Swing, Slice, and Spin-Offs

Swing, Slice, and Spin-Offs: What Topgolf and Callaway Say About the Changing Face of Entertainment, Real Estate, and Retiree Investment Strategy

By Paul Grant Truesdell, J.D., AIF®, CLU®, ChFC®, RFC®

Founder of The Truesdell Companies, including Truesdell Wealth — a fiduciary-based investment and wealth management firm

The Truesdell Professional Building

200 NW 52nd Avenue – Ocala FL 34492

352-612-1000 or 212-433-2525

Recently, I sat down with a group of long-time clients—retirees, business owners, and families in transition—to discuss a timely topic that blends lifestyle, economics, and investment insight: the curious case of Topgolf and Callaway. What started as a casual YouTube mention from a videographer sparked a deeper dive into what many retirees are truly concerned about: not just return on investment, but the story behind the numbers, and what those stories say about where the world is headed.

Let us unpack this together—not with hype, but with context, clarity, and that good old-fashioned discipline we bring to every investment conversation.

The Marriage of Golf and Entertainment: A Look Back

In 2021, Callaway Golf—a well-established name in golf equipment—formally merged with Topgolf, a wildly popular entertainment venue known for turning the driving range into a party. The deal, valued at around $2 billion, was more than a business transaction; it was a statement. A nod to the changing consumer: younger, more social, less concerned with golf as a sport and more interested in golf as an experience.

Prior to the merger, Callaway already held a 14% stake in Topgolf. Topgolf itself was privately held and enjoyed tremendous growth as millennials and Gen Zers sought fun, accessible alternatives to traditional country club culture. Topgolf turned golf into bowling—with drinks, music, tech integration, and Instagrammable moments.

It worked—for a while.

What the Numbers Now Say

Let us fast-forward to 2025. In the first quarter of this year, Topgolf Callaway Brands reported a revenue decline of 4.5%, with first-quarter revenue dropping to $1.09 billion. Of greater concern to investors: same-venue sales at Topgolf fell 12%. That is not a rounding error—it is a red flag.

This decline is notable because same-venue sales are the litmus test for health in brick-and-mortar retail and hospitality. When you grow by opening new locations but your existing ones are slipping, that is like bailing water into a boat with a hole in the hull. So while Topgolf continues to build new locations in places like Avon, Ohio, and Parsippany, New Jersey, the strategy may be masking underlying issues—slowing foot traffic, tightening consumer spending, and possibly market saturation.

What Callaway Plans to Do Now

Here is where things get interesting: Topgolf Callaway Brands has announced its intent to spin off Topgolf as a standalone public company by late 2025. This is a tax-advantaged maneuver, where Callaway retains at least 80.1% of the new entity’s ownership—enough to qualify for tax-free treatment under IRS regulations.

Why the split? Because managing golf clubs and golf parties are two very different businesses.

On paper, the merger was about synergy. But in practice, Topgolf is an entertainment-hospitality company, and Callaway is a sporting goods manufacturer. The disciplines are not the same, and while both appeal to golf lovers, their underlying economics, staffing models, and real estate risks are entirely different.

A restaurant with a driving range attached is not going to operate like a factory making premium irons and balls.

What This Means for Investors—Especially Retirees

If you are retired, or planning to be, here is the real takeaway: businesses often sell a vision that sounds futuristic, fun, and fast-growing—but that does not mean it is structurally sound or recession-proof.

Topgolf’s model is capital-intensive. Each new facility costs millions to build, requires a large footprint, and depends on high-volume discretionary spending—birthday parties, date nights, corporate team-building events. These are not “needs” but “wants.” And in a tightening economy, wants get postponed.

For the past decade, institutional money has chased anything that looked like a tech-enabled growth story—especially those that targeted younger audiences. But demographic shifts are exposing cracks. The younger consumer is more indebted, less loyal, and increasingly hard to monetize.

Meanwhile, retirees—who control a vast amount of this country’s wealth—are often looking for tangible, steady, boring things. Things like infrastructure. Energy. Food. Water. Housing. Not the party version of Pebble Beach.

