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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!