Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

Leases

Sales-Type Leases

We enter into non-cancellable license agreements in our Topgolf operating segment 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 service revenues within the condensed consolidated statements of operations. Leasing revenue from sales-type leases consists of the selling price and interest income as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Sales-type lease selling price(1)	$	8.2	$	11.4	$	16.4	$	18.5
Cost of underlying assets	(4.5)		(5.4)		(7.9)		(8.7)
Operating profit	$	3.7	$	6.0	$	8.5	$	9.8
Interest income	$	1.4	$	0.9	$	2.7	$	1.8
Total revenue attributable to sales-type leases	$	9.6	$	12.3	$	19.1	$	20.3
(1) Selling price is equal to the present value of lease payments over the non-cancellable term of the licensing agreement.

Leasing receivables related to our net investment in sales-type leases are as follows (in millions):

	Balance Sheet Location	June 30, 2023		December 31, 2022
Leasing receivables, net—short-term	Other current assets	$	22.0	$	17.5
Leasing receivables, net—long-term	Other assets	61.5		57.5
Total Leasing receivables		$	83.5	$	75.0

As of June 30, 2023, net maturities of sales-type lease receivables for the next five years and thereafter were as follows (in millions):

Remainder of 2023	$	14.1
2024	27.2
2025	23.0
2026	16.1
2027	8.8
Thereafter	5.5
Total future lease proceeds	94.7
Less: imputed interest	11.2
Total	$	83.5

Operating and Finance Leases

As a lessee, we lease office spaces, manufacturing plants, warehouses, distribution centers, company-operated Topgolf venues, vehicles and equipment, and retail and outlet locations under operating and financing leases.

DLF Agreements

We enter into deemed landlord financing (“DLF”) agreements to finance certain company-operated Topgolf venues. We work with third-party developers or real estate financing partners to acquire rights to land and fund the construction associated with certain venues under build-to-suit arrangements. While we seek to use financing partners, in certain instances, we typically fund a portion of the construction ourselves, and in some cases, all of the construction. In certain build-to-suit arrangements, we are deemed to have control of the underlying assets under construction and are therefore considered the accounting owner of these assets. At the end of the construction period, we complete an assessment to determine if control has transferred to the financing partner under a sale-leaseback arrangement. If control has not been transferred to our financing partner and the sale-leaseback fails, we reverse the construction advance accumulated during the construction phase and record a DLF obligation. When land is acquired directly or venue construction is self-financed, we may enter into arrangements to sell those assets and lease them back from a financing partner. In these cases, if control is not transferred upon the closing of the transaction and the commencement of the subsequent leaseback, we record a DLF obligation associated with the cash proceeds. 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 our operating and financing right-of-use (“ROU”) assets and lease liabilities and DLF assets and obligations is as follows (in millions):

	Balance Sheet Location	June 30, 2023		December 31, 2022
Assets
Operating lease ROU assets, net	Operating lease ROU assets, net	$	1,427.6	$	1,419.1
Financing lease ROU assets, net	Other assets	$	230.7	$	215.7
DLF assets, net	Property, Plant & Equipment	$	925.7	$	813.2
Liabilities
Current
Operating lease liabilities, short-term	Operating lease liabilities, short-term	$	80.4	$	76.4
Financing lease liabilities, short-term	Accounts payable and accrued expenses	$	1.5	$	1.7
DLF obligations, short-term	Accounts payable and accrued expenses	$	0.7	$	2.4
Non-current
Operating lease liabilities, long-term	Operating lease liabilities, long-term	$	1,451.5	$	1,437.5
Financing lease liabilities, long-term	Other long-term liabilities	$	247.2	$	225.9
DLF obligations, long-term	Deemed landlord financing obligations	$	765.8	$	658.0

Leases Under Construction

Our 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 June 30, 2023. As we are actively involved in the construction of these properties, we recorded $175.6 million in construction costs within property, plant and equipment and $72.0 million in construction advances from the landlords in connection with these properties as of June 30, 2023. We determine the lease classification for properties currently under construction at the end of the construction period. Upon commencement, the initial base term of these leases is generally 20 years. As of June 30, 2023, we had $801.4 million of future lease obligations related to eight venues subject to non-cancellable leases that have been signed but have not yet commenced.

