The parties expect to complete the transaction in early 2021, subject to satisfaction of these conditions. If you enjoyed todays email, subscribe now to receive future emails directly in your inbox. But, it's one of us humans writing the story, we promise. Thats a goal of golf governing bodies, who already have instituted youth development programs aimed at attracting more young golfers to the game. More than half of Topgolfs customers identify themselves as non-golfers, giving Callaway early exposure to potential golfers. Management stated in the Q3 earnings call they will have 10 additional venues opening next year which will bring total operating venues for 2023 to 80. What started as a simple idea to enhance the game of golf has grown into a movement where people from all walks of life connect at the intersection of technology and sports entertainment. It is time and circumstance specific.. Non-GAAP Reconciliation and Supplemental Financial Information, Non-recurring and non-cash charges, before taxes(1). GNN may earn a commission from sales generated by those links. Apart from Callaways previous 14% share in the golf-entertainment business, Topgolf also had major ownership stakes from Providence Equity Partners, WestRiver Group and Dundon Capital Partners, the Dallas-based investment arm of Carolina Hurricanes owner Tom Dundon. Its not exactly clear yet, but id expect more of the same. In addition, investors and stockholders will be able to obtain free copies of the proxy statement/prospectus/consent solicitation and other documents filed with the SEC on Callaways website at https://www.callawaygolf.com (for documents filed with the SEC by Callaway). Management uses such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate period-over-period comparisons and in forecasting the Company's business going forward. We are the subject of inquiries from the capital market world and our investors would look at it as a way to grow the company and get liquidity. A long-term forecast of each of these line items is not available without unreasonable efforts due to the variability of these items and the inability to predict them with certainty. Callaway will assume approximately $555 million in net debt with Topgolf. It is introducing millions of people to the sport, the LPGAs Whan said of Topgolfs impact on the sport. Anderson would not disclose any company financial information or the cost of building Topgolf venues, but building between seven and 10 new venues annually would require a hefty dose of capital. Source: Created by Author with data from Yahoo Finance. Every morning I write an email discussing the business and money behind sports. invrelations@callawaygolf.com, For Topgolf: And for Topgolf, despite its current success, how does it continue to scale and generate repeat visitors? 12+ Lunar New Year food events and specials at D-FW restaurants, French bistro La Parisienne to open at The Star in Frisco, New Chick-fil-A opens in downtown Dallas this week, La Casita has become one of the biggest bakeries in D-FW, and its just getting started, New legislative push begins to end Confederate Heroes Day as an official Texas holiday, Dallas Cowboys signing kicker Tristan Vizcaino to practice squad, Dallas ranked among the most congested cities in the U.S. as work from home is phased out, Tax relief, border security, state worker pay raises among Texas Houses top wishes, The Dallas Morning News 2022 All-area teams, football awards and more, Prime Prosper corner just north of Universals future Frisco theme park hits the market, 5 things to know about Brett Maher, Cowboys kicking situation, New Frisco shopping center is moving ahead with developer funding. The employee data is based on information from people who have self-reported their past or current employments at Topgolf. I am not receiving compensation for it (other than from Seeking Alpha). Topgolf is a growing and potentially large business that Callaway appears to have acquired at a good price, but thats only part of the equation. The average Topgolf hourly pay ranges from approximately $15 per hour for a Bay Host to $133 per hour for a Maintenance Associate. Topgolf employees rate the overall compensation and benefits package 3.5/5 stars. Both CEOs said golf equipment and golf entertainment venues have a chance to excel in the COVID-19 environment while other forms of entertainment have been severely restricted. Capital is also needed to support the companys strategy to offer broader entertainment products either through acquisition or development. Both our golf equipment and soft goods businesses are recovering more quickly than we expected, and our third quarter projections reflect this momentum. In that time, Topgolfs value grew to equal that of Callaway, a dominant name in golf equipment and apparel. ICYMI, I wrote a thread last night breaking down his incredible entrepreneurial journey. In addition, the Company's independent registered public accounting firm has not audited this information or completed its quarterly review procedures for the quarter ended September 30, 2020 and does not express an opinion or any other form of assurance with respect to these preliminary estimates or their achievability. Whats the bid for this rarest of Bugattis? Topgolf is broadening and deepening and driving a younger demographic to be aware of golf, said Andy Pierce, global president of golf and consulting for Lagardre Sports and Entertainment. 