Topgolf Callaway Brands Positioned To Thrive As Golf Industry Evolves

More than 41 million Americans age 6+ played golf in 2022. Of that, 15.5 million (38%) participated exclusively via off-course activities like driving ranges, indoor simulators or golf-entertainment venues like Topgolf, according to the National Golf Foundation.

Within the sport’s biggest customer age segment (ages 18-34), 6.2 million played on-course golf, while another 5.8 million were off-course participants only.

“The golf ecosystem is unique and defining, and changes everything,” Topgolf Callaway Brands president and CEO Chip Brewer said. “This growth and evolution is making golf more accessible and creating structural growth around this game we all love. … Think about how things like Topgolf or Five Iron can keep golf a bigger part of your life. It’s so significantly different and it’s coming on like a freight train. Obviously Covid’s been very good for golf too.

“Five years ago, these off-course golf concepts weren’t scaled enough to really reach you. There will be more people visiting a Topgolf this next year than will be playing traditional golf.”

Seeing this rising trend, Callaway acquired Topgolf, which was founded in the United Kingdom in 2000, for $2.6 billion in a deal that closed in March 2021. In August of the following year, it announced the new corporate name Topgolf Callaway Brands Corp. would go into effect beginning September 2022.

Today, Topgolf makes up 39% ($1.5 billion) of Topgolf Callaway Brand’s total revenue ($3.995 billion) in 2022, according to the company’s full-year earnings report. Segment revenue for Topgolf last year increased $461.4 million (42.4%) compared to 2021.

Topgolf Callaway Brands estimates Topgolf is expected to generate approximately 50% of the company’s total adjusted EBITDA in 2023.

With 11 venues expected to open in 2023—including its first in mainland China—Topgolf’s influence on the evolving game of golf won’t just benefit Topgolf Callaway Brands, but the sport overall.

Interest in playing among non-golfing young adults (18-34) is high, according to the NGF, with more than 6 million saying they are “very interested” in taking up the game while a record 3.3 million people played on a golf course for the first time in 2022, according to the NGF.

Newcomers continue to be more diverse than the sport’s overall participation base with beginners 45% more likely to be non-white and 35% more likely to be female.

“I’m excited about the business prospects associated with Topgolf that creates this unique, new enterprise, but I’m also excited about how it’s positively impacting the game of golf,” Brewer said. “We’ve talked forever about growing the game. We’ve talked forever about making it more diverse. You know what does that better than anything I’ve ever seen? Topgolf.”

While Topgolf serves as a popular introduction to golf for millions, once they’re hooked, Topgolf Callaway Brands’ ecosystem of equipment, apparel and technology hopes to keep consumers in and around the game even longer. That’s why it’s no surprise to see Callaway and Odyssey clubs and TravisMathew and Ogio apparel and products at Topgolf facilities.

To engage with golf’s diversifying customer, fan and participant base, Callaway leverages social content from creators including Roger Steele and Good Good Golf as well as by supporting Steph Curry’s Underrated Golf Tour. Callaway and Curry recently agreed to a multi-year extension of their partnership on philanthropic and game-expanding endeavors which first began in 2019.

Some of the world’s top golfers on both the PGA Tour and LPGA are sponsored by Callaway including Jon Rahm, Xander Schauffele, Sam Burns, Rose Zhang, Atthaya Thitkul and Yuka Saso. The brand’s new Paradym driver has seven wins on the PGA Tour, five on the DP World Tour and two on the Champions Tour so far in 2023, while being the No. 1 driver model on the LPGA tour.

Callaway’s golf equipment segment revenue increased $177.4 million (14.4%) in 2022 compared to the prior year, while its active lifestyle segment revenue increased $223.5 million (27.4%).

Callaway acquired Ogio and TravisMathew in 2017 for $75.5 million and $125.5 million, respectively. It added Jack Wolfskin the following year for $476 million.

While Brewer said the company isn’t “going to bite at everything that comes by,” Topgolf Callaway Brands could potentially add more brands under its umbrella, but is more than pleased to “run the playbook that we have” with its current modern golf ecosystem, which also includes Toptracer, Odyssey and World Golf Tour as well as a minority investment in indoor golf and entertainment company Five Iron Golf.

“The fundamental transformation that is occurring around golf now and our position in it gives us organic growth from the addition of venues, which creates more modern golfers, which creates more traditional golfers,” said Brewer, who has been with the company since March 2012. “You have almost this flywheel effect of growth that gives us a competitive advantage in both scale and reach to all these different golfers. It’s benefitting the consumer and it’s benefitting the golf ecosystem.

“It’s significantly different and we really couldn’t have foreseen something like this 10 years ago. It wasn’t clear to anybody how significant off-course golf would be for golf in general but it’s starting to become very obvious that off-course golf is going to be the funnel to get into golf and is going to expand the universe of golfers very, very significantly.”