Q&A as Callaway president Brewer and Topgolf CEO Berle talk merger
In the pandemic world of Zoom meetings, it’s often difficult to discern body language and facial cues because of bad internet connections or evolving technology. That wasn’t the case with Chip Brewer.
From the outset of a Q&A with the Callaway Golf president and chief executive, there was no mistaking his excitement. “My job is to not screw it up and be supportive,” he said with a smile when asked about Callaway’s recent merger with Topgolf.
In a wide-ranging interview with GolfChannel.com, Brewer was joined by Topgolf CEO Dolf Berle to talk about one of the golf industry’s most significant mergers in recent years.
It’s such odd times that we’re living in, was this merger on your radar to start the year? If not, when did this become a priority?
Brewer: The conversation kind of stated in [the second quarter of 2020] and heated up in Q3. We’re pleased that both companies realized this was the right move.
This is something we considered for a long time. We’ve had a position with Topgolf since 2006. This is such a powerful combination and creates such a strong entity in the sport of golf. It’s also good for the game of golf. It will benefit the consumer and benefit the sport. Topgolf is the best thing that’s happened in golf since Tiger Woods.
My job is to not screw it up and be supportive of [Dolf Berle] and his team. They have an engine down there and the consumer loves Topgolf. They don’t like it, they love it.
Berle: We were growing remarkably well and were headed for an IPO to continue that rapid growth rate in all parts of our business. Because COVID showed up, we closed all our venues in the middle of March and didn’t go ahead with the IPO. This is a remarkable landing spot. We would say mission accomplished and happy landing.
How will the resources that this merger creates enable Topgolf to grow?
Berle: We believe that after a careful study of all the trade areas in the U.S., there is the potential for 200 venues in the U.S. [Topgolf currently has 63 locations around the globe]. That’s a combination of small, medium and large venues. Internationally, we have a franchise approach and we have successfully opened venues in Australia and Mexico. Dubai is opening in Q1 next year.
How do plan to leverage Topgolf’s popularity into club and golf ball sales?
Brewer: It’s going to be a competitive advantage for Callaway to be able to access all of these golfers. We have this large audience with them in the fold and we’re going to do what’s in the best interest for Topgolf. People will have interest in some of the latest and greatest products from Callaway. In the Las Vegas facility we have a fitting center and we’ll explore those types of opportunities as well.
More than 51 percent of Topgolf customers identify as non-golfers. How do you transition these potential players into more traditional, 18-hole golfers?
Berle: A non-golfer means they golf one or less times a year and you see that on the tee lines. There are people in high tops and constructions boots and everything else. We’re providing easy access to the sport and a first-time experience that is social and fun. We find that people learn to love the game and become proficient enough to move to a green-grass facility.
Brewer: The beauty of this is, it’s going to happen organically. I appreciate all the grow-the-game initiatives and perhaps they were impactful, but you couldn’t see it in the numbers. Topgolf is clearly going to be the biggest growth initiative we’ve seen and you can see it in the numbers.
Seventy-five percent of these non-golfers say they have a high or very high interest in playing what we call traditional golf. Of the non-golfers half of those visitors said they planned to play on a golf course in 2021. That’s very specific.
Can you explain the importance of Topgolf range as part of this transaction?
Brewer: It’s really a hidden gem because it’s so small. To most people, it’s not a known entity yet as Topgolf has reached a critical scale. With the success that it drives at these ranges, where revenues are going up 25 to 60 percent, it makes it a better experience for the consumer.
If you go to the range and you have it on your mobile app we would have access to data that allows us to see how you’re hitting it and we can target market you with either swing tips or products that will benefit you. It’s really exciting the different things we can leverage.
What are your thoughts on how players like Bryson DeChambeau and Phil Mickelson are pushing the boundaries at the top level and do you envision some of this working its way down to the recreational game?
Brewer: It’s clearly fun, we’re all going to try it. In my group on Saturday a guy had a 46.5-inch driver shaft delivered to him. That’s one of the fun things about golf. That’s one of the things we’re going to be able to leverage here. That’s what we love about this game.
How do you envision the momentum that golf gained in 2020 because of the pandemic carrying into next year?
Brewer: There’s obviously a great deal of uncertainty in the world. Having said that, the momentum that golf has I don’t see anything changing in the near future.
In the near term, we are benefactors of these unusual times and I don’t see why that would change. In the long term our embedded growth rate as an industry is a little higher. We’re not going to sustain that growth, but those trends are not abating.
Berle: We’re excited because the addressable audience is vast and global and the merger with Callaway allows us to be even more confident that we will be able to have sustainable growth.