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Search for Tee Time May Lead to Tokyo

In South Korea, packed courses drive some to Japan, where the golf industry has struggled with overcapacity.

October 23, 2005|Bruce Wallace | Times Staff Writer

FUKUOKA, Japan — Johnny Sung is the chairman of a small company in Seoul and a man who loves his weekend golf. He's been whacking drives and leaving putts short almost every week since he was in his 30s, and now, at 74 with retirement looming, he's hoping to get out on the course a lot more often.

If only he can get a tee time.

Golf is booming in South Korea, trickling down from the elite to a new generation of golfers in their 20s and 30s who are flooding the country's courses -- all 147 of them. Problem is, it does not take long in a country of 50 million people to flood that many courses. Teeing off, especially on weekends, has become a challenge for all but the best-connected businessmen and government officials.

Fortunately for golfers such as Sung, there are plenty of good-quality and relatively empty courses just an hour or so away.

By air. In Japan.

Japan is bursting with golf courses, 2,458 to be exact, and they're becoming alternative links for South Korean golfers desperate enough to fly abroad for a chance to drive. Sung has made the hop by plane to Tokyo from Seoul three times in the last two years, visiting Japan for a couple of days to play several rounds and take advantage of nearby hot springs.

"I know when he's in Japan, but he comes to golf, not to see me," says his son, K.J. Sung, a Korean-American businessman living in Tokyo. A golfer himself, he smiles when he says he forgives his dad.

The influx of South Koreans could not come at a better time for Japanese golf courses. Golf developers built and built in the dizzy days of the late 1980s, and country clubs demanded million-dollar membership fees and still had waiting lists.

But when the bubble economy burst in the early 1990s, Japan was left with an excess of courses and not enough hackers. Compounding problems, many of those expensive club memberships had refundable deposits, and droves of golfers demanded their money back. The clubs had invested the funds in other businesses that were struggling too and couldn't meet the cash call. Many went bankrupt.

Enter the Americans. In the last five years, Dallas-based Lone Star Funds and Goldman Sachs Group Inc. have been scooping up financially troubled Japanese golf courses, almost 200 between them. The firms are now the top two golf course owners in Japan, where golf is a $10-billion-a-year business.

Both set up management subsidiaries that aim to turn a profit by buying supplies such as sand and fertilizer in bulk, and employing American-style management techniques -- slicker pro shops and carts instead of caddies to move golfers around the fairways faster. Clubs are reporting that the number of rounds played is rising, and both Goldman Sachs and Lone Star have filed applications with the Tokyo Stock Exchange to take their Japanese golf subsidiaries public in the next few months.

Reports in the Japanese media have suggested that the IPO for Pacific Golf Management, Lone Star's golf course operator, could be worth $445 million.

"There are still a lot of courses to purchase," said Joseph Lenihan, Pacific Golf's president. The company's 98 properties control 150 18-hole courses, and Pacific has closed four new deals in the last 60 days, he said.

By contrast, finding land for new courses is tough. Flat farmland is precious and protected in volcanic Japan. And there are limits to how many greens and fairways you can carve out of the sides of mountains.

The new American management is also democratizing Japanese golf. The two companies have lowered greens fees and let nonmembers onto once-private courses, have encouraged more women to play and have persuaded the Japanese to start rounds at once unheard-of early-morning hours.

"People around here used to be allergic to the sound of the term 'foreign capital,' but they are happy at how things have turned out," says Isao Ishiguro, the head of Pacific Golf's operations in southern Japan, as he drives a visitor around Wakagi golf course. Wakagi is the company's jewel on Kyushu island, just a three-hour hydrofoil ride from South Korea.

"The old Japanese owner used to call me up every morning and ask me how many golfers were on the course and what the weather was like," Ishiguro said. "But the Americans trust me to run this place. They give me a budget and leave me alone."

Curiously, though, the Japanese courses don't seem inclined to go out of their way to lure South Koreans. The less-than-warm reception may have its roots in Japanese-Korean tension that lingers from the first half of the 20th century, when Japan occupied the Korean peninsula. Japanese clubs post no signs, or even clubhouse menus, in Korean.

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