It is the fourth of July, 1989, and at the Sheraton Makaha Resort and Country Club on the island of Oahu, Hawaii, a group of Japanese tourists is having a wonderful time hacking around the golf course. Toshinori Komatsu, a salesman from the Tokyo suburb of Chiba, surveys his surroundings and says, "The mountains, the ocean, the hibiscus and the birds. You can't get any of this in Japan. I belong to a club in cherry blossom country, one hour from my home, but because of my business and the distance, I only get to golf two or three times per month. It costs only one third as much for the greens fees here, but I don't come to America because it's cheap. The golf and the scenery of Hawaii, that is something that money can't buy."
Oh yes it can. The Japanese are already in the midst of what amounts to a semifriendly takeover of the golf industry in our 50th state, where almost half the golf courses—22 of 48—are now in Japanese hands. In addition, virtually all of Hawaii's new course development is controlled by Japanese. Last year an adviser to former prime minister Yashiro Nakasone told Forbes, "Japan would be glad to purchase some of America's assets. Hawaii, for example." He was only half-kidding.
Hawaii is only the tip of the volcano, so to speak. Overall, Japanese spending in the U.S. doubled in 1988, thanks in large part to the strength of the yen, which has gained about 45% in value against the dollar over the past four years. While the Japanese deals have largely been bonanzas for the Americans who have sold out, they have done little to reduce the massive trade deficit ($52 billion) with Japan. These deals have also raised some troubling questions about who will control sports and leisure in the U.S., and indeed in the rest of the world, by the turn of the century. The so-called Japanization of sports has already begun:
•In a staggering display of power shopping, the Japanese, whose passion for golf has no limit, have spent more than $350 million acquiring U.S. golf courses in the past two years alone. They bought the La Costa Hotel and Spa in Carlsbad, Calif., for $250 million and spent $108 million for the venerable Riviera Country Club in Pacific Palisades, near Los Angeles. Although their firmest foothold is in Hawaii, Japanese investors have snapped up a number of public courses and private clubs all over California and are growing increasingly active in places as far away as Georgia, Florida and New Jersey.
August 20, 1989
•Two years ago a Japanese company bought Turnberry (page 52), a place with a tradition as thick as its Scottish burr and a jewel in the crown of British golfing. There is a suspicion abroad on the heather that the British golfing community quite deliberately encouraged the Japanese to buy Turnberry. "The Brits think the Japanese are slow golfers, and this is one way they can control them," says an American businessman who has lived in both London and Tokyo. "The Japanese smoke cigarettes, drink a beer, eat lunch and move around the course in five hours, while the Brits play 36 holes in one day. Now they can say, 'Why don't you go play at Turnberry? You own that.' "
•Japanese corporations have acquired Steamboat and Breckenridge, two of the three busiest ski resorts in Colorado, and Stratton Mountain in Vermont for a total price believed to be more than $200 million. They have owned Mount Alyeska, the largest ski resort in Alaska, since 1980.
•When Pete Rose surpassed Ty Cobb's alltime record for base hits in 1985, the bat he did it with was Japanese, made in Osaka by one of the world's largest sporting goods company, Mizuno (page 62).
•While the Japanese produce relatively few world-class athletes, one of their baseball teams has the only big league hitter with a chance to bat .400 this year: Warren Cromartie, the former Montreal Expo now hitting .404 for the Yomiuri Giants (page 68).
•The Japanese have begun investing in minor league baseball, recently buying the Class A Visalia Oaks of the California League. The Oaks have four Japanese players, a Japanese coach and an interpreter who can give the bunt sign in two languages. "They need a little more Americanizing," says Don Drysdale, the former Dodger great who serves as president of Japan Sports Systems/USA, the company that owns the Oaks. "It's like somebody has given them a book on how to play baseball." Drysdale does not rule out the possibility that his company might go after bigger fish, perhaps a major league franchise, one day. "We will look," he says, "and if something is worthwhile we would conceivably look higher. It wouldn't surprise me if the Japanese bought a big league team. They have the resources to do it." Indeed, George Argyros, the owner of the Seattle Mariners, has said he has been approached by Japanese investors.
