Topgolf: The complicated world of economic impact analysis

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Topgolf is a division of California-based Topgolf Callaway Brands, a publicly traded company reporting $4.3 billion in 2023 net revenue, $1.8 billion from Topgolf. It operates golf-themed entertainment venues in more than 80 locations in the U.S. plus facilities in 18 foreign countries. Topgolf’s “secret sauce” is its Topracer technology that tracks the flight of a ball after being hit, facilitating a range of competitive games from weather-sheltered suites.

A Topgolf venue has been proposed for a more than 18-acre Brighton site adjacent to CityGate, with plans calling for a 48,282-square-foot facility with about 80 covered driving range bays on two levels opening onto a 205-yard-long outfield. In its application to the County of Monroe Industrial Development Agency, Topgolf claims that the facility will attract “250,000 visitors per year from Upstate New York and neighboring states,” generate $150 million to $200 million in local economic impact over 10 years and create “approximately 300 permanent jobs.”

Topgolf has applied for tax breaks through COMIDA, asserting that construction cost increases put the Rochester location at risk: “Without financial assistance from COMIDA, this project would not be able to move forward.”

Should the application be approved?

As taxpayers, we deserve answers to the following questions:

■ Is this a desirable development for our community in this location?

■ Are the claims made by the developer credible?

■ Would the proposed development go forward without a taxpayer subsidy?

Yes, Topgolf makes sense in Rochester

No need to be coy: Topgolf is a good fit for Monroe County and the town of Brighton. The planned location is between Costco and an office park on an odd-shaped parcel stretching from Westfall to I-590. Neighborhood impacts from the project, including traffic, are manageable. This doesn’t bring the negatives of a manufacturing facility. It is environmentally friendly, except for a bit of noise pollution from the periodic WHACK of balls meeting heavy drivers. And we have a LOT of golfers in Rochester. Visit Rochester reports that Golf Magazine rated Rochester the 10th best golf city in the nation.

CAUTION: While some research shows that proximity to golfing venues can exacerbate problem golfing, Topgolf has adapted Topracer technology to develop noncompetitive games that can help the golfing-impaired transition to a normal life. The Topgolf facility can also play a role in harm reduction for golfers when wind, snow, sleet or hail would make traditional golf physically dangerous.

Are Topgolf’s economic impact claims credible?

Let’s start with job creation. The developer’s application to COMIDA promises about 300 permanent jobs—131 full-time and 162 part-time jobs. That may seem to be a lot of jobs, but Topgolf offers few positions with career potential or the capacity to support a family. The U.S. Department of Labor has published salaries by occupation for the Rochester metro from May 2023. Recreation workers are among the lowest-paid occupations, with a median wage of about $34,000. Restaurant staff earn more—$45,200 for waitstaff and $60,900 for chefs and head cooks. If “part-time” workers work half time and the average annual wage for all Topgolf workers is $40,000, the total payroll for Topgolf Rochester is about $8.5 million.

By way of comparison, total wages in the arts, entertainment and recreation sector in the Rochester metro totaled $136 million in 2022. Private education and health services wages totaled nearly $6 billion. While entry-level positions make an important contribution to the labor market, Topgolf would not be a major employer.

The other challenge with employment claims is that they ignore the substitution effect of a new venue. Big Oak Driving Range in Penfield already offers Topracer games. Job gains attributed to Topgolf should be net of possible losses at Big Oak, other golf venues, and other entertainment venues or local restaurants with which Topgolf would compete. This is common with new entrants: Jobs gained at Whole Foods when it opened in Brighton may have been at the expense of positions at Wegmans or Tops.

What about “spillover” impacts? Some firms make an outsized contribution to the economy because they purchase goods and services from other local firms or provide components or supplies to other firms. A tech firm like L3 (formerly Harris-RF Communications) supports highly skilled and well-paid engineers and has contracts with local firms as suppliers. Rochester’s higher ed sector supplies graduates to firms across a range of fields. Topgolf brings neither unique supplier relationships nor does it provide critical products, services or skilled workers to the local economy.

