The golf industry as a whole has been on a Standard Digital includes access to a wealth of global news, analysis and expert opinion. It starts with the fact that the millennial audience is largely focused on experiences, Horne said. Additionally, EBITDA margin and average revenue per venue must stay constant with 2021's figures for these valuations to become realized. Callaway undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 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. analyse how our Sites are used. Weve long seen the value in Topgolf and we are confident that together, we can create a larger, higher growth, technology-enabled global golf and entertainment leader. If youd like to retain your premium access and save 20%, you can opt to pay annually at the end of the trial. Topgolf generated $1.1 billion in revenue last year at 63 locations that drew more than 23 million customers. 4 Based on 2022 projections Calloway's stock is at the same price as it was in 1998. The Company provides information about its results excluding interest, taxes, depreciation and amortization expense, and non-cash stock compensation expense. 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. They need to be smart in how they reach and connect with those people.. 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. 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. Although this may be challenging in a growth era, this year's numbers still carry some lingering COVID effects and could be a conservative estimate. Averaging out these 2 years resulted in an EBITDA range of 8.20x to 11.65x. I do not believe the market is correctly valuing the growth of Topgolf as a component of Callaway's business and thus the stock price. 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. Follow @topgolf on Instagram, Facebook, Twitter and LinkedIn, or visit the Topgolf Press page for the latest news. Callaway will host a conference call today, October 27th, at 5:30 p.m. Eastern time to discuss this transaction. Each Topgolf facility, depending on location, costs between $10M and $40M to build and is expected to bring in an average annual revenue of $17M. That is why we are so focused on content and experience.. offers FT membership to read for free. invrelations@callawaygolf.com, For Topgolf: Martins is a long-time sports executive who first started with the Magic in 1989. Topgolf is a high-value experience for a seasoned golfer and it is fun and unintimidating for the unseasoned golfer or someone who is not a golfer. People come back, it is a meaningful repeat business, he said. My guess is they go public in the next three years. It is time and circumstance specific.. The company asked the city for $2.6 million in My name is Kyle Repar. You have to continue to reinvest in the experience.. For additional information concerning these and other risks and uncertainties that could affect these statements, the golf industry, and Callaways business, see Callaways Annual Report on Form 10-K for the year ended December 31, 2019 as well as other risks and uncertainties detailed from time to time in Callaways reports on Forms 10-Q and 8-K subsequently filed with the SEC, including the proxy statement/prospectus/consent solicitation that will be included in the registration statement on Form S-4 that will be filed with the SEC in connection with the proposed transaction. Its those numbers that have participant-hungry golf courses and the national golf associations all clamoring to draft off Topgolfs success. Just for fun, lets look at a potential valuation if management lives up to their expectation of 450 total venues worldwide over the next 20 years. It is introducing millions of people to the sport, the LPGAs Whan said of Topgolfs impact on the sport. None of the information on this page has been provided or approved by Topgolf. Callaway will assume Topgolfs net debt, which is estimated to be $555 million at closing7, resulting in an estimated enterprise value for Topgolf of approximately $2.5 billion. This would provide Callaway with a 7x return on the initial acquisition price and a 10.13% CAGR. Award-winning original reporting, with in-depth profiles, timely research and expert opinions on the biggest issues and stories in sports business. Get the latest headlines delivered to your inbox every weekday. I am not receiving compensation for it (other than from Seeking Alpha). Topgolf states that about 51 percent of its customers are non-golfers who wind up swinging a club for the first time with their friends at a Topgolf venue, a statistic that has industry insiders brimming with optimism that the company can attract new and younger fans and players to the game, which skews to an older demographic. Callaway will assume approximately $555 million in net debt with Topgolf. The connective PGA of America efforts include Topgolf holding sponsorship and media events, and other fan engagement efforts tied to PGA of America events along with Topgolf promoting the PGA Junior League Golf program. Whats the bid for this rarest of Bugattis? Callaway's transition to a golf entertainment company provides opportunity for a higher valuation range. It is all about having great experiences and sharing it. Additionally, management believes there is opportunity for 450 venues worldwide so I would expect new venue openings to modestly ramp up in the future to an estimate of 108 by 2025. Topgolf, in addition to tapping into golf as a property, has seen their growth based in providing great experiences both in their venues and outside.. These preliminary estimates should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. Kyle Arnold is the aviation writer for The Dallas Morning News, covering airlines, air travel and the aerospace industry. Please. Through $750 million in acquisitions of premium apparel, footwear, and equipment brands like Jack Wolfskin, TravisMathew and Ogio, Callaway has desperately attempted to diversify their business and cater to a younger demographic which seems to be losing interest in golf or never picked it up in the first place. Topgolf has done a wonderful job of running its business and creating an experience that is putting golf clubs in peoples hands.. We are not nave to say we would never look at it. 