Topgolf Callaway Sells 60% Stake: What This Means for the Future of Golf Entertainment

Topgolf Callaway has recently made headlines with its decision to sell a 60 percent stake in Topgolf and Toptracer to Leonard Green & Partners, a prominent private equity firm. This significant deal, valued at $1.1 billion, marks a notable departure from the $2.6 billion all-stock merger that occurred between Topgolf and Callaway in 2020. The decision was unanimously approved by Topgolf Callaway’s board and is anticipated to finalize early next year.

Callaway, which will continue to operate mainly in the golf equipment and apparel space, stands to gain approximately $770 million in cash from this deal. Importantly, they will retain a 40 percent ownership stake in Topgolf, shifting the focus back to its traditional golf business model—an interesting choice for a company now valued in billions.

This development opens the door to various interpretations and implications within both the golf and entertainment industries. To fully understand the ramifications, a deeper dive into the components of this transaction is necessary.

A Swift and Strategic Decision

The decision to sell Topgolf’s majority stake transpired rather quickly, particularly after Topgolf CEO Artie Starrs transitioned to become the CEO of Harley-Davidson in July. Callaway had previously announced plans for a tax-free spin-off of Topgolf, intending to establish it as a standalone entity. Shareholders were set to receive proportional shares in both the new Topgolf and the remaining Callaway.

Originally slated for a September split, the timeline was extended due to Starrs’ exit, and with the following Q3 financial report lacking mention of the spinoff, it became clear changes were underway. In an investor call, Callaway CEO Chip Brewer emphasized the need for a comprehensive evaluation of options to reach what they believe is the most favorable outcome.

According to Brewer, the core Callaway brands have produced approximately $2 billion in revenue over the past year. This sale not only provides significant capital but also allows for reinvestment in their primary products, paving the way for a strong future.

Understanding Leonard Green & Partners

Founded in 1989, Leonard Green & Partners specializes in investing in high-growth consumer brands across various sectors, from food to fitness to healthcare. With a diversified portfolio that includes prominent names like Zaxby’s, Life Time Fitness, and Troon, Leonard Green projects long-term growth for Topgolf as a key player in golf-themed entertainment.

The firm’s proven track record of making profitable investments over 35 years, along with a significant $75 billion in assets under management, signals a strong belief in the potential of Topgolf to thrive under new ownership.

Topgolf has seen considerable growth since merging with Callaway, with over 35 new venues opening. However, challenges arose as same-venue sales dropped, leading to a stark realization that sustaining growth would require more than just expanding the number of facilities.

The Financial Landscape of Topgolf

Despite the promising trajectory following its merger, Topgolf’s overall revenue growth began to show signs of strain. While overall revenue was buoyed by the opening of new locations, existing venues reported troubling sales drops, including a notable 11 percent decline in July 2024. These disappointing earnings reports contributed to a substantial decline in stock prices, triggering the need to reconsider the company’s operational strategies.

As recent reports indicated the potential for improvement in same-venue performance, this created both optimism and skepticism regarding the future direction of Topgolf. With the Q3 2025 financials showing a reversal in the negative trend, it highlights the fluctuating nature of the business.

The Importance of Callaway’s 40% Stake

Retaining a 40 percent stake in Topgolf underscores Callaway’s commitment to its future. This ownership interest offers Callaway a stake in the potential profits of Topgolf as it operates under Leonard Green. Should Topgolf flourish, that remaining percentage could become a valuable asset—not just for Callaway’s financial health but also as an influential player in the golf entertainment landscape.

It should also not be overlooked that Leonard Green holds shares in Callaway as well. However, Brewer clarified that these shares are separate from the Topgolf deal, marking a distinct boundary between the two entities.

Exploring Callaway’s Future Directions

Looking ahead, Callaway seems poised to refocus its efforts on its core brands—Callaway and Odyssey golf equipment, along with related apparel brands like TravisMathew and Ogio. By prioritizing debt reduction and reinvestment, alongside the possibility of a stock buyback, Callaway can nurture its long-standing reputation in the golf market.

In a surprising twist, suggestions have arisen about a potential sale of Callaway Golf itself, especially in light of reports earlier in 2024 that indicated some major shareholders were contemplating unloading their stakes. While a sale remains a possibility, it appears that recent changes reflect a shift towards solidifying Callaway’s standing in the golf industry rather than pursuing expansive or risky growth ventures.

Navigating a Competitive Landscape

Callaway’s decision to separate Topgolf from its core operations reveals its recognition of the need for diverse business models in the golf industry. The distinct characteristics of a leisure-focused entertainment business like Topgolf contrast sharply with the more stable, higher-margin nature of traditional golf equipment manufacturing.

The complexities inherent in operational structures are significant; Topgolf requires heavy capital outlay and faces the challenges of lower margins. This deal ultimately exemplifies the complex relationship between entertainment and traditional sports, where both sectors must find their niche for long-term sustainability.

Future Prospects for Golf Entertainment

As Leonard Green now navigates the landscape of the golf entertainment sector, interest in Topgolf’s offerings will be scrutinized by investors and enthusiasts alike. The firm’s approach will likely influence not only its profitability but also the broader impacts on the burgeoning golf entertainment industry.

Should Leonard Green capitalize on Topgolf’s unique value proposition effectively, they could reshape golf entertainment, influencing how venues are structured, services are offered, and audiences are engaged.

Conclusion: A New Chapter for Callaway and Topgolf

The sale of a 60 percent stake in Topgolf signals a pivotal transition in the landscape of golf entertainment and the operational focus of Callaway. This strategic move is set to afford Callaway significant financial flexibility while retaining a vested interest in Topgolf’s potential growth.

With the firm behind Topgolf now looking at new avenues for expansion, the fusion of entertainment and sports is bound to evolve further. Callaway’s efforts to streamline operations and priorities underscore a broader trend within the industry—one that seeks greater depth and potential in an increasingly competitive environment.

As investors and fans watch closely, both Callaway and Topgolf are on the brink of exciting opportunities that could redefine their roles in the golf world and change how golf entertainment is experienced. The future looks promising, both for the traditional golf brand and the innovative entertainment venue that Topgolf has become.