Partially because of the Plaza Accord in 1985, Japan’s economy entered an overheated “bubble” period in which the growth in the golfing population and the golf market accelerated. As a result, golf course development also accelerated. Given the strong economy, Japan’s golf market was dominated by companies using golf courses to entertain clients. As a result of aggressive sales of golf club memberships and because golf club memberships themselves became investments, market prices for golf club memberships soared. Along with stocks and real estate, these memberships were part of an asset bubble that burst in 1990; corporate demand rapidly declined and market prices for golf club memberships plunged. While the golf market in terms of players shrank, golf course developers were able to stay in business because of the deposit system, although the number of bankruptcies continued to increase until 2002.
The deposit redemption problem came amidst an increasingly severe market environment for existing golf course operators after 2000. While golf course operators coped by dividing golf club memberships into plural pieces and/or extending deposit redemption periods, this only delayed the needed fundamental reforms. The limit was reached around 2002, when a wave of golf course bankruptcies gave birth to the golf course restructuring business.
Presently, the wave of bankruptcies of major golf course management companies has peaked. However, as listed companies and other large corporate groups have begun to withdraw from the golf course business in earnest in an effort to refocus on their main businesses, and because of the introduction of asset impairment accounting, the transfer of golf course operations is expected to continue. In addition, many failures of small and medium-sized courses are expected to continue.
Because of women professional golfers, male amateur golfers, retiring baby boomers and an economic recovery, the golfing population has bottomed. In addition, the number of rounds played is expected to increase because of a wave of retiring baby boomers, who presently represent the largest golf market user share. However, the golf market continues to be plagued by excess supply, which means that only those course operators that are competitive enough to “provide high-quality services at a reasonable price” and “have a strong brand” to attract users will be able to survive the severe operating environment and produce profits. In other words, we face an age of polarization between the winners and the losers.
