Sunday, November 9, 2008

Buying and Selling of Pebble Beach

In 1978, 20th Century Fox bought the Pebble Beach Co. for $72 million, including golf courses and hotels. Thus began a flurry of buying and selling of the property that lasted for 20 years. The next step came in the early '80s when investor Marvin Davis bought Fox for $722 million, gaining title to a slew of holdings, including Pebble Beach Co. "I never fall in love with any asset," Davis told Golf Digest, "but I came closest [with Pebble Beach]." Nonetheless he allowed his arm to be twisted in 1990 when Japanese investor Minoru Isutani agreed to pay $841 million for the Pebble Beach Co. alone.

When he bought Pebble Beach Co. for $841 million in 1990, Minoru Isutani became a figure of controversy. During this period, many people in the U.S. worried about Japan's economic clout. (The 1992 novel "Rising Sun" by Michael Crichton exemplifies the overheated rhetoric of the time.) Local folks were also stunned that Isutani wanted to privatize Pebble Beach Golf Links. He probably should have known that Samuel Morse's privatization plan, in the early 1960s, collapsed in a heap. Isutani's strategy was OK'ed by Monterey County, but the California Coastal Commission said "no." In 1992, Isutani sold Pebble Beach Co. to a Japanese consortium for $500 million.

Rumors swirled in the 1990s that the Japanese were preparing to sell the Pebble Beach Co. – maybe to the Sultan of Brunei, or the U.S. Golf Association, or someone else. Finally, in early 1999, the property went on the auction block (four golf courses, three hotels, and other assets). What Golf Digest calls the "sale of the century" soon commenced. The winner, in the spring of '99, for $820 million, was a group assembled by businessman Peter Ueberroth, including Clint Eastwood, Arnold Palmer, Dick Ferris and about 120 limited partners. For many people here, the American take-over was a welcome development after years of foreign ownership. As one observer noted, "People get pretty emotional about Pebble Beach."

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