A $2.5 million government subsidy to lure Topgolf to Mobile will be paid back in less than 2-1/2 years and has a 40% rate of return in sales and property taxes, according to a Mobile chamber official.
But at least one county commissioner says it is unnecessary for taxpayers to support Dallas-based Topgolf with a direct subsidy.
Related content: Topgolf in Mobile: $22 million project, 60 hitting bays, 150 jobs and $2.5 million in economic incentives
Mobile County Commissioner Merceria Ludgood said an economic incentive for real estate and retail developments are “inappropriate.” She was the only “No” vote on a 2-1 decision to OK the county’s portion of a project agreement.
The agreement includes a direct $1.25 million county subsidy for the Topgolf project. The Mobile City Council, in a separate agreement that will be discussed on Tuesday and voted on August 30, will also be asked to provide $1.25 million.
“These companies made decisions based on whether a market can support their endeavor, and I don’t believe it is necessary to use public funds in this manner,” said Ludgood in a statement after the commission’s vote on whether to support an agreement for a $22 million Topgolf entertainment and sports venue within the McGowin Park shopping center at Interstate 65 and Government Street.
Alabama projects
Topgolf Birmingham reopened Monday, June 15, 2020, with a few changes brought on to deal with social distancing needs.
The agreement is the first step towards building the third Topgolf in Alabama. Birmingham and Huntsville both opened their Topgolf venues in 2017.
David Rodgers, vice-president of economic development with the Mobile Chamber, said the company’s successes in the two Alabama cities played a role in its consideration of Mobile.
“They look at our economy as the Central Gulf Coast so it’s a little bit different from Birmingham and Huntsville,” said Rodgers. “But they have had success in Alabama, and certainly wanted to keep that in the mix (when considering Mobile).”
Neither Huntsville nor Birmingham paid out a direct subsidy to Topgolf, a company that was purchased by Callaway Golf last year and reported record revenues during the second quarter of this year.
Huntsville, in 2017, did not provide a direct incentive to Topgolf. But the city did provide infrastructure improvements within the MidCity District development where Topgolf is located, according to city spokeswoman Kelly Schrimsher.
In Birmingham, a $1.5 million incentive package was rejected a few years ago after the developers of a Topgolf venue east of the Birmingham-Jefferson County Convention Center after failing to meet the city’s goal of having 30% participation by minority- and women-based firms in the venue’s construction.
The goal, established by the Birmingham City Council, was not close to being met.
In Mobile, the project agreement calls for a “good faith” effort to use county-based contractors and vendors.
Rodgers called the Mobile agreement “a great investment for us on a quality-of-life aspect.”
He said he anticipated the public’s return on investment occurring within “2.3 years,” of its opening, which could occur late next year.
‘Unique’ venue
The Mobile venue is expected to be under construction this fall and completed late next year. It will contain many of the trendy features associated with similar Topgolf venues that are considered economic draws because they feature a popular golf driving range game with electronically tracked golf balls and automatically scored drivers.
Todd Waldo, a representative with Topgolf, told commissioners that the Mobile venue will be a two-story structure with 60 hitting bays, mini-golf and an outdoor patio. It will be built on 9-1/2 acres where a multiplex cinema now sits abandoned.
Each facility also includes a restaurant and bar, meeting rooms and more.
Waldo said the Mobile project includes updated “tracer technology” that is seen on the Professional Golf Association (PGA) circuit. Rodgers said the company will be utilizing a “new prototype” of ball tracing technology that is not used at the other venues, including Birmingham and Huntsville.
“We’ve been looking at the Mobile (market) for a number of years,” said Waldo. “We are thankful to be here.”
Mobile County Commissioner Connie Hudson voted in support of a project agreement to bring a Topgolf entertainment venue to Mobile during the commission’s meeting on Monday, August 22, 2022, at Government Plaza in downtown Mobile, Ala. (John Sharp/[email protected]).
Commissioner Connie Hudson, who along with Commission Randall Dueitt voted “Yes” on the agreement, praised the project for its uniqueness and potential regional draw. She and others expect the venue to draw from the Florida Panhandle and the Mississippi Gulf Coast.
“It’s unique for this area,” said Hudson, who visited a Topgolf venue for the first time this weekend in Baton Rogue to better understand its operations and popularity.
“You have to go to either Birmingham or Baton Rogue to get anything exactly like this,” Hudson said. “It’s very popular and people enjoy it, and they want to go.”
Rodgers said he did not have a breakdown on Topgolf’s economic reach.
He said that Mobile was in competition with other Gulf Coast cities but declined to say what kind of incentive packages were offered elsewhere.
“It comes down to the fact that we are getting new tax dollars to this economy versus (those new dollars) going to any other economy outside of Mobile including the states of Mississippi and Florida. We are excited to keep these tax dollars in this economy.”
Unanswered question
Mobile County Commissioner Merceria Ludgood was the only “No” vote in a 2-1 decision to OK a project agreement with Topgolf. The vote occurred during the commission’s meeting on Monday, August 22, 2022, at Government Plaza in Mobile, Ala. (John Sharp/[email protected]).
But there are some unanswered questions, primarily on the type of wages Topgolf will offer in Mobile.
Ludgood, in her statement, said noted that her questions about wages were not answered by Waldo during Monday’s meeting.
She asked on Thursday for Topgolf representatives “be prepared to answer questions” related to the number of jobs, wages.
Ludgood added, “but the requested wage information was not provided.”
Waldo said that “at a minimum,” the Topgolf venue in Mobile will draw 150 jobs. A range of “40 to 60” of those positions will be full-time, with the remainder as temporary jobs.
“It will be a great employment opportunity for college students and those alike,” said Waldo.
The project agreement requires 150 jobs be reached no later than June 30, 2024. If the venue’s operations do not begin by then, $250,000 will be paid to each the county and city not later than July 31, 2024. Additional $250,000 fees will be owed to each city and county for each year after that until 2028, if the project is not completed and staffed with employees.
Fifty percent of the new employees are to be “local residents,” with the exception of “certain back-office operations that require relocation of personnel,” according to the agreement.
The lack of wage information comes in the aftermath of questionable labor practices that have placed the company in high-profile lawsuits.
Topgolf settled a class-action lawsuit in March that claimed the company incentivized managers at its US locations to pay employees less than the federal minimum wage for untipped labor. The minimum wage in the US has been at $7.25 since 2009, although provisions in the Fair Labor Standards Act allow restaurant and bar employers to pay tipped labor a minimum of $2.13 per hour as long as the hourly wage plus the tip income equals at least $7.25 .
That lawsuit, which involved thousands of Topgolf employees across the nation, alleged the company manipulated the FLSA loophole by not telling employees they were working for tips and making workers spend time doing non-tipped labor such as cleaning and sanitizing, according to media reports. The lawsuit claimed Topgolf did not allocate proper pay levels of the work that was performed by employees.
Topgolf, according to media reports, denied the allegations and settled at an undisclosed amount to the workers named in the lawsuit.
In 2021, Topgolf paid $750,000 in back pay to employees in 25 states for unpaid overtime. The company also elevated employees into leadership roles without offering commensurate pay increases and failing to provide compensation for time worked beyond 40 hours per week.