Is the “250,000 visitors per year” figure credible? Without more information, we don’t know how to judge this figure. Who is defined as a “visitor”? Does Wayne County count? Or does this figure represent total visits to Topgolf, local and regional? Are these “unique” visitors or is someone who comes a dozen times in a year counted as 12 of the 250,000? Should Topgolf get sole credit for a visitor? How many out-of-town visitors might come solely to try out Topgolf? Might they be attracted by Oak Hill or Country Club of Rochester and spend a few hours at Topgolf at a golf-themed party with friends?

Given that Rochester is a relatively large golf market, Topgolf might encourage prospective visitors to stay an extra day, which could add to revenue at the golf courses or at lodging and food establishments. That’s rather different than Topgolf attracting unique new visitors who would otherwise have spent their vacation at Topgolf in Holtsville on Long Island.

Do we believe Topgolf’s “but for” claim?

In economic development circles, “but for” is shorthand for “but for the tax abatement, the development would not have come.” As noted above, Topgolf is a major player in the entertainment business with revenue of $1.8 billion in 2023. Topgolf’s 2025 and 2026 financial prospects are hardly determined by a decision here in Rochester. If COMIDA turns down its request for an abatement, Topgolf could afford to build here without a subsidy.

Nonetheless, long-term financial success depends on paying attention to every transaction—and this is still a $34 million investment. Syracuse, Buffalo or Erie might be eager to offer incentives.

Suppose COMIDA believes that Topgolf is too invested in the Brighton location to start over somewhere else and turns down the request for a tax break. If Topgolf walks away, the community gets nothing—no new entertainment venue, no increase in property tax revenue from the site, no job creation. It is a difficult decision. If Topgolf moves on, there may be another use proposed for the site that is better for the community. Or not.

What does Topgolf gain from the agreement?

COMIDA is empowered to confer tax breaks to firms seeking to locate, expand or remain in Monroe County. As a tax-exempt public benefit corporation, COMIDA assumes ownership of the property for the period of the agreement, rendering the property exempt from taxation. Negotiations between COMIDA and a developer produces a graduated increase in tax liability that is called a “payment-in-lieu-of-tax” or PILOT agreement. At the end of the agreement, ownership of the property reverts to the developer and it becomes fully taxed.

Topgolf is seeking a 10-year PILOT agreement through COMIDA that would reduce its obligation to pay local property taxes, New York and Monroe County sales taxes, and state and local mortgage reporting taxes.

Read: Eager to try a Topracer Range?

In a separate agreement under New York’s incentive zoning rules, the town of Brighton and Topgolf have agreed that town property taxes will be paid in full, although the PILOT agreement will still reduce property taxes paid to the school district and county.

Adjusted for Brighton’s separate agreement, the property tax exemption totals about $2 million over the 10 years of the agreement (with future payments discounted at 2 percent). The sales and mortgage reporting tax abatements cut Topgolf’s tax liability by another $1.8 million.

Savings to Topgolf under the agreement are offset by fees charged by the IDA (about $300,000), the IDA’s attorney, Harris Beach ($100,000), plus an additional $275,000 pledged to Brighton under the incentive zoning agreement. The discounted net benefit to Topgolf (thus the cost to taxpayers) is about $3.1 million over the 10 years.

COMIDA is teed up to make the decision at its Tuesday, May 21 meeting.

Kent Gardner is Rochester Beacon opinion editor. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected]

3 thoughts on “Topgolf: The complicated world of economic impact analysis

  1. I drove past a Topgolf location on a road trip recently, and was surprised by the amount of light pollution it creates. That may be just fine in this location… or not. I just wonder if anyone has thought about it.

  2. It appears that any business coming to the Rochester region requires financial favor. Then with that financial favor we hold our breath and see if it is viable. The winners are attorneys (obviously win or lose), the accountants, all at the cost of the populous whether they need the golf complex or not. Pretty good deal if you can get away with it. They usually do.

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