The Real Estate Footprint Risk

Let us talk about something very few people are mentioning: the commercial real estate obligations behind these flashy Topgolf facilities.

Unlike a software company or a shoe brand, Topgolf facilities require extensive zoning, parking, build-out, and ongoing maintenance. These are not flexible-use spaces. You cannot easily turn a Topgolf into a grocery store or a school if demand dries up. That means whoever owns the land—whether it is the company or a real estate investment trust (REIT)—holds a risky asset class.

So when you see Topgolf building aggressively, you must ask: Is this demand-driven expansion or investor-pressure growth?

Is Ocala Getting One?

Interestingly, despite all this expansion, there is currently no report of Topgolf coming to Ocala, Florida. That may be a blessing. Ocala’s retiree-heavy demographic is not necessarily the core Topgolf customer. It is a family and retiree-driven community, not a metropolitan nightlife hub.

But the question many locals ask—“Are we getting one?”—reveals something bigger: people associate Topgolf with arrival. Like Trader Joe’s or Whole Foods, it is perceived as a symbol that your town “made it.” The emotional branding is powerful. But that does not make it a good investment.

What Should You Do With This Information?

As always, we approach this not from the angle of day-trading or trend-chasing, but from a holistic wealth management standpoint.

Evaluate the narrative: A good story sells stock, but you need to look under the hood. Is the business growing organically or just expanding with borrowed money?

Understand demographic flow: If your portfolio is heavily tilted toward companies that rely on 20-somethings spending $50 for drinks and golf balls on a Thursday night, you may be out of balance with demographic reality.

Beware spin-offs as a fix: Spinning off a company is not inherently bad—but it often signals strategic disalignment or trouble under the surface. Treat it like a “controlled divorce.”

Consider real estate exposure carefully: Ask yourself who owns the property beneath these brands. The land? The leases? The debt?

Remember the Seven COWS: Mindset, Physical, Emotional, Intellectual, Relationships, Income, and Risk Management. When investing, we always tie it back to these. Does a speculative entertainment brand align with your desired mindset and risk profile? Often not.

Closing Thoughts

Golf is not going away. Nor is entertainment. But the fusion of the two, in the way Topgolf has structured it, may not be the next great frontier for long-term investors—especially those in or near retirement. The excitement of hitting a ball into a lit-up net at night with music and cocktails may make for a fun evening, but it is not necessarily the foundation for consistent cash flow, durable competitive advantage, or protection against economic shifts.

At Truesdell Wealth and within the Truesdell Companies, our approach remains fixed-cost, fiduciary-based, and driven by deep analysis—not hype. We look beyond the shiny headlines and into the real math, the market structure, and the social behavior that drive outcomes.

As always, we welcome thoughtful conversations and referrals from those who value substance over smoke.

If you are unsure about how your portfolio is positioned, or if you want a second opinion that cuts through the fog of financial entertainment, we are here. And yes—real humans answer the phone.

Due to our extensive holdings and our clients, you should assume that we have a position in all companies discussed and that a conflict of interest exists. The information presented is provided for informational purposes only. Truesdell Wealth, Inc. - A Registered Investment Advisor - Florida - 212-433-2525 or 352-612-1000 | Paul Grant Truesdell, J.D., AIF, Founder. This discussion was part of a private client briefing and is/was provided for educational purposes only. It is not a solicitation to buy or sell any security. Past performance does not guarantee future results. All investments carry risk, including loss of principal.

Topgolf's Swing: A Comprehensive Study Guide

I. Quiz: Short Answer Questions

1. What was the approximate value of the merger between Callaway Golf and Topgolf in 2021, and what did this merger signify about the changing consumer?

2. Describe the initial concept and appeal of Topgolf that led to its early growth. How did it differentiate itself from traditional golf?

3. What specific financial figures from the first quarter of 2025 indicated a potential issue for Topgolf Callaway Brands, and why are these figures particularly concerning?