The Salinas Spurs of the California League also have a Japanese owner, Don Nomura, who has a 50% interest in the team. Nomura, 32, played college ball at Cal Poly-Pomona and pro ball in Japan for the Yakult Swallows. Seven Japanese players are being seasoned by the Spurs, and Nomura sees the Japanese purchase of minor league U.S. teams as a trend that will continue. "The Japanese are very conservative," he says. "But if they see somebody do well, they will follow the leader."
•A Japanese real estate developer with an interest in yachting and a keen eye for the cutting edge recently offered to pay millions to ship about 20 racing boats from Newport, R.T., to a fishing community called Miura, about 70 miles south of Tokyo, for a regatta he wants to host in his home waters. "We want to have the 50-foot boat race in Japan because we think it is more exciting than the America's Cup," a spokesman for businessman Masotoshi Morita told The New York Times. "We feel it is the future." The last Japanese who said that was Sony chairman Akio Morita, a sports enthusiast who had his engineers develop a small portable cassette player so that he could listen to music while playing tennis and golf.
•At the Keeneland (Ky.) Yearling Sales last month, Zenya Yoshida, owner of Japan's largest thoroughbred breeding farm, paid $2.8 million for the last colt by aged supersire Northern Dancer to be offered at public auction.
•On Formula One auto racing circuits around the world, engines made by Honda have won an astonishing 22 of the last 26 races. Honda has established a virtual stranglehold on Grand Prix racing (page 58).
•Toyota has signed a $130 million contract that designates it as one of the two major automobile sponsors when CBS Sports begins its coverage of the national pastime—ours and theirs—in 1990.
•Last year, to prevent the NHL's Quebec Nordiques from moving to another city, the local subsidiary of Japan's Daishowa Paper Manufacturing Co. purchased an 18% interest in the team. The move was interpreted as a gesture of goodwill to the community, although as one team official later pointed out, "They wanted to do something that would sell their name quickly, and in 24 hours Daishowa became a well-known and easily pronounced name in Quebec."
•In what surely would have been the most shocking deal in sports since the Dodgers left Brooklyn, a Japanese investor came breathtakingly close last winter to buying America's Team, the Dallas Cowboys, before Arkansas oilman Jerral W. Jones stepped in at the last minute with the reported winning bid of $140 million. "I can't say the Japanese investor forced Mr. Jones to act quickly," says Jack Veatch of Salomon Brothers, the investment firm that conducted the negotiations for the franchise. "But I would say it had something to do with it. He [the Japanese investor] was about to make an offer."
Being label-conscious, the Japanese would much rather buy a team like the Cowboys after their worst season than one like the Cincinnati Bengals after their best, for they attach enormous importance—as well as equally enormous sums of money—to prestigious names. Los Angeles Realtors say they can sell Japanese buyers practically anything with a Beverly Hills address, but almost nothing in nearby Bel Air. In the sports market, just as in real estate, the Japanese have confined themselves almost exclusively to the so-called trophy purchases that confer great honor upon the buyer, no matter how badly he may have overpaid.
In order to understand the Japanese phenomenon in sports, it's essential to understand a little of the Japanese culture. For instance, it is no surprise that their buying spree has consisted primarily of golf courses and ski resorts—real estate—given the fact that Japan, an archipelago of slightly less land mass than California but with nearly five times the people, is one of the most densely populated nations in the world. So much to do, and so little space.
Many of the 10 million Japanese tourists expected to go abroad this year will leave at two peak times, in August and at New Year's, creating what has become a semiannual panic at the nation's airports. Where they travel and how they travel is often dictated by the special nature of Japanese society. Travel brochures in Japan rarely depict deserted beaches or lonely mountaintops, not because they don't exist, but because most Japanese would consider a vacation cut off from their countrymen to be a bitterly lonely business. The Japanese derive enormous satisfaction from being part of a national group. It is the group that sets the rules to which the individual willingly submits. And nowhere is the role of the group more powerfully felt than in Japan's corporate world, where business and golf have become twin secular shrines.
