By George Moore
SafeTees Pouch, Inc.
(First in a Series)
Traditional green-grass golf is being challenged as never before, and this challenge is especially serious because much of it is coming from within the golf industry.
The impact has already been felt. More than 1,000 courses have closed since 2006. Nearly 200 closed in 2018; only 12 new ones opened.
Furthermore, the number of rounds played in 2018 was down 4.8 percent from rounds played in 2017.
The National Golf Foundation (NGF) says the closures are “part of an ongoing correction within the industry.” What?
The NGF similarly says the drop in number of rounds played is “inexorably tied to outside factors such as the weather and economy.” No evidence offered.
With apologies to Bob Dyland, the times they are a-changin’.
‘Entertainment’ Is In the Air
Meet the new challenger: “Golf entertainment.” And the top dog in the increasingly crowded golf entertainment arena is a company called Topgolf.
One estimate places Topgolf’s value at $2.1 billion, and in its press releases, it claims “a worldwide fan base of nearly 100 million.” That’s almost twice the number of green- grass golfers worldwide.
Topgolf, backed by Callaway (yes, that Callaway), offers multi-story high-tech driving range experiences in climate-controlled hitting bays complete with HDTV, friends of good cheer and plenty of food and drink to take one’s mind off of mishits.
The venue is similar to other golf entertainment facilities, including Drive Shack, a relatively new player in the genre. Drive Shack, backed by TaylorMade (yes, that TaylorMade), opened its first golf entertainment facility last year in Orlando with a three-story driving range that, like Topgolf, offers a bar and restaurant experience.
Other Drive Shack venues planned for 2019: West Palm Beach, FL, Raleigh, NC, and Richmond, VA. And next year, New Orleans will get a Drive Shack.
Creating An Image
The golf entertainment industry in general and Topgolf in particular do a wonderful job of self-promotion, and they take care to avoid direct clashes with green-grass traditionalists.
Topgolf, with 15,000 employees, tries to thread the needle by saying it wants to convert its customers into green-grass golfers. No such goal is mentioned in Topgolf’s mission statement, however.
Here’s Erik Anderson, the executive chairman of Topgolf, during the National Golf Foundation Golf Business Symposium in Dallas last year:
“The more people that have a golf club in their hand and the more fun they have, green grass clearly becomes more accessible.”
More from Anderson: “We should be able to get people ready to enjoy all that golf has to offer at our facilities. That’s the No. 1 thing I think about how to work with our partners and the game – we can get people very ready to go to a green-grass course, and that’s what we’re really working on with our teaching and training.” [Emphasis added.]
Which is all the more remarkable because Topgolf’s founders, Steve and Dave Jolliffe, don’t like green-grass golf very much. Steve told Entrepreneur magazine last year that he considered green-grass golf a stuffy pastime obsessed with “the difficulty, the dress code, the silly rules.”
Drive Shack, it should be noted, seems to make no pretense that it’s trying to grow green-grass golf.
Ken May, the chief executive officer of Drive Shack (and former chief operating officer and CEO at Topgolf), said in a letter to shareholders last year that the company’s goal is to become “the leader of the experience entertainment industry.”
The Nuts and Bolts of Topgolf
At Topgolf, bays are rented by the hour (roughly $25 to $45 per hour, depending on time and day of the week), and each bay usually can accommodate up to six people.
Players then select a game (there are a half-dozen or so to choose from) and swing away at balls containing microchips. The targets are 20 to more than 200 yards away. (“Top” is the acronym for “target-oriented practiced.”)
Topgolf, headquarters in Dallas, has 58 venues worldwide, with 54 in the United States, according to a recent Topgolf press release. The rest are in the United Kingdom and Australia. The company is eyeing Canada, Mexico and the United Arab Emirates.
If you’re interested in opening a Topgolf franchise in your neighborhood, the company says you should have at least $18 million. The Topgolf at the MGM Grand in Las Vegas reportedly cost $71 million, all at company expense.
Average franchise annual income, Topgolf says, is $24.4 million. Half is from food and drink.
The company is private and identifies its principal backers as the WestRiver Group, the lead investor, and Callaway Golf, Providence Equity Partners, and Thomas Dundon. The investors keep close track.
Anderson, president and CEO of WestRiver, is co-chairman of the Topgolf board, in addition to his role as Topgolf’s executive chairman.
Dundon, managing partner at Dundon Capital partners and an investor in hockey and football, also is co-chairman of the Topgolf board. (He told the Dallas News that he owns nearly 25 percent of Topgolf.)
Oliver “Chip” Brewer, president and chief executive officer of Callaway, is a member of the Topgolf board. (He also is a member of the National Golf Foundation board.) Callaway reportedly has about 15 percent of Topgolf.
Michael J Dominguez, managing director of Providence Equity Partners, Inc., and Scott M Marimow, managing director, Providence Equity Partners Inc., are members of Topgolf’s board. Providence made a “sizable minority investment” in Topgolf in 2016.
Topgolf presents a lot of figures.
It says 13 million customers (68 percent male) visited in 2018. The daily average was 45,609 customers, the average stay was two hours, and the average group size in hitting bays was four people.
The company says a majority of customers (54 percent) were between the ages of 18 and 34, while 16 percent were 17 and younger, 14 percent were 35 to 44, 14 percent were 45 to 64, and only 2 percent were 65 and above.
More Topgolf figures: 51 percent of the customers were non-golfers; 17 percent were occasional green grass golfers (1 to 7 rounds a year); 14 percent were moderate green grass golfers (8 to 24 rounds a year); and 8 percent were avid green grass golfers (25 and more rounds a year).
Next week: A closer look at Topgolf’s supporters.
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