Topgolf Feasibility Study

Sean Hickey, Max Zester, Matt Stroup

Melbourne, Australia

Table of Contents
 I. Executive Summary
II. Introduction
III. Market Analysis
• Overview of municipalities
• Demographic/psychographic data
• Venue data
IV. Project Description
V. Key Project Assumptions
• Financing Options
• Revenue Sources
• Growth Rates of Income and Expenses
VI. Economic and Fiscal Impacts
VII. Pro-forma Financials (minimum of 5 years)
• Balance Sheet
• Income Statement
• Statement of Cash Flows
VIII. Conclusions/Recommendation
I. Executive Summary

The city of Melbourne, Australia is looked at as one of the most promising up and

coming cities in the world, with a vast amount of youth and relatively young population.

With the rapidly expanding TopGolf , and the jolt of innovation it has brought to the

social aspect of the game of golf, this entertainment venue proves to be a hit in young and

growing city like Melbourne. This feasibility study has determined that building a

TopGolf venue in Melbourne, Australia is indeed feasible and we plan to proceed with

the project. Some key factors to the recent growth of the population is affordable housing

and the cost of living. Thus, the community being willing to spend more money on

entertianment, and leisure activities.

With the potential to take over Sydney, Australia’s population by 2028, this

project would be a crucial centerpiece to a booming population like this one.

Furthermore, with the Melbourne Cricket Ground being the biggest sporting venue in

Australia and attracting 2.5 million fans a year, the TopGolf venue and experience would

attract many sports fans.

When taking a look at the numbers, our first year net income comes out to be

$1,577,413 dollars. Following year 1, we see a 19% increase into year 2. Taking a look

into the future, we continue to grow in net income for the next 5 years. We also expect

significant growth after the five year prediction.

 II. Introduction

TopGolf Entertainment Group is a global sports and entertainment community that

connects nearly 100 million fans through experiences and opportunities to create memorable

moments. What began as a technology that enhanced the game of golf now encompasses a range

of unmatched experiences where communities can discover common ground at a variety of

TopGolf venues. The mission for TopGolf is to have actively engaged associates and guest that

create unforgettable experiences. The core values of the TopGolf community are Fun, One

Team, Excellance, Edgy Spirits, and a caring mentality.

Though TopGolf was created in the United Kingdom, its main base of operations is in the

United States. Branding in the U.S. hasn't been the challenge. The challenge has been branding

to other countries in different continents and creating global brand awareness throughout the

world. TopGolf has a wide open market in places like Australia. With the first TopGolf venue

being built in June of 2018 off the Gold Coast of Queensland, Australia. The plan is to expand

and build eight more in Australia alone.The city of Melbourne is one that can be very intriguing

to look into for the next great TopGolf venue. The city of Melbourne in Victoria, Australia has a

huge market for the likes of TopGolf. With eight major sports venues in the city of Melbourne

and with the game of golf growing in popularity each year it sounds like a great fit.It is also

considered to be one of the fastest growing populations in Australia, this would be a great place

to build and expand the brand of TopGolf for years to come.

III. Market Analysis

 A. Overview of municipalities

1. Municipality: City of Melbourne (30 other municipalities in Melbourne)

a. 6th smallest in terms of square mileage

b. 5th largest density

c. 17th in population

d. 5th largest in population growth from 2001

e. tied for most counselors with 11

*all numbers from Australia Bureau of Statistics

Local Council Region Popula Populati Population

government area seat tion on Growth

sq mi Density (2001 (2016

-2016 census) census)

City of Melbourne Melbourne Inner 14 3,486 60,745 135,959 75,214

Melbourne

City of Stonnington Malvern Inner 10 4,152 86,090 103,832 17,742

Melbourne

City of Port Phillip St Kilda Inner 8 5,101 78,227 100,863 22,636

Melbourne

City of Yarra Richmond Inner 8 4,458 67,052 86,657 19,605

Melbourne

B. Demographic/psychographic data

1. Has dominated Australia's population growth for the past 15 years.

2. It is expected to grow past 5 million people and overtake Sydney’s

declined population growth

3. 10th largest immigrant population, 63% of residents were born in Australia

 4. Immigrants speak 233 languages and dialects

5. Has attracted the largest proportion of international overseas immigrants

(48,000)

6. Key factors of growth are affordable housing and cost of living

7. Could potentially take over the population of Sydney in 2028

8. As of 2018 population of Metropolitan area was 4,963,349

9. Growing about 70,000 per year

10. Most common immigrant countries India (3.6%), China (3.5%), England

(3%)

11. Most common languages other than English (62%), Mandarin (4.1%),

Greek 2.4%, Italian (2.3%)

12. Religious percentages Christianity (46%), Buddhism (3.8%), Islam

(4.2%), Hinduism (2.9%) (2016)

13. Socioeconomics: Inner City tends to be more affluent, suburban is more

middle class, outer suburbs are lower income

14. Estimated personal income (avg) 59,573

15. Number of Arts & recreation businesses 6,519

C. Venue data

1. Eight major sports venues in the City of Melbourne

2. The City of Melbourne host around 600 events and attracts 2.5 million

people annually
 3. The Melbourne Cricket Ground (MGC) is the biggest sport venue in

Australia with a capacity of 100,000

4. The first top golf venue in Australia to open was on the Gold Coast,

Queensland

5. It was a 65,000 square foot venue on a 15 acre plot of land

6. The venue cost was 35 million dollars

IX. Project Description

In June of 2018, the construction of the first TopGolf in Australia was complete. TopGolf

in the U.S. has been a popular commodity and with the vision and mission of TopGolf to expand

globally, Australia seems like the perfect place. The TopGolf venue in Queensland Australia was

the first of many to come in Australia. With the expansion plan halting for now, we have come

up with a plan of our own to ensure success in a major city of Australia.

