Golf: Deep Dive

Golf: Deep Dive

  • Intro

  • Universe

  • Covid

  • Topgolf Callaway

  • Bulls

  • Bears

  • Conclusion


For this week’s deep dive, we’re stepping into the world of golf. Maybe you went all-in on your golf hobby during the pandemic, trying to one-up your VP on the course. Or maybe you’re just a casual golfer who loves to tear up Topgolf and beer with the boys.

The pandemic exposed the extent the golf industry has become big business but make no mistake about it - the seemingly modest and classy pastime has blossomed into the same commercialization and influx of wealth as most other major American sports.

Not too long ago, golf was merely an afterthought, an unassuming diversion for enthusiasts. During the inaugural PGA Tournament in 1916, a paltry sum of $3,000 constituted the grand prize. Yet, the golf industry is now worth a staggering $84 billion as of 2023.

Tiger Woods, the prodigious talent and self-proclaimed sex addict, helped commercialize the like never before. When Woods turned professional at 20, he snapped up endorsement deals with sportswear titans like Nike and Titleist. Tiger Woods paved the path for golfers to capitalize on their own name, image, and likeness. As of November 2022, it was estimated Tiger Woods had raked in over $1.6 billion dollars from endorsement deals.

And it’s not just the superstars that are making a decent living. As the industry has grown in value, the 130th spot on PGA’s money list (the cutoff to retain the PGA tour card) has seen average earnings soaring from $58,000 in 1986 to nearly $577,000 as of May 2023.

Golf’s popularity has led to an influx of television advertisements and endorsement deals, but it’s also led sportswear and sports equipment companies to clamor for a piece of the $84 billion industry.


The golf industry is massive. Sportswear and sports equipment manufacturers produce clubs, balls, bags, and apparel for the estimated over 40 million Americans that play golf. Golf courses and resorts employ tens of thousands of Americans and provide restaurants and sometimes even accommodation for golfers. And a lot goes into a televised golf tournament, from advertisements and sponsorships to partnerships with media outlets.

Companies that produce golf equipment and apparel could be a good bet for investors. Some of the major sportswear titans like Nike, Under Armour, and Puma like to flex their muscles in the golf space. But ironically for some of these big dogs, the golf industry doesn’t always turn a profit.

Take Nike for example. The company got out of the golf equipment business in 2017 and now mostly sticks to golf apparel. During Nike Golf’s final year, the segment generated the company over $700 million in revenue.

But Nike couldn’t scale its golf clubs, bags, and balls the way niche golf companies like Callaway, Mizuno, and TaylorMade could. A key reason for ceasing production of its golf equipment? Nike wanted to go all-in on making golf clothing and footwear, and that’s where some of its peers like Under Armour and Puma are having the most success.

Other golf-specific equipment manufacturers include Titleist, which is traded under the NYSE as ($GOLF) under its parent company, Acushnet Holdings. Topgolf Callaway ($MODG) is also traded publicly. We’ll get into how Callaway acquired Topgolf during the pandemic in a move to capitalize on the Covid golf wave. TaylorMade is also a popular golf club manufacturer and was sold to a South Korean private equity firm for $1.7 billion in 2021.



The golf industry exploded during the Covid-19 pandemic, and its explosion led to a surge in interest across the nation, as well as a seismic shift in the landscape of professional golf.

With limited options for safe recreational activities, golf provided a sanctuary of enjoyment and relaxation with its open-air environment. And the golf boom was good for business, too.

Golf courses flourished, resorts experienced a surge in demand, and manufacturers of golf equipment were propelled into a boom.

But a seismic shift in professional golf occurred with the advent of the LIV Golf league.

Degen gambler Phil Mickelson was the first to decide to break ties with the PGA, opting to join the LIV Golf league and align himself with the Saudis.

This bold move marked a turning point, as other notable golfers, including Brooks Koepka, who boasts about Venmoing his wife $1,000 every time she annoys him, followed suit.

One company saw the boom in golf and decided to go all-in on appealing to inexperienced and casual golfers. Callaway, one of the most established golfing brands in the country, aimed to capitalize on the Covid momentum when it acquired in some ways the bane of serious golfers’ existence - Topgolf.

Topgolf Callaway

Callaway has a rich history that dates back to 1982. Callaway is based in Carlsbad, California, and has positioned itself as a high-quality manufacturer, tailored to the most dedicated golfers.

Callaway raked in some serious dough during the summer of 2020, when lockdowns were lifted and golf courses started opening again. But Callaway couldn't help but take another look at a rising star: Topgolf.

Topgolf is a chain of amusement golfing ranges, and the brand pivoted during Covid to accommodate social distance methods and appeal to Americans bored out of their minds during lockdowns. With bars and clubs closed across the country, casual golfers turned to Topgolf as a social activity. Locations came equipped with food and drinks, and it became a good way for younger people to socialize, or even make a TikTok of drunk shenanigans.

Topgolf had begun popping up in shopping malls and sports complexes across the nation, catching Callaway's attention back in 2006 when they initially invested in the company.

