Drive Shack, a brand new, well-financed competitor to Topgolf, is making ready to open its first location in Orlando and guarantees an aggressive nationwide growth.
New York-based Drive Shack is an offshoot of American Golf, the multi-course operator that Fortress Funding Group LLC acquired in 2013. American Golf was managed lately by Newcastle Funding Corp., a Fortress affiliate that used to function as an actual property funding belief. Newcastle introduced in late 2016 that it was altering its identify to Drive Shack and wouldn’t retain its REIT standing.
Sarah L. Watterson, Drive Shack’s CEO and president, stated the corporate’s determination to enter the “eatertainment” class could possibly be traced to the acquisition of American Golf. In a December 2016 investor presentation, Drive Shack famous that there’s “restricted participant development” in golf, however that customers have been interested in “social leisure choices.”
“We noticed a whole lot of the nice points of golf in proudly owning this enterprise, and we additionally noticed the chance to take a number of the greatest points of golf – the meals and beverage, the camaraderie, the great feeling of whacking a golf ball – and pull them off the course and put them into one other venue,” Watterson stated.
Some regional opponents to Topgolf have already got emerged. These embrace FlyingTee in Tulsa, Okla., and 4ORE! In Lubbock, Texas.
What separates Drive Shack from these start-ups is chilly money. As of Sept. 30, the top of the corporate’s fiscal third quarter, Drive Shack had $182 million in money available to self-fund growth. The corporate nonetheless operates 77 American Golf services. It owns 27 of these programs, leases 41 and manages the remaining 9. Drive Shack trades underneath the ticker “DS” on the New York Inventory Change.
Drive Shack already has introduced 5 areas: Orlando; Palm Seaside, Fla.; Glendale close to Phoenix; Raleigh, N.C.; and Richmond, Va. The one close to Phoenix is especially fascinating as a result of it is going to be positioned throughout the road from a soon-to-be-opened Topgolf in Glendale, close to
College of Phoenix Stadium.
A typical Drive Shack will price $20 million to $25 million to construct, in line with the corporate’s public filings.
In a Nov. 1 investor presentation, the corporate estimated that every facility
may generate $three million to $6 million in earnings earlier than curiosity, taxes, depreciation and amortization, or EBITDA.
Drive Shacks will look just like Topgolf’s areas, even right down to the sq. footage and the dimensions of the vary. Drive Shack will likely be 60,000 sq. toes throughout three flooring, with greater than 90 hitting bays and a 220-yard vary. There will likely be eating places and bars, and occasion house for greater than 150 visitors, although Sara Yakin, Drive Shack’s COO, stated that may be configured to accommodate bigger teams.
“I believe Topgolf is only the start,” Watterson stated. “They suppose and we expect there’s room for a second competitor in what they’re doing. We’re seeking to develop, and develop in a short time.”
Topgolf final month opened its first location in Orlando, its 36th location worldwide. It’s maybe not a coincidence that Topgolf Orlando is the primary venue to function Toptracer (previously Protracer) know-how, which offers instantaneous information on ball velocity, distance, curvature and peak of every shot. That may have been Topgolf taking a shot throughout the bow at Drive Shack, whose first location is 16 miles away in Lake Nona close to the Orlando airport.
Watterson stated Drive Shack will provide “digital know-how” that can embrace information comparable to ball velocity and distance, however declined to elaborate. The corporate additionally guarantees an expansive meals and beverage program, with what Yakin describes as a heavy emphasis on “share-ables.”
Drive Shack Orlando will open within the first quarter of 2018, although a precise date has not been introduced. Watterson anticipates hiring 350 staff at every facility.
“We consider it’s an unbelievable enterprise,” Watterson stated. “It’s as much as us to execute on it. We consider that we will develop in a short time as if we execute on it.”
(Observe: This story seems within the Nov. 13, 2017 situation of Golfweek.)