The average Japanese salariman (wage earner) drives the engine of one of the great economic miracles of the century. Men like Toshinori Komatsu, the salesman from Chiba, have built a $95 billion annual trade surplus for their country by working almost an hour a day more than their counterparts in such Western industrial powers as Great Britain, the U.S. and West Germany. And yet the salariman huddles with his family in a living space much smaller than that of his counterpart in the West, and he usually spends hours each day on a train because he cannot afford to live anywhere near his office. A plot of land in the residential neighborhoods of Tokyo sells for about 100 times the cost of a comparable lot in Los Angeles.
He is expected to be at his desk early each morning and not to return home until late at night, frequently just in time to go to bed and start the journey all over again the next morning. "There is no den in the Japanese home," says one businessman. "So if the father comes home before the children go to bed, this might cause friction in the family because there is no place for him. This is why the Japanese businessman feels at home in his job. In many ways the company he works for is his real family. In the olden days, most of the samurai warriors were allowed to serve only one lord. Now the lords have become the big corporations."
"Living in Japan there is no feeling of being rich," lamented a recent editorial in the powerful Mainichi newspapers. A survey by the Dentsu Institute for Human Studies backed up the editorial. The survey revealed that the average Tokyoite worked longer hours, had less leisure time and took much shorter vacations than a resident of New York or Los Angeles. As a result, though 78% of the New Yorkers and 82% of the Los Angeles respondents said they were "psychologically and economically" comfortable, only 42% of the Tokyoites felt that way. The study concluded that Japanese companies would have to shorten their hours before the Tokyo residents could feel as free and satisfied as the Americans.
This willingness to sacrifice material comforts for the good of the group has mystified Westerners since Commodore Perry arrived in Japan in 1853. "The workers of this country [Japan] are carrying the economy on their backs, and one of these days they're going to get tired of putting up with it," says American corporate raider T. Boone Pickens.
But, for now, the dutiful salariman appears willing to put up with such hardship. "If the mix is right, the company becomes the group that gives life its meaning," writes author Jared Taylor in his critical study of Japan, Shadows of the Rising Sun. "The company is not an antagonist or merely a contractual partner from whom one expects certain rewards for certain services. It is a family, a club, a church, all in one. The company...is the altar on which he will sacrifice nearly everything."
The Salariman keeps his head down and his eye on the ball. "The Japanese have very strong feelings of group association and harmony," says Kazunaka (Karl) Uesugi, president of Uniden Valencia Inc., which owns the Valencia Country Club near Los Angeles—the club was purchased last year by the Uniden Corporation, a Japanese manufacturer of cellular phones. "If one guy does, the rest will follow. That's our strength. Establish an objective and work like a son-of-a-gun. In America everybody is so individualistic, they go their own way. Eventually they destroy each other. That's why we have overtaken you."
The one area in which the Japanese have not overtaken the U.S. is in leisure time, where Americans lead in per capita hammock consumption by a ratio of 10 to 1, easy. Maybe even into the high two figures. Nobody has actually counted because, well, it just seems like a lot of work.
But things are beginning to change in Japan. Total revenues of the country's leisure industries increased last year by a robust 8.9%. Many of the country's white-collar workers went from the traditional 5½-day work week to five, and even government clerks now take both days of the weekend off twice a month. Leisure activities that once were considered mere sloth have been approved, even encouraged, by the government.
Admittedly, many of these changes took place during the final ruling days of the Liberal Democratic Party, which suffered massive losses in the national elections last month for having a "geisha and golf mentality," according to one newspaper. But the changes are still there. "In the past we weren't supposed to kill time," says Katsuya Hayashi, director of the Japan Amateur Sports Association. "Now there are many people who are out enjoying sports for the fun of it only."
Japan is awakening to its potential as a booming leisure market, and it is turning to the U.S. to work out any bugs in the technology. "We wanted to develop our know-how in America so we can create the same kind of resort in Japan," says Josuke Sato, public relations manager for Marukin Shoji, the real estate and leisure company that bought the Riviera Country Club last spring. "It is a very expensive proposition to learn this way, of course."