The components of lease expense included in our condensed consolidated statement of operations for the periods presented below are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease costs:
Amortization of ROU assets	$	41.3	$	48.4	$	85.3	$	85.8
Total operating lease costs	41.3		48.4		85.3		85.8
Financing lease costs:
Amortization of ROU assets	2.0		3.0		3.9		3.6
Interest on lease liabilities	3.7		2.1		7.3		4.2
Total financing lease costs	5.7		5.1		11.2		7.8
DLF obligation costs:
Depreciation of DLF assets	5.3		3.2		10.4		6.4
Interest on DLF obligations	16.2		10.7		31.4		20.8
Total DLF obligation costs	21.5		13.9		41.8		27.2
Variable lease costs	2.2		2.9		4.7		4.8
Total lease costs	$	70.7	$	70.3	$	143.0	$	125.6

Other information related to leases (in millions):

	Six Months Ended June 30,
Supplemental Cash Flows Information	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	77.1	$	72.7
Operating cash flows from finance leases	$	3.2	$	3.1
Operating cash flows from DLF obligations	$	21.8	$	15.7
Financing cash flows from finance leases	$	1.7	$	0.2
Financing cash flows from DLF obligations	$	5.1	$	—
Lease liabilities arising from new ROU assets:
Operating leases	$	42.2	$	26.3
Financing leases	$	17.4	$	30.6
DLF obligations (1)	$	101.6	$	38.8
(1) During the course of the construction of our venues, certain financing partners remit funds directly to our construction vendors on our behalf rather than providing the construction advances directly to us. These funds are presented as non-cash investing and financing activities within our consolidated statement of cash flows. During the six months ended June 30, 2023, the amount contributed by these financing partners, in addition to accrued capitalized interest was $26.7 million. During the six months ended June 30, 2022, the amount contributed by these financing partners, in addition to accrued capitalized interest, was $12.8 million, which was corrected from $26.1 million, as previously reported.

	June 30, 2023		December 31, 2022
Weighted average remaining lease term (years):
Operating leases	16.5		16.6
Financing leases	36.5		36.5
DLF obligations	38.2		38.5
Weighted average discount rate:
Operating leases	5.7	%	5.6	%
Financing leases	6.1	%	6.1	%
DLF obligations	8.9	%	8.8	%

As of June 30, 2023, our future minimum lease obligations were as follows (in millions):

	Operating Leases		Financing Leases		DLF Obligations		Total
Remainder of 2023	$	69.7	$	5.3	$	25.1	$	100.1
2024	158.7		14.4		60.5		233.6
2025	155.8		14.9		60.9		231.6
2026	151.3		15.0		61.9		228.2
2027	149.9		15.3		63.1		228.3
Thereafter	1,825.2		568.6		2,923.3		5,317.1
Total future lease payments	2,510.6		633.5		3,194.8		6,338.9
Less: imputed interest	978.7		384.8		2,428.3		3,791.8
Total	$	1,531.9	$	248.7	$	766.5	$	2,547.1

Leases

Leases

Sales-Type Leases

We enter into non-cancellable license agreements in our Topgolf operating segment 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 service revenues within the condensed consolidated statements of operations. Leasing revenue from sales-type leases consists of the selling price and interest income as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Sales-type lease selling price(1)	$	8.2	$	11.4	$	16.4	$	18.5
Cost of underlying assets	(4.5)		(5.4)		(7.9)		(8.7)
Operating profit	$	3.7	$	6.0	$	8.5	$	9.8
Interest income	$	1.4	$	0.9	$	2.7	$	1.8
Total revenue attributable to sales-type leases	$	9.6	$	12.3	$	19.1	$	20.3
(1) Selling price is equal to the present value of lease payments over the non-cancellable term of the licensing agreement.

Leasing receivables related to our net investment in sales-type leases are as follows (in millions):

	Balance Sheet Location	June 30, 2023		December 31, 2022
Leasing receivables, net—short-term	Other current assets	$	22.0	$	17.5
Leasing receivables, net—long-term	Other assets	61.5		57.5
Total Leasing receivables		$	83.5	$	75.0

As of June 30, 2023, net maturities of sales-type lease receivables for the next five years and thereafter were as follows (in millions):

Remainder of 2023	$	14.1
2024	27.2
2025	23.0
2026	16.1
2027	8.8
Thereafter	5.5
Total future lease proceeds	94.7
Less: imputed interest	11.2
Total	$	83.5

Operating and Finance Leases

As a lessee, we lease office spaces, manufacturing plants, warehouses, distribution centers, company-operated Topgolf venues, vehicles and equipment, and retail and outlet locations under operating and financing leases.

