Every K-Pop fan knows YG Entertainment for its artists, but music isn’t the only industry the company is in. In fact, they currently have a business in a market you’d never expect: golfing. Now, according to Korean media reports, YG Entertainment is preparing to close it.
Four years ago, YG Entertainment’s subsidiary YG Plus took over Greenworks. Greenworks now operates XGOLF, the top golf reservation platform in South Korea. According to reports, YG Entertainment’s change in business direction came about because of BIGBANG.
Back in the early 2010s, BIGBANG was one of the most profitable groups in K-Pop, and YG Entertainment was said to have numerous investment offers from foreign and local enterprises. However, as the BIGBANG members began serving their mandatory military service periods and with BLACKPINK yet to debut, YG Entertainment decided to mitigate its losses by diversifying its business endeavors.
From 2014 onwards, YG Entertainment launched and acquired businesses in the Korean barbecue market, the cosmetics market, public relations, and golf. The entertainment agency bought Greenworks in 2017 for ₩31.5 billion KRW (about $27.3 million USD), and it’s remained profitable since then.
However, while Greenworks is making money, it hasn’t grown much over the years. Back in 2017, the business recorded sales revenue of ₩9.80 billion KRW (about $8.51 million USD) and a ₩2.00 billion KRW (about $1.74 million USD) operating profit.
As of 2021, those figures have increased very modestly to ₩11.2 billion KRW (about $9.72 million USD) in sales and ₩3.20 billion KRW (about $2.78 million USD) in profit.
According to business reports, Greenworks isn’t the only YG Entertainment business that’s suffering. After a series of criminal scandals involving the company, several businesses under the agency began to record fiscal deficits and stock prices plummeted. As of this year, YG Entertainment has already sold up its food and cosmetics brands in order to repay debts to investors.
Now, it seems that the company’s golf business will be the next to go, allowing the company to focus on more profitable endeavors. “We are currently expanding our main business of entertainment and merchandising based on our strategy for the company’s future business,” said a YG Plus representative this week.
YG Plus went on to confirm that various businesses in YG Entertainment’s portfolio are “under review,” but the company is yet to make any specific decisions about sales. Nevertheless, The Korea Economic Daily reports that the company is planning to sell off 100% of Greenworks for the second time. YG Plus attempted to sell Greenworks last year, but the deal fell through.
As golf grows in popularity in the 20s to 30s demographic, the market sees potential in the business, which means YG Entertainment could sell it for a tidy sum. However, the company’s luck could also turn in the opposite direction now that Kakao has launched its own successful golf reservation service, KakaoVX, which threatens to push XGOLF out of the market. Now, investors say YG Entertainment’s failed endeavours will serve as a cautionary tale to other entertainment industries hoping to conquer new markets.