Indeed. Rather than risk disgrace at home by owning a Japanese ski resort that might have been inefficiently run, the Victoria Corporation chose to learn U.S. resort-management techniques by buying both the Breckenridge and Stratton complexes, and it was willing to pay about $130 million for the privilege. "There's a huge opportunity in Japan to assist in the development of their leisure business," says Vail Associates president Michael Shannon, looking to turn the tables on Japanese investments in America. "It's now nearly equivalent to that of the U.S., but growing faster than the American market."
The Japanese already are one of the world's largest consumers of snow skis. For some, skiing has become a mania to rival golf. Ski trips in Japan can involve a nine-hour train ride after work on Saturday nights, lift lines on Sunday afternoons that stretch out to two hours, then another long train ride back to Tokyo, with the skier often arriving just in time for work Monday morning. To reduce inefficiency and travel time, the Japanese have developed urban ski resorts in downtown office buildings. "Our businessman is a workaholic, so he wants to combine business and leisure time," says Kazuya Naito, assistant manager of the Sayama indoor skiing facility in suburban Tokyo. "It is the nature of the Japanese. In your culture, business and pleasure are separate. Our Japanese businessman needs something close at hand to release his tension." Sayama trucks in thousands of tons of glacial ice in 300-pound blocks in the fall, grinds them up into slush and guarantees skiers a 14-inch base of snow on a slope that is 300 meters long. Already there are plans for year-round indoor ski resorts in Osaka (with one hill for beginners and another for advanced skiers), one near Tokyo Bay (with a snowmaking system in the ceiling to simulate snowfall), and another on the southern island of Kyushu, which will have a snowmaker running on turbine engines driven by the heat of a volcano near the facility.
The peak season, as it were, at the two carpet-skiing resorts operated by Victoria runs from October to December, when there are three skiers on the slope at all times and waiting times of up to 30 minutes. Half-hour lessons cost $21. "There are some people who cannot afford to go to the mountains, who only ski here," says one of the dashing broadloom instructors at the facility on the eighth floor of the Victoria building in Tokyo. (One supposes that after a really hot run, carpet skiers can sit in the après-ski lounge and talk about how deep the pile was and compare rug burns into the night.)
Because skiing was booming in Japan, it was a natural next step for Victoria, which last year had sales of $450 million (70% in ski-related merchandise) to expand to the biggest playground of them all, the U.S. In the wake of its acquisitions of Breckenridge and Stratton, Victoria has the capacity to provide Japanese skiers with a package that includes clothes, equipment, lift tickets and lodging, without anyone leaving any money behind in Colorado or Vermont. "Victoria Company isn't going to sit still after an investment of that magnitude," says Haruo Tanaka, vice-president of Chiemori Kogyo Co. Ltd.—Denver, a real estate company. "They'll be creating lots of exposure to bring Japanese tourists here." A Victoria spokesman says an experimental tour package to Breckenridge was sold in Japan last winter, but he insists the idea of shuttling large groups of Japanese tourists to the U.S. to ski is still being studied. "Maybe we can learn something about leisure concepts from Americans," he adds enigmatically.
The strength of the yen almost certainly will continue to make American resorts a cheap pickup for Japanese investors. During the two months that elapsed between Sports Shinko's decision to buy La Costa and the actual closing of the deal, the decline of the dollar against the yen reportedly saved the Japanese company $45 million. And it was no doubt the disparity in the strength of the two currencies that prompted the Kamori Kanko Ltd. to consider Steamboat a bargain at a reported price of $100 million. "I hope this means we'll finally get a sushi restaurant," said former U.S. Olympian Billy Kidd, now the resort's director of skiing.
But not everyone in Colorado was so pleased. "At this rate, it's going overboard," said grocer Harley Fry of Steamboat Springs. "They own about half the United States now." Outside one house in Steamboat, a hand-painted sign reads THIS FARM NOT FOR SALE TO JAPANESE.
While Japanese investment in the U.S. helps the American economy, it also increases xenophobic anxieties. According to a study by the World Policy Institute. Americans now spend less time worrying about the Soviet nuclear threat and more about being overrun economically by the Japanese. That fear ignores the fact that the British are more heavily invested in the U.S. than the Japanese, and that the Dutch and Canadians are not far behind. "If a Canadian guy comes and spends a lot of money in this country, nobody's upset," says Karl Uesugi of Uniden. "But if a little Oriental guy comes over and does the same thing, everybody's upset. Japanese people should learn from this, but at the same time Americans have to learn too."
