New Golf Entertainment Venues bringing ‘a Breath of Fresh Air’ to golf

An Overview of TopGolf,  BigShots Golf & Drive Shack 

BY JAMES BEATTY

March 19, 2019

According to the National Golf Foundation, 24 million people are participating in golf by playing on the 15,000 plus courses in the United States (referred to as on-course).  But there are 21 million people participating by playing in off-course venues.

Off-course venues mean driving ranges that are exclusively driving ranges, with no golf course connected with it, as well as simulators and other kinds of entertainment venues.  However for the purposes of this article off-course primarily means those venues which are dramatically changing the face of the sport and the industry. The top three off-course golf and entertainment venues are, Topgolf, BigShots Golf and Drive Shack.

Of the 21 million playing off course, about 8 million of those people experienced golf exclusively off-course. This means that people now have been introduced to the game in a much more accessible and less emotionally threatening way than ever before. So, millions of more people have been introduced to the game. Let’s take a more in-depth look at this growing trend focusing on these 3  major off-course companies.

2018 Golf Participation in the U.S.

Source: National Golf Foundation Report, May 2018.

Golf Entertainment Venues Attracting New Players While Offering Games, Food, Music, Fun & Golf!

“This is a breath of fresh air for the game of golf,” says golf legend Greg Norman in a Top Golf promotion.  As stated on their website, Topgolf is a global sports entertainment community creating great times for all.  Topgolf prides itself on its special blend of technology, entertainment, food and beverage and the inherent good that can be accomplished when a community of all walks of life comes together. The Topgolf venues are multi-level complexes featuring high-tech golf balls, gaming, climate-controlled hitting bays, renowned menu, hand-crafted cocktails, events, music and more.

A group of friends out for a night of fun at Top Golf Atlanta (Photo Top Golf Facebook)

History and Locations

The Topgolf technology was developed in Watford, England between 1996 and 2001 by twin brothers Steve and Dave Jolliffe. The idea for Topgolf came when the two brothers were practicing their swings on a driving range and began thinking of different ways they could improve their experience. The Jolliffes formed a company called World Golf Systems (WGS) and installed the technology in a driving range in Watford, England in 2001. WGS sold the range and licensed the technology to a UK development company, Baydrive. Baydrive developed two additional UK sites. The original idea, however, for a casual golf and bar/dining experience came from Barry Cumbie, Ph.D., and Mark Murray, MD, while attending college at Auburn University.

A typical Top Golf facility.

The business that is today known as TopGolf emerged from Golf Entertainment International (GEI), the US licensee. This company was established in London in 2006 to create a compelling customer experience and to bring the technology and the experience to the United States. GEI was formed by Richard Grogan, David Main and Eric Wilkinson. GEI transformed the early Topgolf experience to also include food, drinks, music and new games. GEI developed its first sites in Alexandria, Virginia, Dallas, Texas and Chicago, Illinois. It then acquired both World Golf Systems and the UK licensee. GEI changed its name at that point to name of the game: Topgolf.

According to their Communications Manager, Topgolf has now grown to 52 locations with 13 Million visitors annually,  You can click here to see the list of locations.

A typical Topgolf facility requires about 13 acres, usually in shopping and entertainment districts near employment centers, as well as specialized buildouts involving netting and poles rising as high as 150 feet. Typically the Topgolf facility has 3 levels with 72 – 102 individual hitting bays. At each of these bays, you can order food, play games and really enjoy your stay

Each Topgolf venue features fun and competitive golf games for all ages, climate-controlled playing bays for year-round comfort, an impressive food and drink menu, private spaces for groups of any size, HDTVs to watch the big game and even a music selection.

On average, a Topgolf location costs up to $18 million dollars to build, however, start-up costs can and have fluctuated. One facility in Austin, TX was built for around $15 million while a new4 level,107 bayTopgolf venue was built in Las Vegas, NV at the MGM Grand hotel costing over $50 million as reported in Golf Digest.

The Las Vegas site was also the location where actor Anthony Anderson set the Guinness World record for the Longest Usable Golf Club.

Ownership

The Jolliffe brothers and a licensee developed the first three Topgolf locations in the United Kingdom beginning in 2000.

