Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Sales-Type Leases

The Company enters into non-cancelable license agreements that provide software and hardware to driving ranges, hospitality venues, and entertainment venues. These license agreements are classified as sales-type leases.

Leasing revenue from sales-type leases is included in services revenues within the consolidated statements of operations. There were no revenues attributed to sales-type leases for the year ended December 31, 2020. Leasing revenue attributed to sales-type leases consists of the selling price and interest income as follows (in millions):

	December 31, 2022		December 31, 2021
Sales-type lease selling price(1)	$	36.3	$	29.8
Cost of underlying assets	(17.6)		(11.9)
Operating profit	$	18.7	$	17.9
Interest income	$	4.5	$	4.3
Leasing revenue attributable to sales-type leases	$	40.8	$	34.1
(1) Selling price is equal to the present value of lease payments over the non-cancelable term of the licensing agreement.

Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in millions):

	Balance Sheet Location	December 31, 2022		December 31, 2021
Leasing receivables, net—short-term	Other current assets	$	17.5	$	12.8
Leasing receivables, net—long-term	Other assets	57.5		44.1
Total leasing receivables		$	75.0	$	56.9

As of December 31, 2022, maturities of sales-type lease receivables for the next five years and thereafter were as follows (in millions):

	Sales-type Leases
2023	$	24.0
2024	23.3
2025	18.5
2026	11.8
2027	5.7
Thereafter	3.6
Total future lease payments	86.9
Less: imputed interest	11.9
Total	$	75.0

Operating and Finance Leases

As a lessee, the Company leases office space, manufacturing plants, warehouses, distribution centers, Company-operated Topgolf venues, vehicles and equipment, as well as retail and/or outlet locations.

Supplemental balance sheet information related to leases is as follows (in millions):

		December 31,
	Balance Sheet Location	2022		2021
Operating Leases:
ROU assets, net	Operating lease ROU assets, net	$	1,419.1	$	1,384.5
Lease liabilities, short-term	Operating lease liabilities, short-term	$	76.4	$	72.3
Lease liabilities, long-term	Operating lease liabilities, long-term	$	1,437.5	$	1,385.4
Finance Leases:
ROU assets, net	Other assets	$	215.7	$	129.5
Lease liabilities, short-term	Accounts payable and accrued expenses	$	1.7	$	1.8
Lease liabilities, long-term	Other long-term liabilities	$	225.9	$	132.5

The components of lease expense are as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Operating lease costs	$	172.7	$	146.3	$	42.5
Financing lease costs:
Amortization of right-of-use assets	6.4		3.2		0.9
Interest on lease liabilities	9.3		4.5		—
Total financing lease costs	15.7		7.7		0.9
Variable lease costs	10.2		6.5		2.5
Total lease costs	$	198.6	$	160.5	$	45.9

Other information related to leases was as follows:

	December 31,
Supplemental Cash Flows Information (in millions)	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	157.0	$	123.6	$	39.8
Operating cash flows from finance leases	$	5.2	$	2.8	$	—
Financing cash flows from finance leases	$	2.7	$	0.8	$	0.8
Lease liabilities arising from new ROU assets:
Operating leases	$	51.9	$	19.6	$	65.5
Finance leases	$	92.0	$	52.7	$	0.1

	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years):
Operating leases	16.6		14.1
Finance leases	36.5		36.2
Weighted average discount rate:
Operating leases	5.6	%	5.3	%
Finance leases	6.1	%	5.3	%

Future minimum lease obligations as of December 31, 2022 were as follows (in millions):

	Operating Leases		Finance Leases
2023	$	152.5	$	11.2
2024	151.7		13.8
2025	148.3		15.1
2026	145.3		15.2
2027	143.6		15.5
Thereafter	1,719.0		564.8
Total future lease payments	2,460.4		635.6
Less: imputed interest	946.5		408.0
Total	$	1,513.9	$	227.6

Deemed Landlord Financing Obligations (“DLF” Obligations)

As of December 31, 2022, the Company had 38 DLF obligations that did not meet the sale-leaseback criteria upon the completion of construction. The assets of which the Company is deemed the accounting owner of under these DLF obligations consist primarily of land properties and buildings. While the Company typically seeks to finance construction of its venues through third-party developers or real estate financing partners, in certain instances, the Company may fund a certain portion of the assets associated with the DLF obligations. As of December 31, 2022 and 2021, the total net book value of assets associated with these DLF obligations, including assets that were not financed through third-party developers or real estate financing partners under a DLF arrangement, was $813.2 million and $620.3 million, respectively. Land properties and the net book value of the buildings and equipment under these DLF obligations are included in property, plant and equipment on the Company’s consolidated balance sheets. Buildings capitalized in conjunction with these DLF obligations are depreciated, less their residual value, over the shorter period of 40 years or the lease term.

