Topgolf Sold To Private Equity For $1.1 Billion

Topgolf Callaway is announcing that it’s selling off a 60 percent stake of Topgolf and Toptracer to the Leonard Green & Partners private equity firm.

The sale price is $1.1 billion, a far cry from the $2.6-billion all-stock merger deal between Topgolf and Callaway in 2020. Topgolf Callaway’s board of directors unanimously approved the deal which is expected to be finalized early next year.

Callaway, as the remaining golf equipment and apparel company will be known going forward, is expected to net about $770 million in cash from the deal. It will also retain a 40-percent ownership stake in Topgolf. The sale marks a strategic pivot by Callaway back to a traditional golf company, at least as traditional as a $2-billion enterprise can be.

There’s a lot to unpack here so please leave your preconceived notions at the door. There’s more here than meets the eye.

A seemingly sudden deal

The deal reportedly came together quickly, particularly after Topgolf CEO Artie Starrs left the company in July to take over as CEO of Harley-Davidson. Topgolf Callaway announced plans over a year ago for a tax-free spin-off of Topgolf, making it a standalone company. Existing stockholders would be given equal shares in both the new Topgolf and in the remaining Callaway.

The split was supposed to have taken place this past September. However, the company reported in this year’s Q2 financial report that the split would be pushed into next year due to Starrs’ departure. The Q3 report, released two weeks ago, notably made no mention of the pending split.

“As we considered various alternatives to separate Topgolf, including a potential spin-off transaction, we received interest from a number of parties,” Callaway CEO Chip Brewer told investors. “After a robust process and a thorough evaluation of a range of alternatives, we believe this sale is the best outcome.

“This transaction is highly attractive in that it provides the company with both significant proceeds and substantial upside in the continued growth of Topgolf.”

According to Brewer, the core Callaway businesses of Callaway and Odyssey golf equipment, TravisMathew and Ogio have generated approximately $2 billion in revenue over the past 12 months. The sale gives Callaway some serious cash to pay down debt and reinvest in those core businesses.

Who is Leonard Green & Partners and what is it buying?

Leonard Green & Partners is known for investing in high-growth consumer brands in a variety of fields including restaurants and sports. It has stakes in eateries such as Zaxby’s and Velvet Taco as well as in Life Time Fitness and Troon, the world’s largest third-party golf management company.

It also has investments in franchise-based health care and veterinary services, tire and auto care chains and the Wrench Group, one of the nation’s largest residential HVAC, plumbing and electrical service providers.

The company has a 35-year track record of high-growth investments. It currently has over $75 billion in assets under management. It clearly sees an opportunity with Topgolf as a golf-themed entertainment attraction.

Topgolf has been on an interesting ride over the past two years. It joined Callaway to great fanfare when the merger was finalized in March 2021. More than 35 new venues have opened since then.

As an entity, Topgolf’s revenue has been on a steady increase since the merger. One big problem, however, is that growth has been fueled by new venues. In Q3 of 2023, same venue sales started dropping and the drops got worse the following year. July 2024 alone saw an 11-percent decrease in same-venue sales. Topgolf Callaway reported disappointing Q2 2024 earnings and the company missed revenue expectations.

Within weeks, stock prices dropped by nearly a third. That’s when the company announced plans to spin off Topgolf into a separate entity.

Interestingly, the company reported in its Q3 2025 financials that same-venue sales were actually up for the quarter. It’s the first quarterly increase in two years.

Retaining 40 percent is significant

The fact that the remaining Callaway (it will be officially listed as CALY on the New York Stock Exchange, replacing MODG) is holding on to 40 percent of Topgolf shouldn’t be underestimated.

It indicates first and foremost that Callaway remains invested in Topgolf’s future. If Topgolf does well under Leonard Green, that 40-percent stake becomes a valuable asset. If Topgolf does really well under Leonard Green, it becomes a very valuable asset to sell.

It’s also important to note that Leonard Green does own shares in Callaway. Brewer indicated in the investor call yesterday that those shares are not part of the Topgolf deal.

The other significant part of this deal is, obviously, the cash influx. Callaway literally had 1.1 billion reasons (770 million net reasons) to sell. Cash is king and a sudden injection of $770 million buys you a lot of flexibility. On a more practical level, Starrs’ departure in July made the spinoff an iffier and longer-term project. The company would have had to identify, hire and onboard a new CEO before the split could happen.

Now, that’s Leonard Green’s problem.

What can we expect from Callaway going forward?

Despite the initial momentum, it became clear that Callaway and Topgolf had very little in common other than golf. Topgolf is a capital expense-heavy, low-margin entertainment and dining operation. Callaway’s core business is golf, a comparatively more stable, higher margin and leaner enterprise to run.

Brewer stated in the investor call that the plan for Callaway going forward is to pay down its debt, reinvest and focus on its core golf brands and potentially buy back stock. Callaway could go into acquisition mode (think footwear) or it could prepare for a sell-off of its own.

In March of 2024, South Korea’s Chosun Daily was the first to report of a potential Topgolf-Callaway split. At that time, it also reported that Callaway Golf itself could be put up for sale. The newspaper reported that Callaway’s three major shareholders (BlackRock, Providence Equity and Carolina Hurricanes owner Thomas Dundon) were investigating the possibility of selling out.

Reports at the time said the legacy Callaway business could be valued as high as $3 billion.

A sale is always a possibility. However, while one never says never, it appears unlikely in the short term. By selling off Topgolf and rebranding itself, Callaway looks to be doubling down on its core business as opposed to prepping for a sale.

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