Japanese corporations are gobbling up U.S. courses at a fast rate

July 07, 1991|By George White | George White,Orlando Sentinel

ORLANDO, Fla. -- In the 16th century, the Scots taught the world how to play it. In the 20th century, the Americans taught the world how to commercialize it. In the 21st century, will the Japanese tell the world how to buy it?

Golf is for sale at a price, at least the fields where the sport is played. The yen men of Japan have the money. America has the golf courses. Fifty years ago the two nations came at each other with bullets. Today they meet over bullion.

Since 1988, Japanese corporations have signed checks totaling $1.3 billion in golf shopping sprees in the United States. That's on golf courses alone. In addition, they've made whopper deals on resorts such as paying $835 million for the Pebble Beach resort and courses, $250 million in California for La Costa Hotel and courses, and, in Orlando, $234 million for Grand Cypress Resort and its 45 golf holes.

Perhaps no other region has been carpeted with Japanese money as has Central Florida. In the last two years Japanese corporations have bought seven courses, and there are strong indications that more such sales will follow.

It's a phenomenon that has alarmed some, perplexed some and pleased some.

The golfer himself probably will never be greeted in the pro shop by a Japanese national recruited from the Tokyo want ads. American companies continue to operate most properties. But out on the golf course, there will be some dramatic differences. Courses that were fraying at the edges like a well-worn shirt will be spiffed up, greened up and quite likely filled up as they get in better and better condition.

What provoked this buying frenzy from the Orient? Some suggest its genesis came back in 1946, when the United States almost single-handedly rebuilt Japan's economy after World War Not until the 1970s, though, did the Japanese begin to stretch financial fingers toward our coast, and only then because of the changing currents in the world money markets.

It was then that decades of soaring national debt began forcing the value of the American dollar downward, at the same time the Japanese yen was getting stronger and stronger. Three years ago, the yen began another upward surge, tripling its value against the dollar. A golf course priced at $3 million suddenly cost $1 million in terms of Japanese purchasing power.

Golf courses represent only about 2 percent of the total Japanese investment in the United States (estimated at $70.7 billion in 1990).

Orlando lawyer Rulon Munns says economics don't begin to tell the whole story, though. He knows the Japanese culture firsthand, having lived there for several years, and he deals extensively with Japanese investors doing business in America.

"I think you start with the premise that the Japanese are just inherently fascinated and intrigued by anything that's American," Munns said. "The people I met in the nearly five years I lived there, they'd do nearly anything to come to America and know more about us.

"And secondly, they have only begun to understand what 'leisure' means. They were total workaholics; there was no time for leisure in the past. Now that's changed, partly because they have the financial resources, and partly because the government is pushing them to engage in more leisure time. Golf has always been considered an upper-end activity, and the people there have fallen in love with the sport."

Californian J. Michael Poellot has been designing golf courses in Japan for 20 years. He adds yet another reason there is very little land in Japan to construct their own.

The terrain is mountainous, and what level land there is is planted with rice. It doesn't matter that a golf course could bring in much more income to the land owner than rice the Japanese landowner won't sell for any price.

"The rice industry is particularly powerful, and it's almost a cultural heritage to grow rice," Poellot said.

"And there is a centuries-old attachment to land. The sale of land, if the land has been in the family any length of time, brings great shame to the person who sells it."

That is the real bottom line: American golf courses are outstanding business investments for the Japanese.

And as Munns said, there is a priceless intangible about owning something American. Poellot agrees. "It's almost like buying a bunch of Van Goghs," he says. "It's something that brings prestige to that company in Japan 'Oh, yes, I own Pebble Beach; I own Riviera.' There is much status involved in it."

The Orlando area has become a focus for the Japanese golf investor. It began less than two years ago with the purchase of Grenelefe and Sun-Air in Haines City, continued last year with the sale of Grand Cypress, and in less than six months the clubs of Sweetwater, Sabal Point, Windermere and Deer Run.

Bay Hill would have been the eighth property. Arnold Palmer and his business partners had agreed to sell for $48 million, $45 million more than they paid. The deal ran into complications when the Japanese waffled on the sale, however, and the case is now in court.

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