Today, we’re wedging our way into the world of golf.
The US Masters kicked off this week at the Augusta National Country Club in Georgia. The iconic golf tournament introduced a total smartphone ban , which they promise will last forever.
But if you think this ban is a metaphor for not keeping up with the times, think again. While golf is a traditional sport (and the Masters is famously regressive) this isn’t about being Luddites. Rather, it’s a conscious decision to maintain a sense of exclusivity.
For a long-established sport like golf, it’s important to balance between tradition and innovation. And that’s exactly what we’ll explore in this issue.
How is the sport developing around the world? Is golf losing its appeal with younger generations? What are the interesting companies and investment opportunities?
Let’s tee off 🏌️
Table of Contents
What if you could invest directly in golfers?
Back in 2021, I got wind of an iOS app called Commonwealth that lets you invest in racehorses.
For the past 12 months, I’ve been watching from the sidelines as their top horse, Country Grammer, won race after race on his way to becoming last year’s highest-earning racehorse in the world. Now their budding superstar, Mage, is heading to the Kentucky Derby.
Clearly these guys know how to pick the right horse. So when I heard they were expanding into a new alternative asset class, my ears perked up.
Their next move is letting you invest in golfers.
Through the Commonwealth App , you can buy shares and back an athlete’s career, starting at $50/share. If your athlete wins, you receive a slice of the earnings.
They’ve signed two golfers so far: Cooper Dossey and Joey Vrzich. Both are recent All-Americans represented by top agencies. Cooper won an APT event last month, and Joey recently competed in the PGA Tour’s Farmers Insurance Open. They both have full status on PGA Tour Canada this summer.
Sign up for Commonwealth and Download the iOS app . You can invest in horses immediately, and when Dossey and Vrzich go live, you’ll be at the top of the list.
LIV vs PGA: A quick guide
The first thing you need to know about golf is the messy relationship between the PGA and LIV.
The PGA (Pro Golfer’s Association) was founded in 1929. They’ve played a significant role in promoting and advancing the sport around the world.
And until recently, they were the only game in town.
You see, the Saudis have recently entered the market in a big way. LIV Golf is attempting to disrupt the golf market and shake up the PGA’s monopoly on players and tournaments.
LIV sprung to life in 2021, bankrolled by a $2 billion investment from Saudi Arabia’s Sovereign Wealth Fund . The LIV slogan, “Golf, but louder!”, basically just means “Golf, but we can pay you more!”
As Wyatt wrote about recently, the list of defectors is impressive . But in addition to luring top players and market share, it’s an attempt to improve their public perception and putt their human rights record into the rough. (This tactic is known as sportswashing .)
The tournament organizers came out swinging, poaching prominent PGA golfers with the allure of insane salaries and prize winnings. Dustin Johnson was ushered over with a sign-up bonus of $150 million.
The average prize pot for a LIV tournament is $25m, about 2.7x higher than the PGA Tour. Winners take home around $4 million , and last-place finishers still get $125,000.
This (obviously) pissed off the PGA, whose new mission is to ensure LIV’s traction gets bogged in sand.
And they’ve made some progress:
- LIV golfers were originally banned from participating in any PGA competitions
- They don’t earn international ranking points
- Tiger Woods rejected a $1 billion offer to become a turncoat
- American TV networks, a huge source of income for the PGA, won’t touch LIV with a ten-foot pole. (LIV eventually signed a rights deal with the CW Network ).
After pressure from Phil Mickelson and the US Dept of Justice , the PGA lifted their suspension. 18 LIV golfers are participating in this week’s Masters.
LIV certainly has the cash to keep chipping away at PGA’s monopoly. What they don’t have (yet) is fan support. LIV’s TV ratings are dropping and pale in comparison to the PGA.
So in February they launched an app and streaming site enabling fans around the world to watch the 2023 LIV Golf League on-demand. They’re hoping to unlock the sport’s untapped worldwide potential.
Let’s talk about that international audience.
What are the most golf-obsessed countries?
Sweden 🇸🇪
In terms of golfers per capita, Sweden is the surprising leader (I’m excluding Iceland because their population is so tiny)
There are 538,962 registered golfers from Sweden, representing 5.21% of the population.
The greatest Swedish golfer of all time is Annika Sorenstam, who has raked in 93 professional wins and $22.2m in career earnings. She is the highest-earning LPGA athlete of all time.
Ireland 🇮🇪
Golf originated in Scotland 600 years ago. But today Ireland is even more enthusiastic.
Ireland has the highest rate of registered golfers in the world — Nearly 3% of the nation’s 5.5 million people.