The U.S. licensee, with WestRiver Group as the lead investor, brought Topgolf to the U.S. in 2005 with the opening of Topgolf Alexandria. WestRiver Group was founded and is run by Erik Anderson, Executive Chairman of Topgolf International, Inc., dbaTopgolf Entertainment Group (TEG).

As the company expanded, Callaway Golf Company (NYSE: ELY) became an investor in 2006 and Thomas Dundon in 2011. Also in 2008, the company was incorporated as Topgolf International, Inc.

In 2016, Topgolf International, Inc. created three new divisions: TEG (a DBA for Topgolf International, Inc.), Topgolf (the venues in the U.S. and U.K.), Topgolf International (the division focused on Topgolf’s international expansion) and Topgolf Media (the division focused on enhancing the Topgolf experience through advanced digital media, strategic partnerships and sponsorships). Additionally, in 2016, Providence Equity Partners made a sizable minority investment in TEG.  WestRiver Group, Callaway, Dundon and Providence Equity are four of the lead investors in TEG.

CUSTOMER Demographics

• The average length of visit at a Topgolf facility is 2 hours
• The average group size is 4 people
• Topgolf averages 45,609 people per day at all of their facilities
• Males represent 68% of their clientele
• Females represent 32% of their clientele

LISTEN TO WHAT CUSTOMERS ARE SAYING ABOUT TOPGOLF  https://www.youtube.com/watch?v=gG2QuIzC_9w

Big Shots Golf

A TYPICAL BIGSHOTS GOLF FACILITY

OVERVIEW

https://www.clubcorp.com

BigShots Golf is a cutting-edge golf and entertainment company powered by BigShots Golf proprietary technology. BigShots Golf is in the family, sports and entertainment space and provides full-service food and beverage, sports bars, multi-media, private event space and climate- controlled golf gaming experiences. From fun, competitive games and golf course play, to advanced Doppler radar tracking technology that tracks every shot accurately and consistently, BigShots Golf offers a unique experience whether you are at a venue or enjoying an indoor simulator at the lounge.

HISTORY AND LOCATIONS

BigShots was founded in Peoria, Illinois by Jason Payne and currently has a 7,000 sq. ft two-story location with 30 bays (tee boxes) in Vero Beach, Florida.  The entire back of the building has 10,000 sqft of roofed over space and is a driving range concourse area. This site is owned by Dr. William Mallon an ophthalmologist and avid golfer. BigShots is the only off-course venue that offers franchises. According to the Vero News article, Mr. Mallon has the exclusive rights to Florida and plans to build three more BigShot facilities in the state.

A typical BigShots facility would require $8M to $12.5M to build not including the land costs.  According to BigShots founder, Jason Payne, whom I had the pleasure of interviewing at the 2019 PGA merchandise show, a total of six locations are under active consideration. I found Jason to be is a most interesting, passionate, sincere congenial person. Jason received his formal education from Devry Institute with an emphasis on computer information systems.

Franchise Information
(Source: Vero Beach article)

BigShots Golf offers plans and specifications for three different size models of buildings. All three size models are designed with two floors. They will provide assistance in determining which size of building best fits the local population and demographics. All the models require a similar size parcel as the driving range area is the same for all of them. BigShots Golf typically recommends a site no less than 400′ wide by 1,300′ long or roughly 12 acres in total.

Their smallest size is approximately 16,000 square feet in total for the building and has 30 Tee Boxes (15 Tee Boxes on each floor). It has a smaller sized bar with a full kitchen and outdoor deck.

BigShots Golf

Their medium-sized model is built with 42 tee boxes (21 tee boxes on each floor) and contains over 32,000 square feet of building space. In this facility size,  guests can enjoy a full-service restaurant and bar with a fully equipped kitchen, VIP bar, and event rooms.

The largest sized building features 60 Tee Boxes (30 Tee Boxes on each floor) contains over 52,000 square feet of building space. This model size includes a full-service restaurant and bar with a fully equipped kitchen, VIP bar, event rooms, and outside patio.

Big Shots Golf can provide build cost estimates for each option and models for specific locations and requirements. They can also recommend a facility size based on local population and demographics.

Go to https://www.bigshotsgolf.com/open-a-bigshots/  to learn more about acquiring a Big Shots Golf Franchise.

