When Callaway bought a piece of Topgolf back in 2006, the equipment maker was a $1 billion company that derived 85 percent of its revenue from club and ball sales, and the “tech-enabled golf entertainment concern” was a six-year-old British-born startup. Some industry analysts questioned the wisdom of the move and thought that Callaway had overpaid. They also doubted whether it would pay off in any significant way.
Fast forward 16 years, and the view of the investment has brightened considerably, especially with Callaway buying in early 2021 the 86 percent of Topgolf that it did not already own. The all-stock transaction was valued at a little more than $2.5 billion at its closing, and it would not be inaccurate to describe it as the deal of the century in the golf industry. Keeping in mind, of course, that the 21st century is still quite young.
For one thing, Topgolf has boosted total Callaway Golf revenues dramatically, adding more than $1 billion to the topline in 2021 alone.
For another, the subsidiary has helped its parent company diversify and ease financial reliance on the low-growth golf ball and club sectors. The latest example of that came with the release earlier this summer of second-quarter earnings for 2022. That report indicated that for the period ending on June 30, Topgolf produced net sales of $403.7 million. That was roughly 40 percent of Callaway’s total for that period and just a tad below the $452 million that the company brought in from its traditional golf equipment business. And Topgolf operating income amounted to $44.2 million.
“I see Topgolf as an embedded growth engine and the most reliable of Callaway Golf’s assets.” – Casey Alexander
Then, there is the future, which looks very bright, due largely to aggressive expansion plans and the fact that Topgolf is the dominant player in what appears to be an enormously untapped golf entertainment market.
“I see Topgolf as an embedded growth engine and the most reliable of Callaway Golf’s assets,” said Casey Alexander, managing director of equity research at Compass Point Research & Trading and a longtime observer of the golf industry.
Topgolf was founded in England in 2000 by twin brothers Steve and Dave Jolliffe. The name stood for Target Oriented Practice Golf, and the first location was in the town of Watford, some 20 miles northwest of London. Five years later, Alexandria, Virginia, outside Washington, D.C., became the first place in the United States to have a Topgolf facility. Less than a decade later, company sales exceeded $160 million, and in 2018, Topgolf opened its 50th venue worldwide. Last year, some 30 million people teed it up in the 70 facilities that Topgolf had opened, largely in the United States but also in the U.K., Australia, Mexico and the United Arab Emirates. Annual revenues for 2021 topped $1 billion.
To Alexander, the secret to that success is pretty simple.
“Topgolf is miniature golf for adults,” he said. “You don’t have to be proficient at golf to enjoy going to one of its venues. There is music, food, alcohol and a chance to be with your friends. It appeals to millennials, to be sure, but also to other demographic groups.”

Another factor is the technology it employs, such as golf balls embedded with computer chips and Toptracer. That enables guests to accurately track their shots and opens up all sorts of interactive gaming possibilities. Topgolf also offers a leading mobile golf game called World Golf Tour that boasts tens of millions of members and has digital content that supports the other platforms.
This is by no means your father’s driving range.
It also helps that Topgolf has generated real genius when it comes to marketing, such as the live stadium tours it has been conducting at major sports facilities throughout the United States during the past five years. The company re-creates the Topgolf experience at iconic venues such as the University of Georgia’s Sanford Stadium or Chicago’s Soldier Field, setting up hitting bays and glowing targets at which people can hit shots. And in the process, they have introduced untold thousands of people to Topgolf and touted the fun that comes with a visit to one of its more standard venues.
The company also has expanded the variety of options, whether entertainment-focused facilities with dozens of hitting bays or more intimate Topgolf Swing Suites and Lounges.

As for the future, Alexander is quite bullish about how Topgolf is going to fare in the months and years ahead.
“The company says it is going to be opening 11 new venues a year,” he said. “That means we are talking double-digit growth at Topgolf for years to come. And there are so many places for them to go, especially now that they have proved they can operate in weather-challenged areas. Initially in the States, they opened in the Sunbelt. But think of a place like metropolitan New York, which has only two facilities at the moment.”
Alexander also sees business booming at existing facilities, many of which still are not operating at full capacity post-COVID because of challenges in hiring enough people. “But those places will get there eventually, and even if they have to raise wages, they can cost those increases by raising the rates they charge,” he said.
Then, there is the way Topgolf introduces people to Callaway golf equipment, because that is all that is used at its venues. And the company is expected to start establishing fitting studios at those spots and also selling its TravisMathew apparel, to further leverage those brands.
“Topgolf is on an operational roll, and I don’t see how you stop it,” concluded Alexander, who expects the company to be the largest segment of Callaway’s business by 2025. “It is very popular, and for all intents and purposes, it has very little competition, largely because the barriers of entry and succeeding in this space are huge given the costs of operating dozens of venues while adding more.”
That deal has never looked better.