Answering consumers’ demand for active enjoyment, sports entertainment centers are expanding across the country and combining gameplay with food and drink in an upscale setting.
Whether you call it eatertainment, social competition or something else, tech-friendly casual sports centers boasting hearty food and drink menus with sleek interiors are multiplying faster than Elon Musk’s next worth.
The current wave of such businesses dates to the founding of Topgolf in England in 2000. It is to active-customer, sports-entertainment centers what Camden Yards was to ballparks in the 1990s: the clear-cut game-changer inspiring imitators and innovators alike, with ample standouts and castoffs left in its wake.
For a growing segment of the population, passive entertainment has become passé. That’s where Topgolf, Bowlero and multiple pickleball concepts enter the picture.
Executives from companies in the industry all offered similar theories on why sports-driven socializing has captivated people. And most agreed that the pandemic has served only to increase people’s hunger for these kinds of experiences.
Pickleball poised as focus for next wave of venues
“Sports activities, whether it’s bowling or Topgolf or traditional golf or whatever, you’re with an intimate group, you have a defined space, and you’re really sharing that experience,” Brett Parker, the chief financial officer and president of Bowlero, said. “Whereas if you go to the movies with somebody, you don’t really go to the movies with them so much as you’re at the movies at the same time as them. You don’t have that interactive dynamic.”
Joe Vrankin, CEO of miniature golf brand Puttshack and former Topgolf CEO, agreed. “You can go out to dinner, you can have a great meal, you can go get drinks, but you’re not really actively participating,” he said.
Bowlero owns heritage bowling centers, but its emphasis is on building and converting those to its namesake concept: a blend of nightclub, shareable menu items, and beer and cocktails with a trendy throwback vibe. Similarly, Puttshack caters more to street food fans than golf enthusiasts.
Parker added that sports-themed nights out fit well with a societal shift, even pre-pandemic, to spend more on experiences than on things.
In the pages ahead, Sports Business Journal explores some of the sports-themed entertainment concepts of note.
The industry leader, Topgolf looks poised for at least another decade of rapid expansion after combining with equipment and apparel maker Callaway Golf in 2021.
Raymond James & Associates in a recent note on Callaway cited a faster-than-anticipated return to pre-pandemic revenue as a significant factor in the parent company’s “strong momentum heading into 2022.”
Former Pizza Hut CEO Artie Starrs, who became Topgolf CEO following the merger last March, said in an email interview that there is no need to tinker with Topgolf’s formula.
“What began as a simple idea combining the love of the game of golf with innovation and fun has now grown into a place that is democratizing the game — for those familiar with the game and for those who are just now discovering golf in a new and fun way at Topgolf,” he said. “Through technology and a seamless experience — be it gameplay, food and drink, or simply being with friends or family — Topgolf takes the intimidation out of the equation and creates an environment of fun that all can enjoy.”
Topgolf’s plans to go public as a stand-alone in 2020 unraveled when the pandemic occurred. Instead, after flirting with various prospective partners, it merged with Callaway in a deal that valued Topgolf at $3 billion. Callaway, founded in 1982, bought a minority interest in Topgolf in 2006, a year after the company opened its first driving range-entertainment hub in the U.S.
By 2014, there were 12 Topgolfs in the U.S. Two years later, the store count grew to 28. Before the pandemic, Topgolf had grown to 54 locations. Last year, as part of Callaway, the company opened nine locations, pushing its overall venue count to 73; of those, 67 are in the U.S.
Because the concept is partially an outdoor attraction — including food and beverage service in the driving bays — it fits with consumers’ post-COVID mindset of embracing more fresh-air activities while enjoying traditional social pastimes. Topgolf expects to open 10 U.S. stores annually over the next few years while expanding aggressively internationally.
Raymond James noted in its latest report that third quarter 2021 EBITDA of $59 million matched what Topgolf generated in all of 2019. And the analysts point to strong capitalization through the Callaway pairing as well as enviable customer demographics as cause for optimism. Close to 50% of visitors are ages 18 to 34 and 60% have household income of $80,000 or more, according to Raymond James.
Starrs said that the technology that proved vital to the company’s initial success remains as important as ever. Topgolf sells its microchip ball-tracking system to traditional ranges and clubs; 13,000 of the systems have been sold to date. And 35 million people have downloaded the WGT by Topgolf online game, according to the company.
“Innovative technology that engages and delights is critical to our success because it is at the heart of the myriad experiences we offer,” Starrs said. “Without the technology, our experiences don’t exist — whether it is making a reservation, playing a variety of games in the venue, tracing the flight path of the ball or playing our online games, it is fueled by technology and remains paramount to our success.”