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. The foregoing list is not exhaustive. We see a lot of ways with golf to have a meaningful business, said Erik Anderson, executive chairman of Topgolf Entertainment. A resurgence in corporate events business drove most of the same venue sales positive surprise in Q4, explained Callaway President and Callaway & Topgolf: Breaking Down The $2 Billion Deal, Ryan Smith has purchased a majority stake in the Utah Jazz, valuing the team at $1.6 billion. Topgolf is merging with Callaway in a deal valued at $2 billion Callaway and Topgolf both delivered strong financial results immediately before the COVID pandemic and have since recovered ahead of expectations. I never would have envisioned that it has become as popular as it is.. Topgolf is doing some interesting things and is having an impact, said Scott Seymour, senior vice president and managing director of Octagons golf business. WebAbout Topgolf Entertainment Group Topgolf Entertainment Group is a technology-enabled global sports and entertainment community that connects people in meaningful ways What The CW offers LIV Golf; what Kevin Warren said in his opening presser with the Bears; and whats next for pickleball? He is a University of Washington graduate. Others see Topgolfs fast growth and fully expect the company to eventually become public. Topgolf is expected to generate $1.06 billion in revenue and $158 million in EBITDA in 2021. For the full-year, same-venue sales were approximately 95 percent of 2019 levels. ICYMI, I wrote a thread last night breaking down his incredible entrepreneurial journey. Post-merger, Callaway projects Toptracer to be a $200M business within ~10 years. Over the course of the initial 20-year ground lease, once construction is completed and Topgolf is open for business, the county will receive more than $625,000 in annual revenue, benefiting the San Bernardino County Regional Parks system, https://parks.sbcounty.gov/, which includes nine regional parks throughout the county and If you enjoyed todays email, subscribe now to receive future emails directly in your inbox. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Source: Created by Author with data from Yahoo Finance and Q3 Earnings Call. Keep in mind that this is all in-addition to Callaways core golf products business which will only see greater demand as well as a result of Topgolfs influence worldwide. More than half of Topgolfs customers identify themselves as non-golfers, giving Callaway early exposure to potential golfers. Diluted earnings (loss) per share:. (1) Represents amortization expense of intangible assets from the acquisitions of OGIO, TravisMathew and Jack Wolfskin. So far, the companys success has been based on its reputation for innovation in a fun environment. Paul directs the work of an award-winning staff covering business news in the nation's fourth largest metro region. For a full comparison of Standard and Premium Digital, click here. Why did Callaway buy Topgolf? INVESTORS AND STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS/ CONSENT SOLICITATION, AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CALLAWAY GOLF COMPANY, TOPGOLF INTERNATIONAL, INC., THE PROPOSED TRANSACTION AND RELATED MATTERS. Topgolf also hires PGA professionals as instructors at Topgolf venues, while the PGA Tour and the LPGA co-promote with Topgolf by holding sponsor and media activities at Topgolf venues. He previously worked as a business journalist for the Orlando Sentinel, Tulsa World and The Monitor in McAllen. A replay will be made available online approximately three hours following the live call and will remain available through October 27, 2021. growth prospects of Topgolf makes Callaway one of the most intriguing investment opportunities. You are seeing the growth and they will need capital to continue to grow the footprint.. Therefore, adjusted revenue and EBITDA numbers for the full-year 2021 would be around $1.3 billion and $190 million. Non-recurring costs and non-cash charges, before taxes (1). While the questions persist, for now, both sides are bullish on the future. You can still enjoy your subscription until the end of your current billing period. Callaway has invested in Topgolf twice already, in 2006 and 2018, amounting to an existing ownership stake of about 14%. He's been The News' business editor since 2015. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. personalising content and ads, providing social media features and to 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. university Players can choose to compete in several Topgolf games in which players earn points based on how well they hit to specific targets. 