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Callaway Golf is selling 60 percent of its stake in Topgolf for $1.1 billion. The company will also change its name from Topgolf Callaway Brands Corporation back to Callaway Golf Company.
Private equity firm Leonard Green & Partners is set to acquire the golf entertainment brand at 45 percent less than the $2 billion Callaway paid in 2020.
Over the last five years, Callaway’s stock price has fallen 73 percent, from $37 a share in 2021 to $10 per share today.
Elsewhere in the golf industry, competitor Acushnet Holdings Corp, which owns Titleist, FootJoy, and Vokey Design, has experienced a rise in stock price of over 100 percent in the last five years.
Topgolf rose in popularity in the early 2000s when it combined golf with a social, bar-like atmosphere. Its facilities offer a temperature-regulated environment and a one to two hour commitment as opposed to a typical day-long golf excursion.
Now, the novelty seems to be losing speed.
In his LinkedIn post four months ago, Michael Girdley, founder and CEO of holding company Girdley, analyzed the fall of Topgolf. He cited inflation, higher interest rates, and a shift in customer behavior.
One comment on the post read, “Went to Topgolf for the first time two weeks ago here in Nashville. Way overpriced. Food was mediocre. Facility looked tired. Very much felt like they’re just riding the ship down.”
Another said, “Topgolf nailed the experience game, but scaling something that heavy comes with a price. Great reminder that hype doesn’t always equal sustainability.”
Callaway CEO and president Chip Brewer said the company received interest from “a number of parties” when it began planning its next move.
“After a robust process and a thorough evaluation of a range of alternatives, we believe this sale is the best outcome for our shareholders, as well as our employees and other stakeholders,” Brewer said in a statement. “This transaction is highly attractive in that it provides the company with both significant proceeds and substantial upside in the continued growth of Topgolf.”
This isn’t Callaway’s first portfolio change of the year. In April, the company announced it was selling Jack Wolfskin, an outdoor apparel brand, to Chinese sportswear company Anta Sports for $290 million. Callaway had acquired the brand in 2019 for $476 million.
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Ava Levinson
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