Some of the greatest golfers of all time hail from Ireland, including Rory McIlroy, Graeme McDowell and Fred Daly.
United States 🇺🇸
The United States is home to over 16,000 golf courses (including 9 of the top 10 most popular courses ). It has about 43% of all courses on the planet.
While the US doesn’t have disproportionally high registered golfers, the raw numbers are huge. 30 million Americans play casually each year, and most legendary household names hail from the US, including Tiger Woods, Jack Nicklaus, and Arnold Palmer.
Other notable golfing nations
🇦🇺 Australia has more golf courses per capita than any other nation, with one course for every ~4,000 people. Some of the world’s top professional golfers are Aussie, including Greg Norman and Karrie Webb.
🇯🇵 Japan has the 2nd highest number of golf courses in the world after the United States
🇬🇧 England has the highest number of courses per square mile
🇨🇳 China is considered a golf growth country. According to the HSBC Golf Industry Report 2020 , there were 970 golf courses in China as of 2019, and it’s currently building about one new course per week. China is also home to Mission Hills : the largest golf complex in the world
🇿🇦 South Africa is home to the world’s largest green golf course, the Legend Golf & Safari Resort. The resort’s signature hole, the Extreme 19th, is played from the top of a mountain and requires a helicopter ride to reach the tee.
Is golf losing popularity?
Not anymore. A decade ago, the conventional wisdom was that golf was falling out of favor with millennials. And at the time, it sure seemed that way.
Golf had a pretty rough decade in the 2010s:
- US golf memberships declined while courses increased fees to make up for the losses, creating a vicious cycle
- Between 2007 and 2012, the United States lost 7 million regular players
- In 2019, European golf memberships dropped by 6%
- 1,200 golf courses were closed between 2003 and 2018. Since 2007, the number of golf course closures in the US has generally outpaced the number of new course openings every year.
Some speculated golf was declining because of America’s tough work/life balance . Tiger Woods’ fall from grace in 2009 no doubt played a part .
One wild, desperate idea from the Head of the PGA (and backed by Jack Nicklaus) proposed increasing the hole size from 4 to 15 inches. The beta test failed miserably.
But in the early 2020s, sentiment rebounded.
In fact, for all the damage COVID-19 did around the world, it seemed to have the opposite effect on golf.
- With indoor gatherings largely outlawed, people rekindled their passion for outdoor sports
- Holes played by amateur golfers increased by 14%
- 36 million US golfers playing a round during lockdown.
- Since 2020, active golfers in the US have steadily increased, from 24.3 million to 25.6 million
- Equipment sales grew 10.1% in 2020 YoY
- July 2020 was the single-best performing month for golf sales in history
And with the exception of Drive Shack (which went bust), public golf retailers smashed the S&P 500 in the wake of the pandemic:
TV ratings are up again too. 2021 saw a 27% increase in viewership, with 13m Americans tuning into the final round of the PGA Championship. This is just a hair behind the 2022 NBA finals between Golden State and Boston which saw 16.8m viewers.
And Netflix has gotten into the game as well. In February they debuted Full Swing, which is the golf version of Drive to Survive.
Whether Full Swing will have the same impact on golf that Drive to Survive had on F1 racing remains to be seen (50% of current F1 fans say the show got them into the sport!) It’s not a foregone conclusion. After all, the Netflix docu-series on tennis, Break Point, was a bust .
But it clearly won’t hurt. Golf was one of the few ways friends could interact during covid, and its jump in popularity has sustained since lockdowns ended.
Golf startups to know about
Golf is hitting its stride once again. Here are some interesting companies making moves.
Commonwealth
You may recall our recent issue on investing in athletes , which featured companies like Finlete , Evo , Mojo , and Chisos .
This space is heating up, and since publishing, we’ve been approached by even more startups doing cool stuff in the space. One of those startups is today’s sponsor, Commonwealth .
As I mentioned above, Commonwealth started as a platform for buying fractional shares of racehorses . But just yesterday they officially expanded into golfers. 🏌️
The team has already signed up Joey Vrzich from Pepperdine University, who recently competed in his first-ever pro PGA tournament , and Cooper Dossey from Baylor University, who picked up an APT win just a few weeks ago.
If your athlete wins, you win. Like other athlete investment platforms, each share entitles holders to a portion of the athlete’s career earnings.
These guys have done a terrific job with their racehorses, and seeing them expand is cool.
LinksDAO
LinksDAO made a lot of noise during the height of the Web3 craze, aiming to build “the world’s greatest golf community.”