The city of Melbourne in Victoria, Australia is home to the great Melbourne Cricket

Ground stadium (MCG). The MGC alone can hold upwards of 100,000 people at a time and

attracts up to 2.5 million people annually. Melbourne is host to about 600 sport and

entertainment events each year, and is one of the fastest growing populations in Australia.

According to demographic data, the population growth has dominated Australia's population

growth for the past 15 years. With the potential of taking over Sydney Australia's population by

the year 2028, and with key growth factors being affordable housing and average cost of living

down, this is a great place for a younger population with families.

Potential Location:
 TopGolfs economic impact is one that is very positive. At each venue location, it can

create up to 500 full-time or part-time jobs. This is very appealing to a younger population that is

growing and looking for affordable experiences within a city. TopGolf is also home to the

world's largest digital golf audience. This has become a huge part of the sport of golf, and with

golf growing rapidly throughout Australia, a TopGolf venue in the heart of Melbourne would be

a very mutually beneficial impact for the city and venue. The first TopGolf Venue in Australia is

one located in Queensland, Australia. It was built on a plot of land that was only 15 acres in

space, and the facility was about 65,000 square feet in space. The total cost ended up being 35

million dollars. It took the construction team about a year to complete the project with almost no

stoppage of work.

X. Key Project Assumptions

A. Financing Options

1. For Topgolf’s first expansion into Australia, it’s Gold Coast location, a

deal was struck with Village Roadshow Theme Parks. Village Roadshow

provided 100% of the startup costs in exchange for 67% in Topgolf

 Australia. They are looking to expand throughout Australia, specifically

looking at Sydney and Melbourne, so if it was determined that Melbourne

was an appropriate location, then Village Roadshow would provide the

startup financing.

2. Village Roadshow expanding, and the financing that would come with it,

would only an option once they have decided that the Gold Coast location,

which opened in mid-2018, is performing well enough.

B. Revenue Sources

1. Memberships

a. Hourly Rate

● Price/bay includes up to 6 players

● Open-noon ($25/hr)

● Noon-5 pm ($35/hr)

● 5 pm-close ($45/hr)

b. Lifetime Member (in addition to hourly rate)

● $5 one time cost

● Membership playing card

● Free club rentals

c. Platinum Member (in addition to hourly rate)

● $250/month

● Skip line advantages

● Food and beverage discount

● Some free play every month

 d. Junior Member (in addition to hourly rate)

● $5 one time cost

● Kids 12 and under

● Access to kids zone events

● Membership playing card

● Free club rentals

2. Food and Beverage (makes up over half of the revenue)

a. 3 full-service bars, a draw for both golfers and non-golfers, where

people can relax without having to pay any admission fees.

b. Rotating seasonal menu to prevent customers from getting bored

with the food and beverage.

C. Growth Rates of Income and Expenses

1. The total number of Topgolf customers increased by 4 million from 13

million to 17 million between 2017 and 2018, which, in turn, brought in a

reported over $300 million in revenue. This number is up 83% from 2014,

so growth is trending in the right direction.

2. Due to the business model of Topgolf, as attendance and revenue increase,

only about half of the expenses increase. Costs associated with running the

driving range and providing other services, along with overhead remain

relatively the same, regardless of attendance. The main expense that will

increase is the other half of the business, the food and beverage.

XI. Economic and Fiscal Impacts

A. $44.3 MM Total Economic Construction Output

 1. $25.5 mil direct expenditures

2. $28.8 mil indirect and induced (suppliers/consumption related)

B. 390 One-year Construction Jobs

1. 260 construction jobs

2. 130 other jobs

C. $1.4 MM State & Local Construction Taxes

D. 642 Operational Jobs Created

1. 475 jobs at Topgolf

2. 167 jobs at suppliers and other businesses

E. $38.4 MM 10 Year Total State & Local Tax Impact

1. State tax impact (sales, excise, license, business, etc.)

2. Local tax impact (property, sales tax)

VII. Financial Statements

Balance Sheet
Income Statement
T-Account

Cash Flows
Depreciation Schedule

Loan Schedule
VIII. Conclusion/Recommendation

Given the profit opportunity to constructing a TopGolf venue in Melbourne, Australia

over the next five years, we determined that the project is feasible as well as a good investment.

This project would be mutually beneficial to the city and community of Melbourne, and would

greatly benefit the TopGolf organization. The demographics of Melbourne and growth that is

expected in the following years, correlate well with the consumer base that TopGolf is trying to

reach. The TopGolf in Melbourne, Australia would be only the second of eight more that

TopGolf plans to expand upon in the near future. The economic and fiscal impacts would also

benefit the city greatly as Melbourne's population growth continues to rise. The start-up

financing that the Golden Coast venue has provided would be a great way to segment into the

growth and expansion in Australia's market for the TopGolf organization.

 References

Demographics

● https://www.abs.gov.au/

Australian Sport Venues

 ● https://www.parliament.qld.gov.au/documents/tableOffice/TabledPapers/2018/5618T147

1.pdf

Cost of Land

● The Price Of Vacant Land in Melbourne Has Jumped By a Staggering 40% in a Year
David Scutt - https://www.businessinsider.com.au/australia-housing-affordability-

population-growth-property-prices-2018-7

TopGolf Australia

● https://topgolf.com.au/

TopGolf

● https://www.sportsbusinessdaily.com/Journal/Issues/2018/04/02/In-Depth/Topgolf.aspx

● https://www.ocwd.com/media/4279/prop05topgolf-overview-presentation.pdf