Supplemental balance sheet information related to DLF obligations is as follows (in millions):

	Balance Sheet Location	December 31, 2022		December 31, 2021
DLF obligation liabilities, short-term	Accounts payable and accrued expenses	$	2.4	$	0.9
DLF obligation liabilities, long-term	Deemed landlord financing obligations, long-term	$	658.0	$	460.6

The components of DLF obligation expenses are as follows (in millions):

	Income Statement Location	December 31, 2022		December 31, 2021
Amortization of DLF obligations	Amortization expense	$	14.5	$	5.7
Interest on DLF obligations	Interest expense, net	46.7		28.0
Total DLF contracts expenses		$	61.2	$	33.7

Other information related to DLF leases was as follows:

Supplemental Cash Flows Information (in millions)	December 31, 2022		December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from DLF obligations	$	36.9	$	17.7
Financing cash flows from DLF obligations	$	4.8	$	—
Lease liabilities arising from new ROU assets:
Operating DLF obligations	$	193.8	$	171.4

	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years)	38.5		39.0
Weighted average discount rate	8.8	%	9.2	%

Future minimum financing obligations related to DLF obligations as of December 31, 2022 were as follows (in millions):

2023	$	52.2
2024	54.8
2025	55.1
2026	56.1
2027	57.4
Thereafter	2,622.7
Total future payments	2,898.3
Less: imputed interest	2,237.9
Total	$	660.4

Leases Under Construction

The Company’s minimum capital commitment for leases under construction, net of amounts reimbursed by third-party real estate financing partners, was approximately $48.0 million as of December 31, 2022. As the Company is actively involved in the construction of these properties, the Company recorded $124.5 million in construction costs within property, plant and equipment as of December 31, 2022. Additionally, as of December 31, 2022, the Company recorded $35.4 million in construction advances from the landlords in connection with these properties. The Company will determine the lease classification for properties currently under construction at the end of the construction period. The initial base term upon the commencement of these leases is generally 20 years. In addition, as of December 31, 2022, the Company had $834.2 million of future lease obligations related to eight venues subject to non-cancellable leases that have been signed but have not yet commenced.

Leases

Leases

Sales-Type Leases

The Company enters into non-cancelable license agreements that provide software and hardware to driving ranges, hospitality venues, and entertainment venues. These license agreements are classified as sales-type leases.

Leasing revenue from sales-type leases is included in services revenues within the consolidated statements of operations. There were no revenues attributed to sales-type leases for the year ended December 31, 2020. Leasing revenue attributed to sales-type leases consists of the selling price and interest income as follows (in millions):

	December 31, 2022		December 31, 2021
Sales-type lease selling price(1)	$	36.3	$	29.8
Cost of underlying assets	(17.6)		(11.9)
Operating profit	$	18.7	$	17.9
Interest income	$	4.5	$	4.3
Leasing revenue attributable to sales-type leases	$	40.8	$	34.1
(1) Selling price is equal to the present value of lease payments over the non-cancelable term of the licensing agreement.

Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in millions):

	Balance Sheet Location	December 31, 2022		December 31, 2021
Leasing receivables, net—short-term	Other current assets	$	17.5	$	12.8
Leasing receivables, net—long-term	Other assets	57.5		44.1
Total leasing receivables		$	75.0	$	56.9

As of December 31, 2022, maturities of sales-type lease receivables for the next five years and thereafter were as follows (in millions):

	Sales-type Leases
2023	$	24.0
2024	23.3
2025	18.5
2026	11.8
2027	5.7
Thereafter	3.6
Total future lease payments	86.9
Less: imputed interest	11.9
Total	$	75.0

Operating and Finance Leases

As a lessee, the Company leases office space, manufacturing plants, warehouses, distribution centers, Company-operated Topgolf venues, vehicles and equipment, as well as retail and/or outlet locations.