4. Explain the "hole in the hull" analogy used in the text regarding Topgolf's expansion strategy. What underlying issues might this strategy be masking?

5. What is Topgolf Callaway Brands' announced plan for Topgolf by late 2025, and what is the primary reason given for this strategic move?

6. How does the article characterize Topgolf's business model in terms of capital and spending, and what impact does a tightening economy have on this model?

7. According to the author, what is a significant risk associated with Topgolf's commercial real estate footprint, and why are these spaces inflexible?

8. Why is the author's observation about Ocala's demographic relevant to Topgolf's business model, even though Topgolf is not currently expanding there?

9. List two of the "Seven COWS" mentioned in the article and explain how they relate to the author's advice on investment strategy.

10. In closing, what is the author's overall stance on the long-term investment potential of the Topgolf-style fusion of golf and entertainment, especially for retirees?

Quiz Answer Key

1. The merger between Callaway Golf and Topgolf in 2021 was valued at around $2 billion. It signified a shift in consumer interest towards golf as an experience rather than solely a sport, appealing to younger, more social demographics.

2. Topgolf's initial appeal was turning the traditional driving range into a social entertainment venue. It integrated drinks, music, technology, and "Instagrammable moments," making golf more accessible and fun, akin to bowling.

3. In Q1 2025, Topgolf Callaway Brands reported a 4.5% revenue decline to $1.09 billion and, more critically, a 12% fall in same-venue sales at Topgolf. These figures are concerning because same-venue sales are a key indicator of health for brick-and-mortar businesses.

4. The "hole in the hull" analogy means that while Topgolf is expanding by opening new locations, its existing venues are experiencing declining sales. This strategy might be masking underlying issues like slowing foot traffic, tightening consumer spending, and potential market saturation.

5. Topgolf Callaway Brands plans to spin off Topgolf as a standalone public company by late 2025. The primary reason is that managing a sporting goods manufacturer (Callaway) and an entertainment-hospitality company (Topgolf) are fundamentally different businesses requiring distinct operational models.

6. Topgolf's business model is characterized as capital-intensive, requiring millions to build each facility with a large footprint. It depends on high-volume discretionary spending (e.g., birthday parties). In a tightening economy, these "wants" get postponed, negatively impacting the model.

7. A significant risk for Topgolf's commercial real estate is that its facilities are not flexible-use spaces. They require extensive zoning and build-out, meaning they cannot be easily converted into other types of businesses, like a grocery store, if demand dries up, making them risky assets.

8. The observation about Ocala's retiree-heavy demographic is relevant because it is not Topgolf's core customer base, which is younger and seeks metropolitan nightlife. This highlights that Topgolf's model may not be universally appealing across all demographics, reinforcing its reliance on specific consumer segments.

9. Two of the "Seven COWS" are "Mindset" and "Risk Management." "Mindset" encourages evaluating if an investment aligns with one's desired mental approach (e.g., substance over hype). "Risk Management" prompts investors to assess if a speculative entertainment brand fits their acceptable level of financial risk.

10. The author's overall stance is that while golf and entertainment are enduring, their fusion in Topgolf's structure may not be a promising frontier for long-term investors, especially retirees. He suggests it lacks the foundation for consistent cash flow, durable competitive advantage, or protection against economic shifts.

Glossary of Key Terms

• AIF® (Accredited Investment Fiduciary®): A professional designation indicating a commitment to fiduciary standards of care and a deep understanding of fiduciary best practices.

• Callaway Golf: A well-established company known for manufacturing golf equipment. In 2021, it formally merged with Topgolf.

• Capital-Intensive: A business model that requires a significant amount of financial capital (money) to acquire, maintain, or improve fixed assets, such as property, buildings, and equipment. Topgolf's model is described as capital-intensive due to the cost of building facilities.

• ChFC® (Chartered Financial Consultant®): A financial planning designation indicating expertise in comprehensive financial planning, including investments, insurance, retirement, and estate planning.

• CLU® (Chartered Life Underwriter®): A professional designation for individuals specializing in life insurance and estate planning.