Membership is granted through the LinksDAO NFT, which gives you voting rights on key decisions. They launched the NFT before the crypto winter, and it was one of 2022’s biggest NFT success stories. The DAO sold 9,090 memberships and raised a cool $10m.
Since then, they’ve been busy partnering with big golf brands, including Top Golf Callaway. Members now get a discount on merch, and some other perks.
But the DAO’s most ambitious goal was to acquire a golf course. And last month they did exactly that.
They created a community proposal to buy the Spey Bay Golf Club in Scotland, which was listed for $900,000. 88.6% of 4,300 LinksDAO members voted to put in an offer , and the organization won the bid!
 Links Golf Club  @LinksDAOWe won the bid. WE’RE BUYING A GOLF COURSE!!!March 17th 2023282Retweets2,281Likes |
The vote was not without controversy. Some members felt the DAO should focus on the US first:
It’ll be interesting to see if this group of Web3 heads can “touch grass” and effectively manage the tough economics of running a golf club. (Operating profit for a golf course is only around 5-10% , and a quarter of golf courses don’t turn a profit )
But in the meantime, they’ve got $9 million to figure it out, and have re-opened their waitlist to new members. So if you like where these guys are headed, now’s your chance to hop on board.
SubAir Systems
SubAir Systems is a South Carolina startup with a big role to play at this week’s Masters.
SubAir’s technology adds moisture to the grass when it’s hot, and sucks up excess water when it rains. This prevents flooding, and came in quite handy today .
Augusta has spent millions installing SubAir systems underneath every green, and even placed them underneath walkways after someone slipped and fell a few years back.
The original SubAir System was invented in 1994 by Marsh Benson , Augusta’s former Director of Golf Course and Grounds. The first green to have a SubAir system installed under it at Augusta National was the 13th green in 2001, but all 18 greens now have it.
SubAir is a private company doing $51m/year in sales, so you can’t invest. But if you’re interested in turf grass management, check out soil analysis startup Land Maverick , or Natuition , a French startup that has created an autonomous weeder robot.
Arccos
Arccos is a golf startup that uses sensors and data analytics to help golfers improve their game.
The company’s sensors attach to a golfer’s clubs and track data on their swings, including club head speed, angle of attack, and spin rate. This data is then analyzed to give golfers insights on how to improve their swing and lower their scores.
Arccos also has a partnership with the PGA Tour, which allows the company to collect and analyze data from professional golfers. This data is used to improve the accuracy of the company’s algorithms and to provide golfers with insights into the swings and strategies of top-level players.
Shot Scope
Shot Scope is a wearable that gives golfers detailed data on their performance, including club selection and accuracy.
Shot Scope’s data can be used to help golfers identify areas for improvement and make more informed decisions on the course.
Golf investors making moves
We’ve seen some interesting golf investments lately:
- Tiger Woods has a new upscale mini-golf and dining franchise called Popstroke . Despite the lazy slogan, “Eat. Putt. Drink,” TaylorMade invested a big chunk in the company , valuing it at $650m.
- TopGolf is ramping up its franchising, especially internationally , since they have just 7 locations outside the US. The tech-enhanced driving ranges are growing 51.6% YoY.
- Carry.golf is accepting new investors for its program that lets you buy shares in ten up-and-coming golfers.
- Chicago-based Puttshack is like TopGolf for mini-golf. With locations in the UK and Atlanta, GA, last October the company received a $150m investment from private equity giant BlackRock and Promethean Investments.
Closing thoughts
After a rough last decade, golf is suddenly surging back.
Whether this surge is due to a “post-covid honeymoon” or something larger remains to be seen. But it’s not just traditional golf that’s on the rise.
“Golf entertainment” companies — including virtual golf, tech-enabled mini-golf, and golf dining — are all breaking out of infancy. TopGolf proved the model works, and Callaway was quick to acquire them. (This acquisition was terrific by the way: In just 3 years, TopGolf already makes up 39% of Callaway’s total revenue !)
While traditional golf can be slow to change, entrepreneurs are embracing technology with zeal as they shape the sport’s future.
It’s exciting to see new exciting golf startups begin to get their time in the sun. ⛳
Further reading
- Golf Digest discusses the massive ramifications of the Saudi-backed LIV
- Factset’s post on the demise and rise of golf has some good stats and companies to take note of
- Over the past 5 years, $9 billion has been invested in golf course renovations
- Joe Pompliano had a terrific Twitter thread chock full of fun facts about the Masters Tournament
- Michael Karnjanaprakorn opines on some ways to reimagine golf (which might just be TopGolf)
Disclosures
- Our ALTS 1 Fund does not have any holdings in any companies mentioned in this issue
- I own shares of Callaway ($MODG)
