Topgolf may be the secret sauce golf has been missing over the last decade as viewership began to wane in concert with the decline in the performance of the sport’s biggest star, Tiger Woods.
Topgolf is a Dallas-based entertainment chain that combines golf with music, food and alcohol. At the company's driving ranges, golf balls are embedded with microchips that track locations for different types of gameplay options. The company views itself as "your premier entertainment destination," according to its website.
“They are opening the game of golf to a new demographic that is enjoying it in a more flexible sort of way. I'm not ready to say it's driving increased rounds, but it is driving increased interest in the game,” Stephens analyst Daniel Imbro, who covers Callaway Golf (ELY) - Get Report , told TheStreet. “Making the game more accessible for new people to try is only a good thing.”
TV viewership for the Professional Golfers Association has had a renaissance the last two years and there is evidence to suggest that interest in the game is helping to drive the gains.
The broadcast of the PGA Tour Championship experienced the best viewership numbers since 2009 in 2018 (5.89 million viewers) and 2019 (3.71 million viewers). While part of that can be explained by the return of Woods to prominence two years ago, the 2019 numbers were up 76% from 2017.
Callaway Golf CEO Chip Brewer mentioned the company’s increasing investments in Topgolf as a positive in on its third-quarter earnings call.
Callaway owns about 14% of Topgolf at $290 million, suggesting an unofficial valuation of more than $2 billion.
Sports Illustrated sat down with Diamond Resorts CEO Mike Flaskey this week to discuss the business of golf and Topgolf. Diamond Resorts is owned by Apollo Global Management Inc. (APO) - Get Report .
“We think the Topgolf model is great because we think, like our tournament, it is attracting a new demographic, like millennials, who may be new to golf. For sure, the concept is a great concept and it is kind of blending entertainment with golf and we believe strongly in that,” Flaskey told Sports lllustrated recently in an interview.
Diamond Resorts tees off the LPGA season with the Diamond Resorts Tournament of Champions today. The tournament runs Jan. 16-19 in Lake Buena Vista, Florida.
Last week, it was reported that Topgolf has been in contact with Morgan Stanley, JPMorgan Chase and Bank of America concerning a potential initial public offering that would value the company at about $4 billion.
Topgolf has about $525 million in outstanding debt, according to a Bloomberg analysis.