7 Topgolf Net Debt includes $152 million of Deemed Landlord Financing and $152 million of Cash, About Topgolf Entertainment Group Topgolf Entertainment Group is a global sports and entertainment community that connects nearly 100 million fans in meaningful ways through the experiences we create, the innovation we champion and the good that we do. The deal, announced Tuesday, creates a company that can draw in non-golfers to Topgolfs entertainment venues and expose them to the broader game, said Callaway CEO Chip Brewer, whose company sells golf clubs, balls, apparel and other equipment. Chip Brewer will continue to lead the combined company as President and Chief Executive Officer. Sometimes we post sponsored content from this account, and it is labeled as such. During your trial you will have complete digital access to FT.com with everything in both of our Standard Digital and Premium Digital packages. 5 Excludes Deemed Landlord Financing After extensive research and analysis, Zippia's data science team found the following key financial metrics. MEMBERSHIP TERMS: If you choose a Lifetime Membership, you will pay a one-time charge of $5.00 where applicable, and you will be subject to the Terms and Conditions contained in this Agreement. Secondly, can Topgolf look up your membership? Averaging out these 2 years resulted in an EBITDA range of 8.20x to 11.65x. Measure of Success: Churchill Downs Race Tracks Sponsorship Strategy Sponsored by IEG, The Marchand and Ourand Sports Media Podcast: Episode 69, NFL still a ratings powerhouse, but there's room to improve for ESPN and Amazon, Fischer: Big questions remain following Hamlin injury, but NFL teams 'absolutely' expect to play on Sunday. The Callaway golf business, and the game of golf itself is experiencing unprecedented growth, Brewer said. At Topgolf, you pay for time at a bay, which you should typically reserve well in advance of your visit if it's a weekend. Is this happening to you frequently? Callaway first invested in Topgolf in 2006, and the companies have maintained a strong partnership since, including an exclusive golf partnership agreement at all Topgolf venues. Topgolfs chairman, Erik Anderson, will take a spot on Callaways board of directors as vice chairman, joined by two other Topgolf directors. Access to easy-to-read digital editions of weekly issues. After the merger, Callaway said its golf equipment will account for 30% of revenue and its apparel 24%, while Topgolf will represent 46% of revenue. Before that, he was editor-in-chief at the Dallas Business Journal and business editor at the Cleveland Plain Dealer. I wrote this article myself, and it expresses my own opinions. Drive Shack, backed by TaylorMade, this spring is set to debut its first golf/entertainment facility in Orlando with a three-story driving range that, like Topgolf, will offer a bar and restaurant experience. Topgolf revenue is $220.0M annually. Investors are cautioned not to place undue reliance on such preliminary estimates. During the course of the preparation of the Company's consolidated financial statements and related notes as of and for the three months ended September 30, 2020, the Company and its auditors may identify items that would require the Company to make material adjustments to the preliminary estimates presented above. Looking for a great beer for Sunday through Thursday nights? (1) In 2020, amounts represent certain non-recurring costs, including costs associated with the Company's transition to its new North America Distribution Center and the implementation of new IT systems for Jack Wolfskin, as well as $0.7 million of severance related to the Company's cost reduction initiatives. See more in GNN's affiliate disclosure. Callaway is issuing about 90M shares to facilitate the merger stock is down about 20% in response. Topgolf is the leading tech-enabled golf entertainment business, with an innovative platform that comprises its groundbreaking open-air venues, revolutionary Toptracer technology and innovative media platform with a differentiated position in eSports. Premium Digital includes access to our premier business column, Lex, as well as 15 curated newsletters covering key business themes with original, in-depth reporting. Any environment where individuals are swinging golf clubs is terrific, said Sarah Hirshland, senior managing director of business affairs for the USGA, which last year partnered with Topgolf to hold U.S. Open watch parties at all Topgolf venues. This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. (1) Callaway Golf charges include: Non-recurring transaction and transition costs associated with the acquisition of Jack Wolfskin, including banker's fees, legal fees, consulting and travel expenses, audit fees and valuations services, as well as non-cash charges related to the valuation of acquired inventory, in addition to other non-recurring advisory fees. Athletic's got you covered. WebFounded in 2000, Topgolf is a sports entertainment facility that features hitting bays, a restaurant, and a bar. Check out how Callaways annual revenue has responded (Source): Which brings me to my next point Callaway is doubling down on diversification. Want to find out the nearest Topgolf location to you? Each Topgolf location costs about $20 million to build, and these locations have typically paid for themselves in two years. 