The Week That Was: January 9, 2011

japan Sayonara, Goldman Sachs

Goldman Sachs Group is leaving Japan's lousy golf business.

The New York City-based investment bank plans to sell its 45 percent stake in Accordia Golf, the largest owner/operator of golf properties in Japan. Tokyo-based Accordia, which opened for business in 2002, currently owns 131 properties.

Since Goldman Sachs took Accordia public in 2006, the investment fund's stock price has fallen by about 60 percent, a decline that reflects the cooling of Japan's torrid love affair with golf. The popularity of golf in Japan, the world’s second-largest golf market (after the United States), reached its peak in the late 1980s and early 1990s but has been waning ever since. The nation currently has an estimated 10 million golfers, a number that's expected to shrink to 6.7 million by 2015, as older golfers die and younger ones find other diversions.

In creating Accordia, Goldman's idea was to buy distressed and under-performing courses at low prices, return them to profitability, and sell them at handsome profits. It didn't foresee that Japan's golf-crazy middle class would so quickly abandon the game for less expensive pursuits -- the price of a round of golf in Japan is truly “world class” -- leading to the erosion of Accordia's value.

The Financial Times reports that “the number of players at [Japan's] golf courses” -- I presume the phrase means the number of rounds played -- peaked in 1992, at 102 million. By 2009, the number had fallen to 91 million.

“Golf is a luxury,” a financial consultant told Bloomberg. “Playing numbers are falling because of the declining population and weakening economy, as well as companies choosing not to entertain clients on the course.”

Goldman owns more than 470,000 shares in Accordia. Bloomberg says that they're currently worth $445 million.

south africa Another One Bites the Dust

One of South Africa's most prolific golf developers is also leaving the golf business.

Although it believes that the nation's housing market is “showing early signs of recovery,” Pinnacle Point Group has decided to stop building golf communities and aims to sell at least two of its best-known golf clubs. In a recent financial statement, it said that “ownership of golf courses will no longer be part of its future strategy.”

We've heard this story before, haven't we? Like so many other companies, PPG has concluded that golf development isn't what it used to be.

Available at the right price, whatever it may be, are two of PPG's premier properties, Pinnacle Point Golf Club in Mossel Bay and Clarens Golf & Trout Estate in the Free State Highlands.

These days PPG also owns Wedgewood Village Golf & Country Estate outside Port Elizabeth, which I suppose could also be on the market. Last year, the company agreed to sell Gardener Ross Golf & Country Estate in suburban Pretoria, which features an Ernie Els-designed course, but I can't determine if the sale was ever completed.

PPG has also left some to-be-built golf communities on the table. It had planned to build Romansbaai Beach & Fynbos Estate on South Africa's Western Cape, a 3,000-acre coastal community in Nigeria called Lagos Keys, and the Ile Aurore Nouvelle golf community in the Seychelles, an island chain in the Indian Ocean. Ile Aurore Nouvelle’s golf course was to be co-designed by Darren Clarke, the PGA pro, and Peter Matkovich, an architect based in Kwazula Natal, South Africa.

Various news reports say that PPG has lined up a buyer for Pinnacle Point Golf Club, which has a Matkovich-designed course.

puerto rico Keeping Up with the Joneses

Robert Trent Jones, Jr. is midway through what he calls “a major restoration” of one of his late father's courses, the East course at Dorado Beach Resort & Club in suburban San Juan, Puerto Rico.

The idea, Jones Jr. says, “is to recapture the original design while uncovering a more flexible and fun course for all players.”

The East course, the first to be built at the 1,000-acre resort, opened in 1958. The resort's Jones-designed West course was added in 1966, and two more Jones-designed tracks (the Sugarcane and Pineapple layouts) opened later.

The East and West courses were subsequently renovated by Raymond Floyd, whose work is now presumably being undone.

“I came to Dorado as a teenager, when my father was working here, and started to realize how exciting golf course architecture is," said Jones Jr., whose design firm is based in Palo Alto, California. “It was a formative moment at the very beginning of my career."

Dorado Beach was developed by Laurance Rockefeller and, in its heyday, served as a Caribbean hang-out for celebrities, jet-setters, and politicians. According to a press release, Mickey Mantle, Joe DiMaggio, Gerald Ford, Dwight Eisenhower, and John F. Kennedy all slept there.

scotland Verdict: A Bridge Too Far

The plan to build a foot bridge on the ancient, historic North Inch Golf Course has been put on hold, probably forever.

I posted about the proposal to build the bridge on December 5, 2010. The construction would have required the course's owners to relocate the green on the track's 15th hole, the course's signature hole, an idea that rubbed a lot of local golfers the wrong way. One of them felt that moving the green, which had been designed by Old Tom Morris, would have been “a great tragedy.”

Well, the tragedy has been averted.

A local charity, Capability Scotland, says that it'll no longer allow its land to be used for the bridge. The Perth and Kinross Council, the municipal body behind the plan, will have to build the bridge somewhere else.

Morris' great-great-grandson, Melvyn Hunter Morrow, told the Scotsman that the golf course “is as important to Perth as the Stone of Destiny is to Scone, and we shouldn't eradicate or remove what is left of Old Tom's work.”