Ownership

Big Shots was founded in 2013 and in 2018, ClubCorp acquired a controlling interest in the company.

According to the Dallas News article in Dec. 2018  “We’re doing this to broaden our base [and] create more opportunities for people to get introduced to the game,” said David Pillsbury, who became ClubCorp‘s chief executive earlier this year. “We think of everything as a membership funnel and the more people that get exposure at the top of the funnel, the more we can ultimately transition to becoming full golf members,” Pillsbury said.

David Pillsbury

I also had the opportunity to interview David at the 2019 PGA Merchandise show and found his vision and enthusiasm for this venture to be exciting and certainly poised to bring new and interesting experiences to the public. I was very impressed with his commitment to diversity and inclusion as it relates not only to future Big Shot Golf customers but also to potential suppliers and especially Big Shot Golf franchisees.

ClubCorp is the nation ’s largest owner and operator of private clubs nationwide with over  200 country clubs, city clubs, athletic clubs and stadium clubs in its portfolio. ClubCorp will introduce BigShots Golf technology to consumers through BigShots Golf state-of-the-art entertainment venues, and BigShots Golf Indoor Simulators, a digitally-simulated play and gaming experience. BigShots Golf facilities will provide full-service food and beverage, sports bars, multi-media, private event space and climate-controlled golf gaming experiences, while BigShots Golf Indoor Simulators will be available for both commercial and in-home play. All BigShots Golf locations will feature the game’s Live Play option, which provides consumers the ability to compete against each other from any location in real time.

In addition to offering free-standing outdoor franchises, BigShots Golf will introduce an indoor franchise product that can be easily installed as a single unit or multiple units in bars, malls and other retail venues.  ClubCorp will also bring BigShots Golf and BigShots Golf Indoor Simulators to some sites owned by ClubCorp.

As reported on July 9, 2017, ClubCorp and Apollo announced that ClubCorp and certain affiliates of the Apollo Funds had entered into a merger agreement whereby upon completion of the transaction, ClubCorp stockholders were entitled to receive $17.12 per share in cash in exchange for their shares of ClubCorp common stock, which represents an aggregate transaction value of approximately $1.1 billion and an enterprise value of $2.2 billion including debt. As a result of the transaction, ClubCorp’s common stock will no longer trade on the New York Stock Exchange and be delisted.

John Beckert, Chairman of the Board of ClubCorp, said, “We are pleased to have completed the transaction with the Apollo Funds and for ClubCorp to begin this new chapter. Apollo shares our Company’s vision to continue to advance ClubCorp’s position as the world leader in private clubs and as a provider of premier services, unrivaled benefits and extraordinary experiences to members and guests of ClubCorp’s family of clubs.”

“We are excited for our funds to be acquiring ClubCorp,” said David Sambur, Senior Partner at Apollo. “We look forward to working with ClubCorp’s outstanding management team and talented employees, who have built a best-in-class member-centric business that delivers exceptional experiences. We plan to leverage Apollo’s resources and expertise while working with ClubCorp’s dedicated team to continue to grow the business and provide the highest level of service and club offerings to members.”

Apollo is a leading global alternative investment manager. Apollo had assets under management of approximately $232 billion as of June 30, 2017 in private equity, credit and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources.

This is a very clear signal that ClubCorp must be taken as a serious player in the off-course space !

CUSTOMER Demographics

Not available at this time.

Determined based on location and market size.

BIGSHOTS GOLF YOUTUBE

Listen here to Jason Payne and David Pillsbury discuss their view and insights on the Big Shots Golf and ClubCorp Customer Experience and Franchise opportunities.https://www.youtube.com/watch?v=eT2w9xA79yc

DRIVE SHACK

A typical Drive Shack facility.

OVERVIEW

NYSE STOCK SYMBOL  “DS”

Drive Shack Inc. is a publicly traded owner and operator of golf-related leisure and entertainment businesses. Drive Shack is developing venues across the country that are reimagining the traditional concept of a golf course through blended, industry-leading technology, design and service that creates the golf entertainment experience for every skill level and interest.