DLF Agreements

We enter into deemed landlord financing (“DLF”) agreements to finance certain company-operated Topgolf venues. We work with third-party developers or real estate financing partners to acquire rights to land and fund the construction associated with certain venues under build-to-suit arrangements. While we seek to use financing partners, in certain instances, we typically fund a portion of the construction ourselves, and in some cases, all of the construction. In certain build-to-suit arrangements, we are deemed to have control of the underlying assets under construction and are therefore considered the accounting owner of these assets. At the end of the construction period, we complete an assessment to determine if control has transferred to the financing partner under a sale-leaseback arrangement. If control has not been transferred to our financing partner and the sale-leaseback fails, we reverse the construction advance accumulated during the construction phase and record a DLF obligation. When land is acquired directly or venue construction is self-financed, we may enter into arrangements to sell those assets and lease them back from a financing partner. In these cases, if control is not transferred upon the closing of the transaction and the commencement of the subsequent leaseback, we record a DLF obligation associated with the cash proceeds. 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 our operating and financing right-of-use (“ROU”) assets and lease liabilities and DLF assets and obligations is as follows (in millions):

	Balance Sheet Location	June 30, 2023		December 31, 2022
Assets
Operating lease ROU assets, net	Operating lease ROU assets, net	$	1,427.6	$	1,419.1
Financing lease ROU assets, net	Other assets	$	230.7	$	215.7
DLF assets, net	Property, Plant & Equipment	$	925.7	$	813.2
Liabilities
Current
Operating lease liabilities, short-term	Operating lease liabilities, short-term	$	80.4	$	76.4
Financing lease liabilities, short-term	Accounts payable and accrued expenses	$	1.5	$	1.7
DLF obligations, short-term	Accounts payable and accrued expenses	$	0.7	$	2.4
Non-current
Operating lease liabilities, long-term	Operating lease liabilities, long-term	$	1,451.5	$	1,437.5
Financing lease liabilities, long-term	Other long-term liabilities	$	247.2	$	225.9
DLF obligations, long-term	Deemed landlord financing obligations	$	765.8	$	658.0

Leases Under Construction

Our 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 June 30, 2023. As we are actively involved in the construction of these properties, we recorded $175.6 million in construction costs within property, plant and equipment and $72.0 million in construction advances from the landlords in connection with these properties as of June 30, 2023. We determine the lease classification for properties currently under construction at the end of the construction period. Upon commencement, the initial base term of these leases is generally 20 years. As of June 30, 2023, we had $801.4 million of future lease obligations related to eight venues subject to non-cancellable leases that have been signed but have not yet commenced.

The components of lease expense included in our condensed consolidated statement of operations for the periods presented below are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease costs:
Amortization of ROU assets	$	41.3	$	48.4	$	85.3	$	85.8
Total operating lease costs	41.3		48.4		85.3		85.8
Financing lease costs:
Amortization of ROU assets	2.0		3.0		3.9		3.6
Interest on lease liabilities	3.7		2.1		7.3		4.2
Total financing lease costs	5.7		5.1		11.2		7.8
DLF obligation costs:
Depreciation of DLF assets	5.3		3.2		10.4		6.4
Interest on DLF obligations	16.2		10.7		31.4		20.8
Total DLF obligation costs	21.5		13.9		41.8		27.2
Variable lease costs	2.2		2.9		4.7		4.8
Total lease costs	$	70.7	$	70.3	$	143.0	$	125.6

Other information related to leases (in millions):

	Six Months Ended June 30,
Supplemental Cash Flows Information	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	77.1	$	72.7
Operating cash flows from finance leases	$	3.2	$	3.1
Operating cash flows from DLF obligations	$	21.8	$	15.7
Financing cash flows from finance leases	$	1.7	$	0.2
Financing cash flows from DLF obligations	$	5.1	$	—
Lease liabilities arising from new ROU assets:
Operating leases	$	42.2	$	26.3
Financing leases	$	17.4	$	30.6
DLF obligations (1)	$	101.6	$	38.8
(1) During the course of the construction of our venues, certain financing partners remit funds directly to our construction vendors on our behalf rather than providing the construction advances directly to us. These funds are presented as non-cash investing and financing activities within our consolidated statement of cash flows. During the six months ended June 30, 2023, the amount contributed by these financing partners, in addition to accrued capitalized interest was $26.7 million. During the six months ended June 30, 2022, the amount contributed by these financing partners, in addition to accrued capitalized interest, was $12.8 million, which was corrected from $26.1 million, as previously reported.

