Topgolf Callaway is announcing a multi-year agreement with Gulf Saudi to bring Topgolf Callaway brands to Saudi Arabia.
The deal, which was announced in a press release issued today at 3:00 a.m. ET (10:00 a.m. Riyadh time), includes plans to build three Topgolf facilities in Saudi Arabia by 2023 , with an option for two more in the future. . These locations will be owned and operated by Golf Saudi.
In addition, Callaway, Odyssey, TravisMathew and Ogio will be the official equipment and apparel brands for Saudi Arabia’s men’s, women’s and youth golf teams. Saudi Elite golf professionals and golf professionals working at Saudi Golf facilities will also be sponsored by these brands.
Finally, Golf Saudi will be the official distributor of Callaway, Odyssey and Ogio products in Saudi Arabia.
What does this mean?
In an early morning press release, Ben Sharpe, current Managing Director and President of Callaway’s EMEA division said:
“We are excited to enter another market in the Middle East with three (Topgolf) locations in Saudi Arabia. We have found a strong partner in Saudi Golf to help us bring our modern golf brands…to the region and help transform Saudi Arabia into an exceptional golfing nation.”
The news comes on the heels of the announcement earlier this month that Topgolf Callaway plans to split into two separate companies as of mid-2025. The plan is to spin off Topgolf into a separate entity, with current Topgolf Callaway shareholders receiving equivalent shares in the new Topgolf, thereby avoiding the tax implications of an outright sale.
The split followed a less-than-stellar second-quarter financial report that, while showing overall Topgolf sales growth, highlighted a fourth straight quarter of same-location sales declines at Topgolf. That meant Topgolf’s growth was being fueled only by opening new locations, while quarterly sales at existing locations were declining.
Management announced in its second quarter report that the downward trend in the same country and the unsatisfactory performance of the stock was prompting them to conduct a “strategic review” of Topgolf. A month later, the company announced its intentions to split up.
The Saudi connection
The Saudi Golf link is the interesting part of the announcement. Golf Saudi is the operating arm of the Saudi Golf Federation, which is an element of Saudi Arabia’s Vision 2030. Vision 2030 is a broad government initiative to create a sustainable, diverse and – in their words – economy and society. progressive and not dependent on oil.
A pillar of Vision 2030 is tourism and a key element of the tourism pillar is golf. That’s why the Saudis started LIV, and that’s why the Saudi Golf Federation and Saudi Golf are promoting the construction of golf courses in that country.
The reasoning is simple. Saudi Arabia wants to become a global business hub. To do this, it needs global businesses to set up shop in the desert. To make this happen, the country must provide places to go, sights to see and things to do.
Golf is one of those things.
There are currently seven golf courses in Saudi Arabia, with plans for 14 more to open by 2030.
Also among the objectives of Golf Saudi:
- Develop a golf ecosystem to drive jobs, create businesses and increase revenue streams
- Connect golf tourism by driving interest in new properties and destinations
- Position golf through events that showcase Saudi as an innovative and progressive society
- Provide access to golf through fun-based entry-level golf initiatives.
The plan to build up to five Topgolf facilities allows Saudi Golf to check at least three off that list.
Additionally, Golf Saudi is working to incorporate golf into a national sporting culture. His goals include enrolling 500 kids a week in golf camps, creating 50,000 golf-related jobs and getting more than one million people to at least try the game.
What does this mean for Topgolf Callaway?
In the short term, it’s an opportunity to partner with a well-funded, golf-centric entity. Topgolf Callaway joins companies such as Six Flags theme parks, Hilton, Ritz-Carlton, Hyatt and other hotel chains, as well as golf design firm Nicklaus in partnering with the Saudis to invest in their country’s future.
If you’re of the mind to conclude that the whole point behind LIV is “sports flush”, you can probably conclude that it’s working. If you instead believe that LIV is part of Saudi Arabia’s efforts to globalize its economy and create the society that Vision 2030 calls for, you might as well conclude that it is working.
In the big picture, the Topgolf Callaway-Golf Saudi partnership is a business coup for both Topgolf and Callaway, adding value to both entities. You will recall in March a South Korean news agency reported that a The Topgolf Callaway split was coming. Chosun Daily said Topgolf Callaway’s three biggest investors, who together owned 33 percent of the company’s shares, wanted out.
The plan as reported was to spin off the Topgolf business, which is happening, and then sell the golf and apparel business to Callaway for about $3 billion.
According to the report, a South Korean investment company was the leading candidate to buy the Callaway business.
So far, the Chosun Daily report has been remarkably prescient. If Callaway is indeed on the trading block, today’s announcement adds another wrinkle, and perhaps a potential suitor, to the mix.
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