HISTORY AND LOCATIONS

Drive Shack has announced its intention to open as many as 15 mega-ranges by 2020. Drive Shack, formerly known as American Golf, is selling off much of its golf-course portfolio to raise capital, which it plans to redeploy to build giant “entertainment” facilities with 90 or more hitting bays, restaurants, and other games and activities. The company opened its first location near the Orlando airport in April 2018 and has five other sites under development. Each Drive Shack location costs about $30 million to build. The company said it has identified 30 sites it would like to develop, with the goal of building 5 to 10 new locations annually starting in 2020.

ORLANDO

Sarah Watterson, former CEO of Drive Shack, stated in 2018 that the company’s Orlando location, which opened April 7, 2018 attracted more than 40,000 visitors, who averaged $44 per visit, for about $2 million in revenue during the quarter. The company’s projection is that it can generate $16 million to $23 million per site once each is fully ramped up.

Watterson said the company has sold one owned course for $3.5 million and has letters of intent on 15 more that either are under contract or have letters of intent. The company hopes to sell all of its owned courses by early 2019.

The Orlando area Drive Shack, the company’s first location, was built in Lake Nona’s Sports and Performance District. The project includes a three-story, 57,000-square-foot driving range entertainment facility that includes a restaurant, lounge, bar, hitting bays and meeting spaces and will be built on 15-acre piece of land in Lake Nona.

Towns and cities across the United States are opening of course locations in lieu of new golf courses in hopes of appealing more to the millennial and casual golfer.

The second Drive Shack venue will be developed in Richmond, Va.

The Lake Nona location of Drive Shack will join the U.S. Tennis Association National Campus, the USTA Florida headquarters and U.S. Professional Tennis Association complex, and the Orlando City Soccer Club training facility as part of the Sports and Performance District.

NEW ORLEANS

Also in April 2018, then Mayor Mitch Landrieu announced that Drive Shack would be bringing its unique golf entertainment experience to New Orleans.

Drive Shack will construct a new, three-story golf-entertainment complex at the site of the former Times-Picayune production facility located at 3800 Howard Ave., adjacent to U.S. Interstate-10. The 60,000-square-foot complex was slated to begin construction in the fourth quarter of 2018. This economic development project will create over 350 new jobs in New Orleans and attract further investment in the city.

As part of this project, Drive Shack committed to utilizing the City’s job readiness pipeline program HireNOLA and utilize DBE certified firms in addition to establishing formal partnerships with local colleges, universities, and business organizations,  to ensure that would the hires from the area’s diverse talent pool.

Once completed, the three-story, indoor/outdoor all-weather golf-entertainment complex will have 90 climate-controlled hitting bays, a Free Play Game Lounge with classic games like shuffleboard, skeeball and Pac-Man, a full-service restaurant and bar, an outdoor lounge, and several fully equipped meeting and event rooms. Each hitting bay will feature complimentary custom TaylorMade clubs with unlimited golf balls, dual flat screens with TV on-demand, interactive games enabling guests to compete with other bays, and full-service on-call food and drinks from the restaurant.

The new three-story complex took a parcel of land that has lain vacant ever since Times-Picayune left and is spurring redevelopment of an entire corridor near the Superdome.

NEW YORK

Drive Shack Inc. formally announced plans to open a new golf entertainment and recreation complex in Manhattan, after New York City Department of Parks and Recreation (“NYC Parks”) officials awarded the Company a site at Randall’s Island Park. Drive Shack will completely rebuild and replace the existing golf driving range with a year-round golf-centric recreation facility. The current Randall’s Island Park driving range is undergoing improvements and will reopen in April 2019 under Drive Shack’s subsidiary, American Golf. Operations will continue under American Golf’s supervision until breaking ground on the 3-story venue.

The development is expected to generate significant economic growth for the City including the creation of 350 permanent positions and over 150 construction jobs. American Golf has worked with NYC Parks for over three decades, a partnership that Drive Shack will continue. A key focus will be community outreach, where alongside internal instructional programs, Drive Shack plans to work with school golf teams, Randall’s Island Park Alliance (RIPA) sponsored youth and development programs and other organizations, to utilize the Company’s enhanced golf technology and introduce a larger audience to golf while improving players’ skills. The completed facility will also include a renovated miniature golf course to further draw young people and their families to Randall’s Island Park.

The new 18-acre facility will offer 96 climate-controlled hitting bays each holding up to 6 guests, which will dramatically increase recreational capacity allowing year long play.