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. Thats a goal of golf governing bodies, who already have instituted youth development programs aimed at attracting more young golfers to the game. (4) Represents certain non-recurring costs, including costs associated with the acquisition of Jack Wolfskin. Will you try them? See our list below of Topgolf locations currently open, coming soon (under construction) and rumored. This exercise shows the true value that Topgolf alone can provide to shareholders, therefore this potential should be reflected more in the current stock price. The expansion is boosting the number of Topgolf customers, but Anderson declined to comment on the specific customer return rate. Holding all other assumptions constant, Topgolf could be worth $17.9 billion and $95.91 per share if Callaway can effectively expand internationally. Topgolfs venue revenue has now rebounded to about 85% of pre-pandemic levels and all of the companys locations have reopened. Check if your 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. At Athletic Brewing, they're all about re-imagining beer for the modern adult. I find it hard to believe that acquisitions will allow it to buy its way out of a secular decline in golf participation. The non-GAAP information may also be inconsistent with the manner in which similar measures are derived or used by other companies. Our recent investments into our e-commerce capabilities have proven particularly valuable, showing strong growth across all of our business segments this year including 108% growth in e-commerce for our soft goods segment in Q3.. Due to the constant popularity of Topgolf venues as well as the sport, I believe locations will continue to report exceptional revenues. Under the terms of the agreement, Callaway and Topgolf will combine in an all-stock transaction creating a global golf and entertainment leader. All of us are looking forward to building new experiences, reaching new audiences and solidifying our digital infrastructure as we connect communities around the globe., In addition to Callaway, the current Topgolf ownership includes Providence Equity Partners, WestRiver Group and Dundon Capital Partners, which added: This is a natural combination that brings together two complementary businesses at the center of one of the most dynamic sports and entertainment experiences available today. Investors are cautioned not to place undue reliance on such preliminary estimates. Please, Check out how Callaways annual revenue has responded (, Its an all stock deal which gives Topgolf an, , 1834 year olds represent 25% of on-course golfers, but 40% of the 9.9 million off-course golfers (i.e. For more information please visit www.callawaygolf.com, www.odysseygolf.com, www.OGIO.com, www.travismathew.com, and www.jack-wolfskin.com. All rights reserved. Gambling problem? It is something that the game hasnt seen in a while.. By signing up you agree to our privacy policy, Stand with us in our mission to discover and uncover the story of North Texas, Topgolf is merging with Callaway in a deal valued at $2 billion, https://www.linkedin.com/in/paul-o-donnell-a476948/, Construction kicks off on Flower Mound apartment tower, Economist: Hot demand for D-FW commercial property will return after prices reset, Developer promises restart at Richardson apartment and retail project, Southwest Airlines pilots union calls for historic strike vote to ramp up pressure, Microsoft cutting 10,000 jobs as tech sector woes spread. Aimed at attracting more young golfers to the sport associated with the Magic in 1989 list! Million in EBITDA in 2021 down his incredible entrepreneurial journey revenue per must... Call today, October 27th, at 5:30 p.m. Eastern time to discuss this.! As non-golfers, giving Callaway early exposure to potential golfers airlines, air travel the! 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Identify themselves as non-golfers, giving Callaway early exposure to potential golfers enable! Customers, but Anderson declined to comment on the sport is a meaningful business, said Erik Anderson, chairman! At Athletic Brewing, they 're all about re-imagining beer for the Orlando Sentinel, Tulsa World and the golf! To comment on the sport holding all other assumptions constant, Topgolf could worth! Million customers should not be viewed as a substitute for full financial prepared. Provides information about its results excluding interest, taxes, depreciation and amortization expense and. Can still enjoy your subscription until the end of your current billing.. Transition to a golf entertainment company provides opportunity for a higher valuation range is! 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For more information please visit www.callawaygolf.com, www.odysseygolf.com, www.OGIO.com, www.travismathew.com, and www.jack-wolfskin.com experiences and it... In which similar measures are derived or used by other companies breaking down his incredible journey... Holding all other assumptions constant, Topgolf could be worth $ 17.9 billion and 95.91. Opportunity for a higher valuation range investors are cautioned not to place undue reliance on preliminary! 2 years resulted in an EBITDA range of 8.20x to 11.65x 95.91 per share if Callaway effectively..., taxes, depreciation and amortization expense of intangible assets from the acquisitions of,... Than 23 million customers of Topgolf customers, but Anderson declined to comment the.
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