Supplemental balance sheet information related to leases is as follows (in millions):

		December 31,
	Balance Sheet Location	2022		2021
Operating Leases:
ROU assets, net	Operating lease ROU assets, net	$	1,419.1	$	1,384.5
Lease liabilities, short-term	Operating lease liabilities, short-term	$	76.4	$	72.3
Lease liabilities, long-term	Operating lease liabilities, long-term	$	1,437.5	$	1,385.4
Finance Leases:
ROU assets, net	Other assets	$	215.7	$	129.5
Lease liabilities, short-term	Accounts payable and accrued expenses	$	1.7	$	1.8
Lease liabilities, long-term	Other long-term liabilities	$	225.9	$	132.5

The components of lease expense are as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Operating lease costs	$	172.7	$	146.3	$	42.5
Financing lease costs:
Amortization of right-of-use assets	6.4		3.2		0.9
Interest on lease liabilities	9.3		4.5		—
Total financing lease costs	15.7		7.7		0.9
Variable lease costs	10.2		6.5		2.5
Total lease costs	$	198.6	$	160.5	$	45.9

Other information related to leases was as follows:

	December 31,
Supplemental Cash Flows Information (in millions)	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	157.0	$	123.6	$	39.8
Operating cash flows from finance leases	$	5.2	$	2.8	$	—
Financing cash flows from finance leases	$	2.7	$	0.8	$	0.8
Lease liabilities arising from new ROU assets:
Operating leases	$	51.9	$	19.6	$	65.5
Finance leases	$	92.0	$	52.7	$	0.1

	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years):
Operating leases	16.6		14.1
Finance leases	36.5		36.2
Weighted average discount rate:
Operating leases	5.6	%	5.3	%
Finance leases	6.1	%	5.3	%

Future minimum lease obligations as of December 31, 2022 were as follows (in millions):

	Operating Leases		Finance Leases
2023	$	152.5	$	11.2
2024	151.7		13.8
2025	148.3		15.1
2026	145.3		15.2
2027	143.6		15.5
Thereafter	1,719.0		564.8
Total future lease payments	2,460.4		635.6
Less: imputed interest	946.5		408.0
Total	$	1,513.9	$	227.6

Deemed Landlord Financing Obligations (“DLF” Obligations)

As of December 31, 2022, the Company had 38 DLF obligations that did not meet the sale-leaseback criteria upon the completion of construction. The assets of which the Company is deemed the accounting owner of under these DLF obligations consist primarily of land properties and buildings. While the Company typically seeks to finance construction of its venues through third-party developers or real estate financing partners, in certain instances, the Company may fund a certain portion of the assets associated with the DLF obligations. As of December 31, 2022 and 2021, the total net book value of assets associated with these DLF obligations, including assets that were not financed through third-party developers or real estate financing partners under a DLF arrangement, was $813.2 million and $620.3 million, respectively. Land properties and the net book value of the buildings and equipment under these DLF obligations are included in property, plant and equipment on the Company’s consolidated balance sheets. Buildings capitalized in conjunction with these DLF obligations are depreciated, less their residual value, over the shorter period of 40 years or the lease term.

Supplemental balance sheet information related to DLF obligations is as follows (in millions):

	Balance Sheet Location	December 31, 2022		December 31, 2021
DLF obligation liabilities, short-term	Accounts payable and accrued expenses	$	2.4	$	0.9
DLF obligation liabilities, long-term	Deemed landlord financing obligations, long-term	$	658.0	$	460.6

The components of DLF obligation expenses are as follows (in millions):

	Income Statement Location	December 31, 2022		December 31, 2021
Amortization of DLF obligations	Amortization expense	$	14.5	$	5.7
Interest on DLF obligations	Interest expense, net	46.7		28.0
Total DLF contracts expenses		$	61.2	$	33.7

Other information related to DLF leases was as follows:

Supplemental Cash Flows Information (in millions)	December 31, 2022		December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from DLF obligations	$	36.9	$	17.7
Financing cash flows from DLF obligations	$	4.8	$	—
Lease liabilities arising from new ROU assets:
Operating DLF obligations	$	193.8	$	171.4

	December 31, 2022		December 31, 2021
Weighted average remaining lease term (years)	38.5		39.0
Weighted average discount rate	8.8	%	9.2	%

Future minimum financing obligations related to DLF obligations as of December 31, 2022 were as follows (in millions):

2023	$	52.2
2024	54.8
2025	55.1
2026	56.1
2027	57.4
Thereafter	2,622.7
Total future payments	2,898.3
Less: imputed interest	2,237.9
Total	$	660.4

Leases Under Construction

The Company’s minimum capital commitment for leases under construction, net of amounts reimbursed by third-party real estate financing partners, was approximately $48.0 million as of December 31, 2022. As the Company is actively involved in the construction of these properties, the Company recorded $124.5 million in construction costs within property, plant and equipment as of December 31, 2022. Additionally, as of December 31, 2022, the Company recorded $35.4 million in construction advances from the landlords in connection with these properties. The Company will determine the lease classification for properties currently under construction at the end of the construction period. The initial base term upon the commencement of these leases is generally 20 years. In addition, as of December 31, 2022, the Company had $834.2 million of future lease obligations related to eight venues subject to non-cancellable leases that have been signed but have not yet commenced.