Additional DriveShack locations are planned for Raleigh, N.C., Richmond, Va., andWest Palm Beach, FL.  The company had announced plans to build in Marietta, GA but in Jan 2019 announced it would no longer pursue those plans according to their new CEO, Ken May

Drive Shack no longer plans to develop a venue in Marietta, GA. The change in direction comes as part of the company’s enhanced strategy and plans for growth, now led by new CEO Ken May.

Previously, May served as CEO of Topgolf where he was pivotal in the business’s growth, opening 24 stores and quadrupling the company’s workforce, all in just four years. Under his guidance Drive Shack aims to be positioned for similar growth. As part of the shift in direction, the company will be taking a deeper look at locations in which American Golf, a Drive Shack Inc. subsidiary, currently operates.

OWNERSHIP

Drive Shack Inc. is a publicly traded owner and operator of golf-related leisure and entertainment businesses. The company’s subsidiaries include American Golf, its traditional golf enterprise that operates private, resort and public golf courses nationwide, and Drive Shack, a golf and entertainment company that features the latest in golf and gaming technology with venues offering signature interactive range games, virtual course play, restaurant and bar, and classic arcade game center. Drive Shack opened its first venue in Orlando, April 2018, and has several locations opening in 2019 including Raleigh, NC; Richmond, VA, and West Palm Beach, FL.

Drive Shack Inc. is a leading owner and operator of golf-related leisure and entertainment businesses. Their portfolio consists of Drive Shack which is developing a nationwide network of innovative golf entertainment venues and American Golf which one of the largest golf course companies in the world. The company also has various real estate related assets

American Golf is an experienced and innovative operators in the golf industry. As an owner, lessee, and manager of golf courses and country clubs for over 50 years, Over its 50-year history, American Golf has been involved with more than 325 golf courses for various private entities or public agencies. Currently, American Golf manages over 70 facilities across the United States.

The company is publicly traded on the New York Stock Exchange (NYSE) under the stock symbol “DS”http://ir.driveshack.com

According to their third quarter 2018 investor presentation, the company currently operates 72 golf courses in 12 states. It is in the process of selling off  24 of its 26 owned courses, with hopes of raising as much as $175 million in capital. The company  plans to have $200 to $250 Million  from the sale of course and cash on hand to fund Drive Shack growth and expansion

(Source: http://ir.driveshack.com/Cache/1500114952.PDF?O=PDF&T=&Y=&D=&FID=1500114952&iid=4040318)

CUSTOMER DEMOGRAPHICS (ORLANDO ONLY)

• 82,000 VISITORS SINCE OPENING
• MALE – 65%
• FEMALE – 35%
• AVERAGE LENGTH OF STAY IS 2 HOURS
• FOOD AND BEVERAGE ACCOUNT FOR 40% OF THE GROSS REVENUE

Drive Shack YouTube – Listen to what customer are saying about their experience at Drive Shack https://www.youtube.com/watch?v=CVRAyAK9Mi8

OFF COURSE VENUE CAPSULE COMPARISONS

I have tried to capture the key comparisons of each entity for the readers. I hope this provides some meaningful insights as you choose visit or consider other pursuits with each venue.

# BIG SHOTS WAS FOUNDED IN 2013  WITH CLUBCORP ACQUIRING CONTROLLING INTEREST IN 2018

This is going to be an interesting battle over the next few years as each of these venues continue to expand and battle for market share. I would predict that as a result the customer experience will be very exciting and engaging as each company will do its utmost to ensure and increase brand loyalty. Millions of dollars will be spent by each of these entities in the process. I hope that each company’s Diversity and Inclusion efforts will ensure that women and people of color will have a fair opportunity to become suppliers as well as long term customers. There will absolutely be no shortage of fun, food and competition. Will this bring new golfers to the game? I think so. In the end, certainly  the consumer and I believe the game of golf will be the winners

James Beatty, Executive Editor, African American Golfer’s Digest is also Founder of NCS International, an Omaha, Nebraska-based company that providers of an array of economic development services. He also serves on the  We Are Golf Diversity Task Force and is Chairman of the Recreational Play SubCommittee. He recently launched Jim Beatty Golf Ventures, a golf promotion and management company.