• Discretionary Spending: Consumer spending on non-essential goods and services, such as entertainment, dining out, and travel, which can be easily postponed or cut back during economic downturns. Topgolf relies heavily on this type of spending.

• Fiduciary-based: Refers to an investment professional or firm that is legally and ethically obligated to act in the best interest of their clients, prioritizing the client's financial well-being above their own.

• IRS Regulations: Rules and guidelines set forth by the Internal Revenue Service (IRS) in the United States, which govern taxation. Relevant here for the tax-free treatment of the Topgolf spin-off.

• Market Saturation: A situation where a product or service has diffused throughout a market to such an extent that the growth potential becomes limited. The article suggests Topgolf might be facing this in some areas.

• REIT (Real Estate Investment Trust): A company that owns, operates, or finances income-producing real estate. REITs offer a way to invest in real estate without having to buy, manage, or finance property. The article notes the potential risk for REITs holding Topgolf properties.

• RFC® (Registered Financial Consultant®): A designation for financial advisors who provide advice on financial planning and investment management.

• Same-Venue Sales: A key performance indicator (KPI) that measures the revenue generated by existing locations over a specific period, excluding sales from newly opened locations. It is considered a "litmus test" for the health of brick-and-mortar businesses.

• Seven COWS: An acronym or framework used by Truesdell Wealth, representing different aspects of well-being and life (Mindset, Physical, Emotional, Intellectual, Relationships, Income, and Risk Management) that are considered when evaluating investment alignment.

• Spin-off: A corporate action where a parent company separates a division or subsidiary into an independent company. The parent company typically distributes shares of the new entity to its existing shareholders. This is Topgolf Callaway Brands' plan for Topgolf.

• Synergy: The concept that the combined value and performance of two companies will be greater than the sum of their separate parts. This was the stated goal of the Callaway-Topgolf merger.

• Tax-advantaged maneuver: A financial or business strategy designed to minimize tax liabilities, often by leveraging specific legal or IRS provisions. The Topgolf spin-off is described this way.

• Topgolf: An entertainment venue that features a high-tech driving range with games, food, and drinks, designed to be a social and accessible golf experience.

• Truesdell Wealth: A fiduciary-based investment and wealth management firm founded by Paul Grant Truesdell, emphasizing disciplined, context-driven investment conversations.

Briefing Document: Topgolf's Strategic Pivot and Investment Implications

Executive Summary

This briefing document synthesizes key themes and critical insights from Paul Grant Truesdell's analysis of Topgolf Callaway Brands, focusing on the strategic decision to spin off Topgolf, its implications for investors (particularly retirees), and the underlying economic and real estate risks. The document highlights the disconnect between a "futuristic, fun, and fast-growing" vision and the realities of capital-intensive, discretionary spending businesses in a tightening economy. Truesdell emphasizes the importance of looking beyond market hype to fundamental business health, demographic realities, and real estate exposure when making investment decisions.

Main Themes and Key Insights

1. The Shifting Landscape of Golf and Entertainment

• Merger Rationale: In 2021, Callaway Golf merged with Topgolf in a $2 billion deal, aiming to capitalize on a "changing consumer: younger, more social, less concerned with golf as a sport and more interested in golf as an experience." Topgolf transformed the traditional driving range into an entertainment venue, described as turning "golf into bowling—with drinks, music, tech integration, and Instagrammable moments."

• Initial Success, Subsequent Challenges: While the model initially "worked—for a while," recent financial performance indicates a reversal.

2. Financial Performance and Red Flags

• Revenue Decline: In Q1 2025, Topgolf Callaway Brands reported a 4.5% decline in revenue, dropping to $1.09 billion.

• Same-Venue Sales Dip: Of significant concern, "same-venue sales at Topgolf fell 12%." Truesdell calls this "not a rounding error—it is a red flag," indicating a decline in the health of existing brick-and-mortar locations.

• Growth Masking Issues: Aggressive expansion through new locations (e.g., Avon, Ohio; Parsippany, New Jersey) may be "masking underlying issues—slowing foot traffic, tightening consumer spending, and possibly market saturation."

