure all the junky clubs there now will be Callaway branded before too long. It's a great niche for them to further grow their brand and sell more product. I applaud them for the move.

[Ryan Hillenbrand]

TopGolf is a bar, with golf as a side attraction.

Its bowling, with better looking participants

[Steve Lapper]

TopGolf is a bar, with golf as a side attraction.

David,


Spot on!
That Said:


For the record, Top Golf has indeed had a discernible impact on the game. There is documented data, pre-Covid 19, that public courses nearby to various successful TG locations saw increased interest from beginning golfers. A decent. For example, I’ve seen some of the metrics from Austin, TX and Edison, NJ that had strong correlations as well as surveys that distinctly tied initiation to the game at TG to first-time lesson participants at various Munis and public daily fee venues. I’m sure Callaway knows this as well.


Let’s all understand that GCA readers and posters are—for the most part—amongst the more enthusiastic, experienced and avid golfers existent. Let’s not be the snobs some sound like.

[Alex Miller]

Anytime you go to a Top Golf location you're sure to see a bunch of Callaway branded equipment and apparel. I'm sure all the junky clubs there now will be Callaway branded before too long. It's a great niche for them to further grow their brand and sell more product. I applaud them for the move.

This is it. I don't know why the market sold off but I sure will be buying some ELY (and wish I had back in March).


Callaway gets to introduce their brand to all of the new golfers who enter through Top Golf. They get R&D as it relates to microchipped balls, they get a new customer base to market to directly, they get to combine and scale their advertising, they get a place to put excess inventory (balls and clubs) and can therefore leverage better manufacturing with larger commitments, and they get to charge customers hand over fist for a good time and a trial of their clubs (which seems to be working on its own for TG). They'll also have enough regular customers at these locations to go all-in on Kingdom-like fittings - it's a retail homerun but I think so much more.

[Mark Kiely]

Where's my electronic ball dispenser?
Where's the waitress?
Where's the specialty cocktail menu?
What was my score on that shot?
Why can't I hear the music?
Where are all the giant TVs?
Wait, we're going to be out here four and a half hours?


I could go on, but I'm skeptical that many people introduced to golf via Top Golf will take any real interest in the game we know as golf. Other than hitting a golf ball with a golf club, it's an entirely different experience in almost every conceivable way. (As said by others above as well.)

[Mike Bodo]

They'll also have enough regular customers at these locations to go all-in on Kingdom-like fittings - it's a retail homerun but I think so much more.

Herein lies the scary part. They'll own the market for golfers that wish to transition from Top Golf to traditional golf, as all will be fitted with Callaway Clubs and Odyssey putters and play with Callaway balls. Of course, they'll have Callaway bags to transport their clubs in and be adorned in Callaway hats, shirts, gloves and shoes. Not a bad gig if you can get it. LOL!

[Kalen Braley]

Where's my electronic ball dispenser?
Where's the waitress?
Where's the specialty cocktail menu?
What was my score on that shot?
Why can't I hear the music?
Where are all the giant TVs?
Wait, we're going to be out here four and a half hours?


I could go on, but I'm skeptical that many people introduced to golf via Top Golf will take any real interest in the game we know as golf. Other than hitting a golf ball with a golf club, it's an entirely different experience in almost every conceivable way. (As said by others above as well.)

Mike to some extent they can get all of those things on at least some courses.  But that last one is the reason I remain skeptical.

Hit the ball, go find it, hit it again, go find it, rinse, repeat...for 4.5 to 5 hours, (not including travel time or practice time if they want to improve)?  I'm highly doubtful the Top Golf crowd are gonna stick with that!

Its a bit like jamming to Guitar Hero, and then signing up for Guitar lessons...nope, nope, nope!

[Mike Bodo]

Hit the ball, go find it, hit it again, go find it, rinse, repeat...for 4.5 to 5 hours, (not including travel time or practice time if they want to improve)?  I'm highly doubtful the Top Golf crowd are gonna stick with that!

Its a bit like jamming to Guitar Hero, and then signing up for Guitar lessons...nope, nope, nope!