2023 Leaders Group. Stay informed and spot emerging risks and opportunities with independent global reporting, expert Give them a try - use JOE25 for 25% off your first order at athleticbrewing.com. Dallas-based Topgolf Entertainment Group is merging with publicly traded golf brand Callaway in an all-stock transaction that values the golf entertainment business at $2 billion. Any changes made can be done at any time and will become effective at the end of the trial period, allowing you to retain full access for 4 weeks, even if you downgrade or cancel. What that success means in terms of revenue and profitability arent made public by the privately held company, but the company has found the formula to attract a crush of interest from both golfers and non-golfers alike. Accordingly, we have not provided a further reconciliation of EBITDAS to GAAP net income. This suggests that based on the current industry multiples and Topgolfs performance coming out of COVID, Callaway did not drastically overpay in the merger when you look towards the higher range of the valuation. For a full comparison of Standard and Premium Digital, click here. Topgolf has done a wonderful job of running its business and creating an experience that is putting golf clubs in peoples hands.. Upon closing, the combined companys Board of Directors will consist of 13 directors, including three directors appointed by Topgolf shareholders. Investors and stockholders will be able to obtain free copies of the proxy statement/prospectus/consent solicitation and other documents filed with the SEC by the parties through the website maintained by the SEC at www.sec.gov. university Our track record of creativity and diversity of offerings will only grow stronger as part of Callaway, a global leader in the industry, said Erik Anderson, executive chairman of Topgolf. Diluted earnings (loss) per share:. (1) Represents amortization expense of intangible assets from the acquisitions of OGIO, TravisMathew and Jack Wolfskin. The replay may be accessed through the Internet at this link. Topgolf has been growing like crazy the last several years, with the Dallas-based company adding locations around the country. Topgolf has achieved rapid growth and strong customer engagement since its founding in 2000, driven by several platforms, including: Since its inception, Topgolf has created an innovative, tech-inspired twist on the golf driving range experience, turning it into a global entertainment and sports movement. Callaways continued strong cash generation and ample liquidity, including more than $630 million of cash and available credit facilities as of Q3 2020, position the company to fund Topgolfs continued growth with significant ability to pay down debt at the same time. Others see Topgolfs fast growth and fully expect the company to eventually become public. I wondered if I could even get a bay.. Topgolf generated $1.1 billion in revenue last year at 63 locations that drew more than 23 million customers. You may change or cancel your subscription or trial at any time online. Attention spans scatter. 1 Golf Datatech industry report published September 21, 2020 As a result, investors should exercise caution in relying on this information and should not draw any inferences from this information regarding financial or operating data not provided. Topgolf Entertainment Group's platforms include Topgolf venues, Topgolf International, Toptracer, Topgolf Media and Topgolf Swing Suite. The deal ends a 20-year journey as a private company for Topgolf, a concept that started in the United Kingdom to create a new experience in a golf game thats struggled in recent years. Brian Lynch For a valuation method, I used EBITDA trading multiples from a collection of companies that I believe best competes in this entertainment industry that Topgolf truly specializes in. A replay will be made available online approximately three hours following the live call and will remain available through October 27, 2021. Management believes that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful comparative information for investors in their assessment of the underlying performance of the Company's business with regard to these items. Topgolf is expected to generate $1.06 billion in revenue and $158 million in EBITDA in 2021. The part you didn't know? Topgolf garnered an investment from Callaway in 2006 and expanded to the United States, now the primary market for the company. Now that Callaway is buying Topgolf at a $2 billion valuation, a 50% haircut to their projected IPO price earlier this year, whats the plan? Carlsbad, Calif.-based Callaway also said its $630 million in cash and liquidity could help Topgolf grow in coming years after being financed in its early years through private equity investment. We are not nave to say we would never look at it. Topgolf peak revenue was $220.0M in 2021. I have no business relationship with any company whose stock is mentioned in this article. The data on this page is also based on data sources collected from public and open data sources on the Internet and other locations, as well as proprietary data we licensed from other companies. Callaway, Topgolf, and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Callaway in connection with the proposed transaction. That is why we are so focused on content and experience.. Maintaining our same EBITDA multiple range of 8.20x to 12.75x, the Topgolf business could be worth up to $4.3 billion in total value and $23.02 per share by 2025. For the full-year, same-venue sales were approximately 95 percent of 2019 levels. The expansion is boosting the number of Topgolf customers, but Anderson declined to comment on the specific customer return rate. As Topgolf continues to expand, all eyes will be on whether Topgolf can play a major role in developing a new generation of golfers and enthusiasts of the game. The combined company will also benefit from a strong financial profile, including: Topgolf is in the early stages of its growth with more than ten years of planned unit growth opportunity in