If the Japanese are troubled by this sort of reaction, they can at least understand it. In 1635 the shogun's government began cutting off travel into or out of Japan, and for two centuries the country remained isolated. Even now, Japan is one of the most racially homogeneous countries in the world.
"To be different in this society is very difficult," says a Tokyo correspondent for a Western news organization. Forty-one years old, he only recently decided to stop trying to conceal from friends that he is actually an ethnic Korean, not Japanese as he has pretended for most of his life to be. He still feels it necessary to keep his nationality a secret from his business associates.
The first battleground in the war to see who controls the way America plays is Hawaii. The Japanese already account for 20% of Hawaii's tourism, and they own two thirds of the state's major hotels. This year on the island of Maui alone, the Shinwa Golf Group of Kyoto has spent $195 million buying a hotel, two 18-hole golf courses and a 14-court tennis complex in Wailea.
Twenty percent of Hawaii's gross state product is a result of economic activity created by Japanese visitors and investors, but to some Hawaiians, the Japanese seem intent upon developing a circular economy. "They fly in on Japan Air Lines, get on a Japanese tour bus that takes them to a Japanese-owned hotel, play on Japanese-owned golf courses while their wives shop in commercial villages run by Japanese merchants," says Greg Shannon, a medical technician who belongs to Hands Around Oahu, a group that is trying to stop the proliferation of private golf courses on the island. "They've got the whole loop set up so that it completely cuts out the local businessman."
This fear of losing control "to outsiders" can also be found in California, the second-favorite state for Japanese visitors and investors. When the owners of the Riviera Country Club announced in the spring of last year that they were about to sell the landmark club—a 168-acre golf and tennis playground on Sunset Boulevard, where Mary Pickford, Douglas Fairbanks and Errol Flynn once cavorted—the members became alarmed only after it was learned that the buyer was an unnamed Japanese company. The objections eventually became so strenuous that the buyer, a billion-dollar Tokyo real estate company named Marukin Shoji, decided to buy only a 49% interest in the club, with an option to purchase the other 51% later. "There was a lot of anxiety," says Dick Caruso, a 27-year Riviera member who runs the pro shop. "A lot of people were talking about quitting."
Marukin Shoji has constructed office buildings all over Tokyo and is developing resorts throughout Japan. Outside its corporate headquarters, amid the visual poesy of Japanese ideograms, a sign written in bold script proclaims RIVIERA COUNTRY CLUB, TOKYO OFFICE. When the furor over the Riviera sale eventually subsided, Marukin Shoji began exercising its option to buy the club outright. "Riviera is like a shrine over there," says Caruso. "It has to be pride of ownership for them, because to pay $108 million for the kind of return you can generate from a sports club these days just doesn't make sense."
"The membership was up in arms," says Dr. Joey Rosenberg, chairman of the club's board of governors. "I'm not sure the American public likes the idea of foreign ownership coming in and buying our landmarks, which Riviera is. But a lot of our apprehensions disappeared once we were sure they weren't going to turn the club into a Western stopover for Japanese tourists."
It's an odd twist of history that so many of the country clubs of America, those former symbols of wealth and exclusivity, find themselves under siege from a group of people who once would have been excluded.
And real estate is not all the Japanese are after. Coming soon to a city near you will be a Japanese-owned major league franchise. It's almost inevitable, given their monetary power, their fondness for prestige and their business acumen. After all, the Japanese man who tried to buy the Cowboys, whose pockets are still bulging with dollars, is reportedly continuing his search for a team in the U.S. "I think there are certain high-profile teams he would be interested in," says Veatch of Salomon Brothers, "maybe L.A.- or New York-based teams. Any high-profile American sports franchise would be a natural target for a Japanese company trying to increase its recognition level in the U.S. market."
Who knows? Someday, we may have the Mitsubishi New York Yankees.