Topgolf Callaway could look noticeably different next year

Three years after Topgolf and Callaway joined forces to create Topgolf Callaway, the two sides announced their intention to take different paths in 2025.

In a release on Wednesday, Topgolf Callaway Brands Corp., the company overseeing both brands, confirmed it will move forward with a plan to separate the company in two, potentially via a spinoff of Topgolf next year.

The reason for the change of heart? Topgolf Callaway believes the brands are stronger on their own.

“We believe this business, on a stand-alone basis, will be well understood and valued by the market,” said Chip Brewer, president and chief executive officer of Topgolf Callaway. “Since our merger with Topgolf, we have made considerable investments in the Topgolf business that have dramatically expanded its scale, digital capabilities and venue profitability.  These investments, combined with the hard work of the Topgolf team, have allowed us to outperform our original growth and free cash flow expectations.”

The noted spin-off of Topgolf into a “stand-alone public company,” in the second half of 2025, is the most likely separation path. Still, other disunion options are also being considered in the name of shareholder value. In other words, nothing is certain. What is certain is that Topgolf Callaway believes the two brands “represent different and compelling investment opportunities” on their own.

Under the proposal, Topgolf Callaway would spin-off “at least 80.1 percent” of Topgolf to “obtain the desired tax-free treatment of the spinoff for U.S. federal income tax purposes.” Also under consideration is “retaining a limited ownership in Topgolf for a period of 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,” said Brewer.

Callaway initially invested in Topgolf in 2006, before increasing its stake to 14 percent in 2018. Two years later, in 2020, the two sides merged and eventually changed the name to Topgolf Callaway, in March 2021, when Callaway completed an all-stock acquisition ($2.66 billion) of Topgolf Entertainment Group.

The news of a spin-off comes six months after a report from South Korea’s Chosun Daily claimed Callaway could be spun off and put up for sale so management could focus solely on its high-tech Topgolf driving ranges. Shortly after the report surfaced, Callaway issued a statement confirming they were “not aware of any such discussions.”

Topgolf Callaway’s current portfolio includes Callaway, Topgolf, Travis Mathew, TopTracer, Jack Wolfskin, Odyssey, OGIO and World Golf Tour.

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Jonathan Wall

Golf.com Editor

Jonathan Wall is GOLF Magazine and GOLF.com’s Managing Editor for Equipment. Prior to joining the staff at the end of 2018, he spent 6 years covering equipment for the PGA Tour. He can be reached at jonathan.wall@golf.com.