its U.S. venues business and just 2% addressable market penetration in international venues and 1% in the Toptracer Range business. Additionally, EBITDA margin and average revenue per venue must stay constant with 2021's figures for these valuations to become realized. With the completion of the 9 new venues in 2021, Topgolf will have 70 venues operating for the entirety of 2022. Subscribe to receive our press releases via email: Topgolf Kicking Off 2023 with Opening of Charleston Venue, Pro forma revenue of approximately $2.8 billion based on fiscal year 2019 results that is expected to grow to approximately $3.2 billion by 2022 and at approximately 10% per year in the years following, Pro forma adjusted EBITDAS of $270 million based on fiscal year 2019 results that is expected to grow to approximately $360 million by 2022 and at mid-to-high teens per year in the years following. Topgolf will continue to operate from its headquarters in Dallas, Texas. Click below to sign in. Whatever it has been doing has not been working. Young people are fickle. Disclosure: I/we have a beneficial long position in the shares of ELY either through stock ownership, options, or other derivatives. Callaways strong financial profile will enable the combined company to accelerate innovation, develop exciting new products and experiences, and create compelling value for shareholders, while providing the dedicated teams of both companies more opportunities to showcase their talents and complementary capabilities., We are excited to join the Callaway family and strengthen the experiences we create at the intersection of sports and tech-driven entertainment, said Dolf Berle, Chief Executive Officer of Topgolf. Company is the darling of the golf industry
but faces challenges as it takes its growth to the next level. Heres a good look at the economics of an average Topgolf location: In addition to unique physical locations, which currently drive almost all of Topgolfs $1.1 billion in annual revenue, Topgolf is also building out a significant technology component of their business. Bottom line Topgolf has developed a unique way to engage an entire new generation of individuals that werent interested in golf before. In 2019, amounts represent certain non-recurring transition costs associated with the acquisition of Jack Wolfskin, including consulting costs, audit fees and travel expenses, in addition to other non-recurring advisory fees. Even with the dizzying ascent of the company, Topgolf faces challenges with its growth and expansion. Itll be fun to see how creative Callaway gets in an attempt to funnel recreational driving range visitors into legitimate customers for their existing brand. I am incredibly bullish on it, said Jeff Price, chief commercial officer for the PGA of America. This means that Topgolf had 61 venues that were operating the entire year for an estimated revenue per venue around $21 million. Players can choose to compete in several Topgolf games in which players earn points based on how well they hit to specific targets. It is classified as operating in the Arts, Using management guidance, modest growth assumptions, and industry EBITDA multiples, the Topgolf business could be worth up to $4.3 billion by 2025. Remaining privately-owned during those two decades, the company built locations in every region of the country. Tech entrepreneur Ryan Smith purchased a majority stake in the Utah Jazz yesterday, which values the team at $1.6 billion. Getting good locations is hard, training is hard and we compete against all forms of entertainment, Anderson said. Callaway has invested in Topgolf twice already, in 2006 and 2018, amounting to an existing ownership stake of about 14%. What The CW offers LIV Golf; what Kevin Warren said in his opening presser with the Bears; and whats next for pickleball? As part of Callaway, we plan to grow our leadership position by leveraging Callaways brand reputation, industry relationships and financial strength to connect more communities around the world to the Topgolf experience.. It's a driving range where players of all skill levels can hit balls, each with an RFID chip in them, to different targets up and down the range. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. For Callaway: Topgolf is very much in a high-growth phase right now, Brewer said. WebTopGolf has 5 employees across 7 locations and $423.88 m in total funding,. Gambling problem? You have to continue to reinvest in the experience.. Upon completion of the merger, Callaway shareholders will own approximately 51.5% and Topgolf shareholders (excluding Callaway) will own approximately 48.5% of the combined company on a fully diluted basis. It's been proclaimed the most exciting two minutes in sports. The majority of Topgolfs revenue comes from physical locations, but they also have a growing technology business, which Callaway envisions being a significant source of revenue in the future. Continued access to capital is a major priority if Topgolf is to continue its growth trajectory. Goldman Sachs & Co. LLC served as the financial advisor to Callaway and Latham & Watkins LLP served as legal counsel. The acquisition of Topgolf for $2.6 billion redefined Callaway (ELY) as a golf entertainment company. A long-term forecast of each of these line items is not available without unreasonable efforts due to the variability of these items and the inability to predict them with certainty. Callaway Golf Company (NYSE: ELY) is a premium golf equipment and active lifestyle company with a portfolio of global brands, including Callaway Golf, Odyssey, OGIO, TravisMathew and Jack Wolfskin.