LMAO!!    This will be an interesting experiment for Callaway, for sure. However, if the 25% conversion rule noted in the Golf Advisor article from 2018 is still applicable today, it represents a LOT of potential money in Callaway's coffer - both in the short and long term.


https://www.golfadvisor.com/articles/topgolf-is-growing-the-game-and-these-new-golfers-are-proof


To quote an excerpt from the article.
"While the majority of people who visit Topgolf aren't avid golfers, Topgolf is certainly having an impact on the game. In fact, according to a fall 2017 survey conducted by the National Golf Foundation among Topgolf users, 23 percent of those who identified themselves as new golfers who now play on green grass golf courses, said that their first golf experiences came at Topgolf. And of those who graduated from Topgolf to golf courses, 75 percent of those said that Topgolf influenced their decision to start playing "real" golf. Considering the millions who come to Topgolf venues every year, those numbers are certainly significant."


Although there are a lot of Topgolf naysayers here, I wouldn't be too quick to dismiss the impact Topgolf is having on introducing new golfers to the game. Obviously, Callaway did their research and saw this as HUGE opportunity to have these golfers become lifelong Callaway brand loyalists. Again, kudos to them for recognizing and capitalizing on the opportunity, as it gives them a distinct edge over their competition.

[Alex Miller]

Not to mention that Top Golf's current goal is not to convert non-golfers to golfers, but to get repeat customers and grow their business. With this new goal of creating golfers in mind, perhaps they offer affordable group and individual lessons and give their pros a commission on sales of clubs, balls, etc. There are ways to boost the 23% number and to capitalize on that financially.

[Wayne_Kozun]

Top Golf valued at $2 billion.  Wow.

Do you mean Wow, that's high?  Or Wow, that's way down.


Back in January there was talk that it would IPO at a $4B valuation.  So it is down 50% from then.


Topgolf IPO Could Value Company at $4 Billion

[Steve Lapper]

Top Golf valued at $2 billion.  Wow.

Do you mean Wow, that's high?  Or Wow, that's way down.


Back in January there was talk that it would IPO at a $4B valuation.  So it is down 50% from then.


Topgolf IPO Could Value Company at $4 Billion

Pre-Covid valuations for hospitality enterprises, even with .75B of debt have gone the way of dinosaurs. This was a smart deal for both parties. They were already "in bed" together and one needs growth, and the other a firmer financial footing that is able to service debt and wait out the pandemic storm.


 FWIW, I bought a sizable stake in ELY yesterday and will continue to do so until the Street recognizes that 1+1=3 here.

[JESII]

This feels like a great move for Callaway to diversify into a corollary business. I don't see it as an attempt to convert users into their core business and actually think if they're jamming "regular golf" down my throat while I'm there it'll hurt. If they have a shop stocked exclusively with their brands, great...just don't send an instructor into our group trying to make sure everyone is getting the club to the correct positions.

[Kalen Braley]

Mike,

Good post, and for the record, I think this was both a great movie by Callaway and that Top Golf niche is a legit business model that's here to stay.

If I read your post correctly, 75% of the 23% who convert over, or 17.5%, is still a pretty low conversion rate. But hey real golf can use all the help it can get right?

P.S.  Perhaps they can convert the upper deck to a Vegas style, 21 and over, adults only area with other activities to lure them in...

[Mike Bodo]

If I read your post correctly, 75% of the 23% who convert over, or 17.5%, is still a pretty low conversion rate. But hey real golf can use all the help it can get right?

P.S.  Perhaps they can convert the upper deck to a Vegas style, 21 and over, adults only area with other activities to lure them in...

Prior to COVID-19, the golf industry would have fallen all over themselves for an increase of 23% new golfers coming into the game. To retain 17% of them long-term is still a nice number of new golfers being added to replace those dropping out. Essentially, one can look at Topgolf as a feeder system to "real" golf. Whatever it takes to bring new blood to the game I'm all in favor of. We need growth to keep our beloved archies here gainfully employed. 


To your last point regarding converting the Upper Deck to "adults only". Sign me up! 

[Edward Glidewell]

Its bowling, with better looking participants

I actually think bowling is more fun.


With that said, there's nothing wrong with TopGolf. I'm glad people enjoy it.