Shunned by 12 Buyers, Japanese Golf Company Sells for $3.5 Billion

Japan’s largest golf course owner never sank a putt during acquisition talks with six of the world’s top private equity firms — three of them walked away immediately, and none put in a bid. But on Wednesday Accordia Golf landed…

Jennifer
Image Credit: iStock, kevron2001
Sign up for insightful business news.

Japan’s largest golf course owner never sank a putt during acquisition talks with six of the world’s top private equity firms — three of them walked away immediately, and none put in a bid.

But on Wednesday Accordia Golf landed a hole in one: Fortress Investment Group — a fund backed by tech investment giant Softbank — spent $3.5 billion on its portfolio of courses, which sold for just $760 million five years ago. Does Fortress know something no one else does, or will it soon be begging for a mulligan?

On the Back Nine

Japan is the world’s fastest-aging major economy and, let’s face it, golf is an old man’s game (find another sport where a 51-year-old is still winning major trophies against 20-somethings). Accordia is Japan’s largest owner of golf courses, with 169 or 7.6% of the national total under its belt. Sounds like an investment match made in heaven.

Fortress’ game plan takes this into account — essentially it’s hoping rich retirees keep picking up clubs to balance out the decrease in young players and corporate rounds. But while Accordia generates a lot of cash right now — revenue was up 2% annually before the pandemic — there are lots of reasons to suspect this stroke could end up in the drink:

  • Last year, 5.2 million people in Japan played at least one round of golf, down 10.3% from a year before, according to the Japan Productivity Center, and Accordia says its customers average 2.7 rounds a year, amounting to 11.7 million rounds in 2020 — yet private equity firms still wouldn’t touch it with a 10 foot 5-iron.
  • Here’s how fast golf is declining in Japan: roughly one course every week goes out of business or is converted into a solar farm, according to the Financial Times.

The Tiger Effect: In 1991, Japan had 18 million golfers — the sport was a national sensation as the country’s financial sector soared and adopted some cultural habits of Wall Street. Fortress could be betting on new inspiration à la Tiger Woods — this year, 29-year-old Hideki Matsuyama became the first Japanese player to win The Masters, making him a cultural phenomenon that brought broadcasters near tears and earned praise from the Prime Minister. Fore!

Analysis more
(Photo Credit: Towfiqu Barbhuiya/Unsplash)

Private Practice: A Q&A with Pierre Valade, Founder of Privacy App Jumbo

(Photo Credit: Nate DeWaele/Unsplash)

The Brontosaurus Bubble: Could the bottom fall out of the dinosaur fossil market?

Recent News

Private Practice: A Q&A with Pierre Valade, Founder of Privacy App Jumbo

Subways Sales Climb for First Time in Years as the Company Looks to Expand in Foreign Markets

Florida Tops New York New Jobs Report

Sony Bids Farewell to PlayStation Supply Chain Woes