Topgolf Callaway Brands Corp. announced Wednesday that it plans to spin off Topgolf into a separate public company after struggling sales and traffic.
The move is meant to maximize shareholder value and allow golf equipment entity Callaway and Topgolf to separate and focus on their core strengths. The split is expected to be completed in the second half of 2025, subject to market conditions, regulatory approvals, and other customary factors. Although Topgolf becoming a separate, standalone public company is the most likely path, the parent company will continue to evaluate other options. There are no assurances that the spinoff will ultimately occur, the company said.
“Our employees’ dedication and hard work has enabled us to take this next step in the Company’s evolution,” CEO Chip Brewer said in a statement. “Our Callaway and Topgolf businesses both employ very talented and dynamic people. I am confident that we will maintain the commitment to excellence that has been key to our success.” He continued, “The focus and other benefits that come from creating two independent companies is expected to provide even greater opportunities for our employees and our brands.”
The roughly 100-unit Topgolf will prioritize profitable same-venue sales growth, new venue development, and improving operating efficiencies. The chain has earned roughly $1.8 billion in revenue over the last 12 months through Q2.
The chain’s same-store sales dropped 8 percent in Q2, fueled by soft traffic trends. After a notable change in demand starting in late May, comps fell 8 percent in June when Callaway expected it to be slightly positive. The eatertainment concept has struggled with inflation and consumers limiting their time on discretionary spending. Internal and external data show that price is the biggest concern for guests. The company also sees it from peers, in credit card data, and firsthand in the Topgolf business, including feedback from large corporate clients.
As part of the separation, Callaway will retain existing debt, while Topgolf is expected to be debt-free with a significant cash balance, providing each company the flexibility to pursue its respective growth strategies.
Brewer will remain CEO of Callaway, while Artie Starrs will continue to lead Topgolf. Both executives are expected to guide their companies through this transition while building on the significant investments made in recent years.
After separation, the two companies will remain partners. For instance, Callaway will continue to be the exclusive golf equipment partner for Topgolf.
“These investments, combined with the hard work of the Topgolf team, have allowed us to outperform our original growth and free cash flow expectations,” Brewer said. “Looking forward, we remain convinced that Topgolf is a high-quality, free cash flow generating business with a significant future value creation opportunity. Topgolf is transforming the game of golf and is expected to deliver substantial financial returns over time. At the same time, Topgolf has a different operating model, capital structure and investment thesis than Callaway, and as a result, the Board has determined that separating Topgolf will best position Topgolf and Callaway for success and maximize shareholder value.”
The company’s financial advisors are Goldman Sachs and Centerview Partners with Latham & Watkins LLP serving as legal counsel.