	June 30, 2023		December 31, 2022
Weighted average remaining lease term (years):
Operating leases	16.5		16.6
Financing leases	36.5		36.5
DLF obligations	38.2		38.5
Weighted average discount rate:
Operating leases	5.7	%	5.6	%
Financing leases	6.1	%	6.1	%
DLF obligations	8.9	%	8.8	%

As of June 30, 2023, our future minimum lease obligations were as follows (in millions):

	Operating Leases		Financing Leases		DLF Obligations		Total
Remainder of 2023	$	69.7	$	5.3	$	25.1	$	100.1
2024	158.7		14.4		60.5		233.6
2025	155.8		14.9		60.9		231.6
2026	151.3		15.0		61.9		228.2
2027	149.9		15.3		63.1		228.3
Thereafter	1,825.2		568.6		2,923.3		5,317.1
Total future lease payments	2,510.6		633.5		3,194.8		6,338.9
Less: imputed interest	978.7		384.8		2,428.3		3,791.8
Total	$	1,531.9	$	248.7	$	766.5	$	2,547.1

Leases

Leases

Sales-Type Leases

We enter into non-cancellable license agreements in our Topgolf operating segment 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 service revenues within the condensed consolidated statements of operations. Leasing revenue from sales-type leases consists of the selling price and interest income as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Sales-type lease selling price(1)	$	8.2	$	11.4	$	16.4	$	18.5
Cost of underlying assets	(4.5)		(5.4)		(7.9)		(8.7)
Operating profit	$	3.7	$	6.0	$	8.5	$	9.8
Interest income	$	1.4	$	0.9	$	2.7	$	1.8
Total revenue attributable to sales-type leases	$	9.6	$	12.3	$	19.1	$	20.3
(1) Selling price is equal to the present value of lease payments over the non-cancellable term of the licensing agreement.

Leasing receivables related to our net investment in sales-type leases are as follows (in millions):

	Balance Sheet Location	June 30, 2023		December 31, 2022
Leasing receivables, net—short-term	Other current assets	$	22.0	$	17.5
Leasing receivables, net—long-term	Other assets	61.5		57.5
Total Leasing receivables		$	83.5	$	75.0

As of June 30, 2023, net maturities of sales-type lease receivables for the next five years and thereafter were as follows (in millions):

Remainder of 2023	$	14.1
2024	27.2
2025	23.0
2026	16.1
2027	8.8
Thereafter	5.5
Total future lease proceeds	94.7
Less: imputed interest	11.2
Total	$	83.5

Operating and Finance Leases

As a lessee, we lease office spaces, manufacturing plants, warehouses, distribution centers, company-operated Topgolf venues, vehicles and equipment, and retail and outlet locations under operating and financing leases.

DLF Agreements

We enter into deemed landlord financing (“DLF”) agreements to finance certain company-operated Topgolf venues. We work with third-party developers or real estate financing partners to acquire rights to land and fund the construction associated with certain venues under build-to-suit arrangements. While we seek to use financing partners, in certain instances, we typically fund a portion of the construction ourselves, and in some cases, all of the construction. In certain build-to-suit arrangements, we are deemed to have control of the underlying assets under construction and are therefore considered the accounting owner of these assets. At the end of the construction period, we complete an assessment to determine if control has transferred to the financing partner under a sale-leaseback arrangement. If control has not been transferred to our financing partner and the sale-leaseback fails, we reverse the construction advance accumulated during the construction phase and record a DLF obligation. When land is acquired directly or venue construction is self-financed, we may enter into arrangements to sell those assets and lease them back from a financing partner. In these cases, if control is not transferred upon the closing of the transaction and the commencement of the subsequent leaseback, we record a DLF obligation associated with the cash proceeds. 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 our operating and financing right-of-use (“ROU”) assets and lease liabilities and DLF assets and obligations is as follows (in millions):

