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Friday, October 30, 2020

More About the Topgolf/Callaway Merger

Today I'm linking you to Rex Hoggard's interview with Callaway Golf president and chief executive Chip Brewer and Topgolf CEO Dolf Berle. Now that the two are planning a formal business merger, it doesn't hurt to learn what they have planned.

View from a Topgolf driving bay

Callaway had bought into Topgolf back in 2006 and now owns around 14% of their stock. When this merger is complete, they'll own 51.5%.

I think it's worth knowing about this merger because the pandemic is going to affect all kinds of businesses and, while this merger was already in the works before COVID reared its ugly head, the changing economic environment will dramatically change profitability going forward. In this case, it sounds like Callaway is going to have a way to profit from the playing habits of casual players in a way the other equipment companies won't.

We are entering an economic situation where the price of playing a traditional golf course is going to be out of reach for more people than in the past... and price had already proven to be a deterrent to many potential players. Alternate ways to play, like Topgolf, are likely to become a bigger part of the landscape.

I'll be very interested to see what kind of impact this has on the other equipment manufacturers over the next few years. It's clear from this interview that Callaway and Topgolf are trying to get ahead of the curve.

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