By George Moore
SafeTees Pouch, Inc.
(Second in a Series)
Rodney Dangerfield (Al Czervik in “Caddyshack”) always got laughs with his signature line, “I get no respect.”
Topgolf can relate.
In its infancy, it, too, got no respect. Golf equipment companies rejected partnership deals, and the PGA, LPGA, USGA and most investors gave the company the cold shoulder.
Golf … but not golf? Ha ha ha.
But when one American investor, Richard Grogan, finally visited the first Topgolf facility near London in 2004, he remarked, “There’s something happening here. I sense a tiger; let’s see if we can find his tail.”
Grogan found the tail, all right, and it turned out that the tiger went by the name “Golf Entertainment.” And since then, just about everyone connected to the golf industry has jumped on the golf entertainment bandwagon.
‘Have a Great Time’
What is Topgolf? It’s a place to hit golf balls, sure. But it’s a whole lot more, too.
The company says it’s “your premier entertainment destination. And by entertainment destination, we’re talking about a place where you can come for birthday parties, bachelor or bachelorette parties, corporate events, date nights, or just a night out with friends, and everyone will have a great time.”
Topgolf leads the golf entertainment genre by a country mile. One estimate places its value at $2.1 billion, and in press releases, it claims “a worldwide fan base of nearly 100 million.” That’s almost twice the number of green-grass golfers worldwide.
The founders, who didn’t like traditional green-grass golf at all, opened their first Topgolf near London in 2000, and the company now has 58 venues worldwide. A Topgolf press release says 54 are in the United States, and the rest are in the United Kingdom and Australia. Canada, Mexico and the United Arab Emirates may be up next.
The company is private, and the principal backers are the WestRiver Group, the lead investor, and Callaway Golf, Providence Equity Partners, and Thomas Dundon. All are involved in corporate governance.
Topgolf promoters are everywhere. Golf media (Golf Digest, 11/21/18, “TopGolf Las Vegas Is Where It’s At”). Professional golfers who have made millions playing on green-grass courses (Greg Norman, YouTube at Topgolf Austin, 3/7/14, Topgolf brings “a breath of fresh air” to golf).
Not to be out-done, Golf, Inc. magazine declared Erik Anderson, executive chairman of Topgolf and head of WestRiver, to be the most innovative person in golf in 2015.
And just last week, the magazine had high praise for Anderson when it announced that he will be speaking at its Strategies Summit, “The New Golf Experience,” in September.
Jack Crittenden, editor in chief, wrote, “There has been a shift from selling tee times or memberships to delivering meaningful experiences. … We are excited to have the key leaders behind golf’s shift to more entertainment and a greater focus on great experiences. Erik is at the forefront and has the biggest footprint in this space.”
Erik got that footprint with lots of help, most notably from Callaway Golf, which had always made a decent living selling golf equipment to green-grass golfers.
Thank you, Mister Callaway
Callaway climbed aboard the Topgolf wagon in 2006 with the purchase of $10 million in preferred shares of Golf Entertainment International Limited (GEI), Topgolf’s parent. Callaway’s president at the time was George Fellows.
Topgolf and Callaway also set up a “Preferred Partner Agreement,” whereby Topgolf made Callaway the preferred supplier of golf products used or offered for use at TopGolf facilities and gave Callaway preferred retail positioning in the TopGolf retail stores, plus access to consumer information obtained by TopGolf.
The following year, Callaway moved to secure its investment when it and other Topgolf shareholders agreed to two loans to Topgolf. One was for capital projects and operational needs, and the second, four months later, was intended to keep Topgolf afloat “as a result of the seasonal fluctuations of the business.”
Callaway says it agreed to an additional exposure of $1.5 million under the second loan if asked and if other shareholders didn’t step up to the plate.
Also, in February 2008, Callaway and another GEI shareholder (not identified in Callaway’s annual report) agreed to provide collateral in the form of a one-year letter of credit for $8 million on a loan to a subsidiary of GEI.
In for a penny, in for a pound. As of January 2018, Callaway’s investment in Topgolf stood at $70.5 million.
Oliver “Chip” Brewer, Callaway’s president since 2012, sits on Topgolf’s board … and he has a seat on the board of the National Golf Foundation, which also helps with Erik Anderson’s footprint.
Golf Entertainment is ‘Golf’
The NGF has welcomed “golf entertainment” into the golf world by broadening the definition of golfing. The foundation says in its annual report, “Total golf participation climbed to 33.5 million in 2018 when factoring in increasingly popular off-course forms of the game such as Topgolf.”
The NGF says it found “latent demand” of 14.7 million people who didn’t play golf on a course in 2018 but who were “very interested” in doing so. (The foundation adds that the number is about 15 percent higher than it was two years earlier, partly as a result, it says, of the growth and popularity of off-course golf.)
The NGF further says that nearly half of the 14.7 million who are “very interested” are “lapsed golfers,” or people who at some point have played on a course but didn’t play last year. The rest have never played on a course, the NGF says.
(The “very interested” apparently are no-shows. According to Statista, the number of on-course golfers has remained steady at around 24 million annually since 2012, down from 30 million in 2006.)
With the NGF on board, it was perhaps inevitable that the PGA would hop on, too, and in 2016, Topgolf and the PGA announced a “strategic alliance.” Among other things, the “alliance” calls for “linking PGA TOUR and LPGA tournament activities to local Topgolf venues.”
A little more than a year later, the PGA announced a second “strategic alliance” with Topgolf. This alliance is designed to help promote job openings for golf industry professionals at Topgolf venues nationwide.
Pete Bevacqua, CEO of the PGA at the time and now president of NBC Sports Group, said, “Topgolf’s fun and entertaining concept is rapidly attracting a new generation of non-traditional players to the game, and we’re proud that PGA Professionals are instrumental in this growth. In addition to growing the game, Topgolf’s exciting expansion represents an outstanding opportunity for PGA Professionals nationwide.”
Now for icing on the cake: Topgolf is offering 50 percent discounts on game play to all 30,000 PGA members Mondays through Thursdays.
Topgolf has gotten respect. And nobody’s laughing.
Next Week: Another perspective on “golf entertainment.”
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