	Balance Sheet Location	June 30, 2023		December 31, 2022
Assets
Operating lease ROU assets, net	Operating lease ROU assets, net	$	1,427.6	$	1,419.1
Financing lease ROU assets, net	Other assets	$	230.7	$	215.7
DLF assets, net	Property, Plant & Equipment	$	925.7	$	813.2
Liabilities
Current
Operating lease liabilities, short-term	Operating lease liabilities, short-term	$	80.4	$	76.4
Financing lease liabilities, short-term	Accounts payable and accrued expenses	$	1.5	$	1.7
DLF obligations, short-term	Accounts payable and accrued expenses	$	0.7	$	2.4
Non-current
Operating lease liabilities, long-term	Operating lease liabilities, long-term	$	1,451.5	$	1,437.5
Financing lease liabilities, long-term	Other long-term liabilities	$	247.2	$	225.9
DLF obligations, long-term	Deemed landlord financing obligations	$	765.8	$	658.0

Leases Under Construction

Our 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 June 30, 2023. As we are actively involved in the construction of these properties, we recorded $175.6 million in construction costs within property, plant and equipment and $72.0 million in construction advances from the landlords in connection with these properties as of June 30, 2023. We determine the lease classification for properties currently under construction at the end of the construction period. Upon commencement, the initial base term of these leases is generally 20 years. As of June 30, 2023, we had $801.4 million of future lease obligations related to eight venues subject to non-cancellable leases that have been signed but have not yet commenced.

The components of lease expense included in our condensed consolidated statement of operations for the periods presented below are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease costs:
Amortization of ROU assets	$	41.3	$	48.4	$	85.3	$	85.8
Total operating lease costs	41.3		48.4		85.3		85.8
Financing lease costs:
Amortization of ROU assets	2.0		3.0		3.9		3.6
Interest on lease liabilities	3.7		2.1		7.3		4.2
Total financing lease costs	5.7		5.1		11.2		7.8
DLF obligation costs:
Depreciation of DLF assets	5.3		3.2		10.4		6.4
Interest on DLF obligations	16.2		10.7		31.4		20.8
Total DLF obligation costs	21.5		13.9		41.8		27.2
Variable lease costs	2.2		2.9		4.7		4.8
Total lease costs	$	70.7	$	70.3	$	143.0	$	125.6

Other information related to leases (in millions):

	Six Months Ended June 30,
Supplemental Cash Flows Information	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	77.1	$	72.7
Operating cash flows from finance leases	$	3.2	$	3.1
Operating cash flows from DLF obligations	$	21.8	$	15.7
Financing cash flows from finance leases	$	1.7	$	0.2
Financing cash flows from DLF obligations	$	5.1	$	—
Lease liabilities arising from new ROU assets:
Operating leases	$	42.2	$	26.3
Financing leases	$	17.4	$	30.6
DLF obligations (1)	$	101.6	$	38.8
(1) During the course of the construction of our venues, certain financing partners remit funds directly to our construction vendors on our behalf rather than providing the construction advances directly to us. These funds are presented as non-cash investing and financing activities within our consolidated statement of cash flows. During the six months ended June 30, 2023, the amount contributed by these financing partners, in addition to accrued capitalized interest was $26.7 million. During the six months ended June 30, 2022, the amount contributed by these financing partners, in addition to accrued capitalized interest, was $12.8 million, which was corrected from $26.1 million, as previously reported.

	June 30, 2023		December 31, 2022
Weighted average remaining lease term (years):
Operating leases	16.5		16.6
Financing leases	36.5		36.5
DLF obligations	38.2		38.5
Weighted average discount rate:
Operating leases	5.7	%	5.6	%
Financing leases	6.1	%	6.1	%
DLF obligations	8.9	%	8.8	%

As of June 30, 2023, our future minimum lease obligations were as follows (in millions):

	Operating Leases		Financing Leases		DLF Obligations		Total
Remainder of 2023	$	69.7	$	5.3	$	25.1	$	100.1
2024	158.7		14.4		60.5		233.6
2025	155.8		14.9		60.9		231.6
2026	151.3		15.0		61.9		228.2
2027	149.9		15.3		63.1		228.3
Thereafter	1,825.2		568.6		2,923.3		5,317.1
Total future lease payments	2,510.6		633.5		3,194.8		6,338.9
Less: imputed interest	978.7		384.8		2,428.3		3,791.8
Total	$	1,531.9	$	248.7	$	766.5	$	2,547.1