3. The Strategic Spin-off of Topgolf

• Planned Separation: Topgolf Callaway Brands intends to "spin off Topgolf as a standalone public company by late 2025." This is structured as a "tax-advantaged maneuver," with Callaway retaining at least 80.1% ownership.

• Operational Disalignment: The primary reason for the split is the fundamental difference in business models: "managing golf clubs and golf parties are two very different businesses." Truesdell explains, "Topgolf is an entertainment-hospitality company, and Callaway is a sporting goods manufacturer. The disciplines are not the same... A restaurant with a driving range attached is not going to operate like a factory making premium irons and balls."

• Spin-offs as a Signal: While not inherently negative, a spin-off "often signals strategic disalignment or trouble under the surface. Treat it like a 'controlled divorce.'"

4. Investment Implications, Especially for Retirees

• Capital-Intensive Model: Topgolf's business model is "capital-intensive." Each new facility costs "millions to build, requires a large footprint, and depends on high-volume discretionary spending." These are "not 'needs' but 'wants,'" which "in a tightening economy, wants get postponed."

• Demographic Mismatch: Truesdell warns that "demographic shifts are exposing cracks." While institutional money has chased "tech-enabled growth story" companies targeting younger audiences, the "younger consumer is more indebted, less loyal, and increasingly hard to monetize."

• Retiree Investment Priorities: In contrast, "retirees—who control a vast amount of this country’s wealth—are often looking for tangible, steady, boring things. Things like infrastructure. Energy. Food. Water. Housing. Not the party version of Pebble Beach."

• Evaluating the Narrative: Investors should "evaluate the narrative" and ask: "Is the business growing organically or just expanding with borrowed money?"

• Portfolio Balance: Portfolios "heavily tilted toward companies that rely on 20-somethings spending $50 for drinks and golf balls on a Thursday night" may be "out of balance with demographic reality."

5. Commercial Real Estate Footprint Risk

• Inflexible Assets: A crucial, often overlooked risk is the "commercial real estate obligations behind these flashy Topgolf facilities." Unlike software or shoe brands, Topgolf facilities require "extensive zoning, parking, build-out, and ongoing maintenance." These are "not flexible-use spaces. You cannot easily turn a Topgolf into a grocery store or a school if demand dries up."

• Risky Asset Class: Whoever owns the land for these facilities "holds a risky asset class." Truesdell prompts investors to question whether aggressive building is "demand-driven expansion or investor-pressure growth?"

6. Local Perception vs. Investment Reality (Ocala Example)

• "Symbol of Arrival": The perceived association of Topgolf with a town "making it" (like Trader Joe's or Whole Foods) highlights the "powerful emotional branding."

• Investment vs. Emotion: Despite this perception, Truesdell cautions that emotional branding "does not make it a good investment," especially for communities like Ocala with a "retiree-heavy demographic" not aligned with Topgolf's core customer.

Truesdell provides a framework for holistic wealth management:

1. Evaluate the narrative: Look beyond the "good story" to underlying business health.

2. Understand demographic flow: Assess if your portfolio aligns with long-term demographic realities.

3. Beware spin-offs as a fix: Recognize that spin-offs can signal deeper issues.

4. Consider real estate exposure carefully: Understand who bears the property risk (land, leases, debt).

5. Remember the Seven COWS: Align investments with Mindset, Physical, Emotional, Intellectual, Relationships, Income, and Risk Management. For speculative entertainment brands, "Often not," is the answer to alignment with desired mindset and risk profile.

Conclusion

Truesdell concludes that while golf and entertainment will endure, their fusion in Topgolf's current structure "may not be the next great frontier for long-term investors—especially those in or near retirement." The model, driven by "discretionary spending" and "capital-intensive" expansion, lacks the "consistent cash flow, durable competitive advantage, or protection against economic shifts" desired by long-term, fiduciary-minded investors. The advice underscores a commitment to "real math, the market structure, and the social behavior that drive outcomes" over "shiny headlines" and market hype.