Golf Inc - April 2008 - (Page 42)

nationals, in particular, should take the time to become familiar with the U.S. golf market and American business practices before taking the plunge. “Up to today, Korean-Americans have bought the golf courses,” he said. “But now we see more Koreans from Korea buying, and I’m a little concerned about that.” He said a friend told him about a Korean businessman he knows who has $20 million to spend for a golf course. “I asked if he had ever worked at a golf course in the U.S., or knew anything about it, and I was told ‘No,’ he didn’t’,” Kang said. “I advised him to tell the man to wait before he bought. If you want to invest a few million dollars, you have got to have a cultural understanding of how to do business in the U.S.” One reason for Kang’s caution is that most Korean buyers tend to be very hands-on in their course operations. Woolson said that Korean owners typically do not employ professional course management companies, although in some cases they will retain a management company if it is already in place and appears to be doing a good job. On the other hand, Woolson said, the new owners will typically keep key staff members in place when they acquire a course, relying on them to run the daily operations while ownership tends to costcutting measures and revenue-generating strategies. Grubb & Ellis’s Arimitsu said Korean buyers, while astute, are not immune to the lures of ego and just plain fun. “They have enough properties making a lot of money, they want to buy something that’s a lot of fun,” Arimitsu said. Fun aside, however, he thinks the longrange strategy of Korean buyers is solid. “I think it’s a great buy if you look longterm,” he said. “They’re not building any more courses in California in the good areas any more — all the new stuff is in outlying, low-population areas. Money is made when you buy, not when you sell, so I think now is a good time to be buying.” One buyer’s vision Choon Man Lee concedes that the recent upsurge in American golf course purchases by Korean buyers may not produce the highest possible returns on their money. On the other hand, he doesn’t care and he says his countrymen don’t either. “As far as investments go, I don’t believe any Koreans or other golf course investors are relying on incomes from the golf course,” said Lee, who purchased the 36-hole PGA of Southern California facility in Beaumont, Calif., in December for $16 million. “A golf course is not a good investment compared to other businesses. Koreans are attached to golf — it’s more than a hobby.” Unlike some more experienced Korean or Korean-American buyers, the California course (renamed East Valley Golf Club) is Lee’s first plunge into golf course ownership. A former animation director for a company that contracted with companies including Fox Studios, Paramount and Disney, Lee said he has friends who own and operate golf courses. “I don’t think it’s a good investment to purchase the golf course in terms of return rate, but I have played golf for a long time and my doctors have advised me to walk as I’m getting older,” Lee said through an interpreter. “I found this golf course, which was in very nice condition, well-kept, with an excellent learning center, so I bought it.” In Lee’s case, the learning center component of the former Southern California PGA facility was the key to the deal. Korean buyers of U.S. courses frequently have an almost evangelical zeal to grow the game among Korean citizens. “That [learning center] is a huge opportunity for junior kids in Korea, China, even India,” Lee said. “A lot of Korean kids go to Australia to learn golf because there are not enough golf schools for little kids here.” He envisions a full learning center at East Valley eventually, offering not only golf instruction but also education in the English language and U.S. culture, including American golf course business practices. Lee said he expected to close escrow in early March on 5.8 acres of adjacent property to develop the learning center, a dormitory for students and other facilities at East Valley. Lee said that one thing U.S. golfers can count on from their new Korean course owners is well-conditioned golf courses. Since he took over at East Valley, he said in addition to buying land and planning the new learning center, he has concentrated on maintaining high-quality conditions. “Korean investors try to keep the golf course as a formal garden,” Lee said. “The quality will be much better [under Korean ownership].” Lee should know — in the first few weeks after buying East Valley, he walked all 36 holes of the course every day, checking on conditions. Now, he said, he only does that three or four times a week. —Jim Dunlap 42 Golf Inc. April 2008 PHOTOS BY MELISSA STOTTLEMYER

Table of Contents Feed for the Digital Edition of Golf Inc - April 2008

Golf Inc - April 2008 Contents Editors Column Birney Takes NGCOA Helm Construction Costs on the Rise KemperSports Adds 14 Courses Americas: Fazio Designs St. Kitts Layout Europe/Africa: Seaside Resort Planned in Egypt Asia/Australis: Faldo Opens New Chinese Course High-Tech Tools: New Technologies that can Help Operators There's No Economic Slump at Still-Popular Reynolds Plantation Tim Moraghan Wants to Make Golf Fun Again Why a $1.5 Billion Resort has Made Environmental Protection a Top Priority Most Admired Operators Marketing Experts Make Their Pitch for Golf Courses From Korea, with Cash Last Word

Golf Inc - April 2008

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