Yet, it was during the pandemic that Callaway had a revelation. Golf held immense appeal for casual players. It wasn’t just the serious professionals sparking an economic boom for the industry during Covid. Callaway saw the potential to engage a younger audience and diversify their revenue streams.

Callaway made an announcement in October 2020: they would acquire Topgolf at a valuation of $2.7 billion. This acquisition was finalized in 2021, and Callaway renamed the company to Topgolf Callaway.

Topgolf Callaway is a unique pick for investors because the company doesn’t just rely on equipment and apparel to make money - the company sees value in the experience.$MODG investors to also capitalize on the physical driving ranges that Topgolf locations provide, which is usually difficult to do as most golf courses are publicly held.

 And relying on the established Callaway brand, $MODG is able to take the revenue from its apparel/equipment business and invest it in the fast-growing Topgolf. Right now, the company needs to pay off long-term debt, and some investors are skeptical. But there’s no doubt $MODG is betting on serious growth in the golfing industry.



  • Diversified Revenue Stream

  • The Topgolf Callaway merger truly sets $MODG up as the premier golf stock in 2023. Callaway, a global leader in premium golf equipment and lifestyle apparel, has a track record of producing some of the industry’s most high-quality equipment. Meanwhile, Topgolf is one of the most popular aspects of the golfing entertainment sector.

  • Strong Growth

  • $MODG’s growth has been very strong over the past decade. Callaway’s revenue hovered around $800-900 million from 2010-16. But once Nike discontinued its golf equipment line, Callaway’s sales hit $1 billion for the first time in 2017, growing to $1.7 billion by 2019. And Topgolf Callaway’s 2022 revenue hit nearly $4 billion, up 28% after a record-setting 2021.

  • Topgolf’s venues are not only immensely popular as corporate and family gatherings but also incredibly profitable. According to management, new Topgolf courses yield an impressive return on investment of 50% over their first 3 years as of Q1 2023. Topgolf wants to expand by 10 courses this year.

  • Targeting Younger Generation

  • While Callaway’s golf clubs are targeted at the experienced golfer, Topgolf is a whole different animal and has more of a social atmosphere. Equipped with food and a bar, Topgolf caters to the casual golfer who likes to consume a few beverages at the driving range.

  • In a way, it's a genius advertisement - introduce a new generation to golf through a fun experience like Topgolf, and inundate them with Callaway products.


  • Covid Demand

  • Certainly, Topgolf Callaway experienced unprecedented demand during the pandemic. The key question going forward is whether the Covid golf boom was a fad, or if it’s here to stay. $MODG’s stock sank over 25% after reporting Q1 earnings a few weeks ago.

  • LIV Golf Concerns

  • Again, if the Covid golf boom was a fad, Topgolf is in trouble. LIV Golf is wildly unpopular in the United States given its ties to the Saudi government. LIV could be damaging to the sport’s image as even some of the world’s best players have labeled it as a money grab.

  • LIV Golf doesn’t have a television contract in the United States. If LIV continues to poach PGA’s top talent, fewer Americans might watch golf on TV.

  •  M&A Integration

  • We feel like $MODG’s merger captures strong value. But there are always M&A concerns. For short-term investors, the company is still loaded up on debt from its acquisition.


In the early 21st century, golf was widely regarded as a dying sport, seen as an old man's game, expensive, and time-consuming. And with millennials and Gen-Z seemingly drawn to activities that provide instant gratification and quick dopamine hits, the appeal of golf appeared to be waning.

But the Covid era changed that - maybe golf is back, after all.

And Topgolf Callaway wants to keep that momentum going. $MODG is an interesting pick - it’s the only stock that provides investors with exposure to golf equipment and apparel, but also the experience (driving ranges, courses, etc.). The company hopes that, by combining the Topgolf experience with its established equipment and apparel brand, it can resonate with a broader audience and continue to grow.

Ultimately, $MODG and all golf stocks hinge on the overall success of golf in America. There’s no doubt the golf industry experienced a boom during the pandemic. Golf equipment and apparel sales are estimated to be up 30% compared to 2019’s pre-pandemic numbers.

But can the golf industry sustain this success?

We love how Topgolf Callaway aims to contribute value to every aspect of the golfing ecosystem. The company wants to revitalize golf’s relevance in the 21st century. Most experts think the golf industry’s growth will level out, and that equipment and apparel sales will grow by an estimated 5.4% CAGR until 2030.

But there are intangible factors that could also lead to a revenue boom for $MODG. For example, amidst the return-to-office push, some companies could offer in-person corporate gatherings at Topgolf. And you never know if a Netflix documentary or new young phenom could spark more interest amongst casual fans. At the same time, others worry that the LIV Golf League could be extremely damaging to the golf industry’s image, and harm its credibility in the United States.

But amidst the ebbs and flows of golf’s popularity, we like what $MODG is doing. $MODG is going all-in on declaring that golf is back. Younger generations aren’t just craving the latest clubs and bags - they’re also looking for an experience. And by combining its equipment line with amusement driving ranges, Topgolf Callaway is building a golf empire. And as the company builds more driving ranges, drops new equipment, and further integrates after the merger, we think $MODG is on the right track to grow the golf industry in the years to come.

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