Golf giant Callaway acquires Topgolf in $2 billion deal

Golf giant Callaway acquired the rest of sports entertainment company Topgolf in an all-stock deal Tuesday, with the latter valued at ~$2 billion.

The backdrop: Topgolf was founded in 2000, and just six years later Callaway made its first investment, which included an exclusivity deal across all locations. In 2018, Callaway increased its stake to 14%; now it owns the entire company.

Topgolf transforms the traditional driving range with a gamified experience, where players earn points by hitting targets. Most aren't coming to work on their game; they're coming to eat, drink and hang out with friends.

• Revenue: $1.1 billion in 2019
• Customer demo: Over 50% of Topgolf's 23 million guests last year identified as non-golfers.
• Scale: 71 locations across five countries, 30 states and Washington, D.C., are either open or coming soon.

The big picture: This deal will help Topgolf scale its operation and give Callaway access to millions of prospective golfers, all while providing a case study for the industry as it finds new ways to appeal to younger and more casual players.

• 18–34 year olds represent 25% of on-course golfers (24.1 million), but 40% of the 9.9 million off-course golfers (i.e. Topgolf), per the National Golf Foundation.
• Meanwhile, 15.7 million people who didn't play on a course last year said they'd be "very interested" in doing so in the future. Callaway hopes its Topgolf presence will help convert some of those folks into customers.

"Topgolf is the best thing that happened to golf since Tiger Woods. It's going to be the largest source of new golfers for our industry."