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WHITHER PEBBLE BEACH?
The U.S. golfing community has at least two reasons to be worried about last week's sale of the Pebble Beach Co.—whose 5,300 acres of holdings on California's Monterey Peninsula include the Pebble Beach, Spyglass Hill, Spanish Bay and Del Monte golf courses, two resort hotels, the 17-Mile Drive and the famous lone cypress tree—to the Ben Hogan Property Co., an affiliate of the Japanese-owned Cosmo World Corp. of Los Angeles, for between $800 million and $1 billion.
One reason is the litany of complaints from members of a number of golf clubs in Japan owned by either Cosmo World's Tokyo-based parent company, also called Cosmo World, or by other companies headed by Minoru Isutani, the president of Cosmo World of Tokyo. Isutani is an elusive, controversial figure who has been under scrutiny from the Japanese press because of his close relationship to Hisashi Shinto, a central figure in the stock scandal that led to the resignation of Japanese prime minister Noboru Takeshita last year. Members of Isutani's golf clubs contend that he has oversold memberships by as much as 10 times, to make windfall profits, and that as a result they can't get tee times. Some members reportedly plan to file a civil fraud suit against Isutani because of the alleged overselling and other supposed improprieties involving his clubs. An Isutani spokesman calls the charges against Isutani "erroneous."
A second reason for concern is that the Pebble Beach Co. lost $8.7 million last year because of debt payments. If Pebble Beach's new owners want it to turn a profit, they may have to make one or more of its golf courses private. Part of the appeal of the Pebble Beach courses is that they're public; anyone who can get a tee time and can afford the $90 to $175 greens fee can play them.
One hopes that Pebble Beach's new owners will view it as a trophy property too valuable in status to tamper with. As Jack Cooper, managing director of investment real estate for Bank of America, says, "I don't know that there is a lot of profit for them there from a cash-flow point of view. But there is not a lot of cash flow there when you buy a Rembrandt, either, and that's just what they've done here."
ALL THINGS GREAT AND SMALL
THE CFA'S TV TROUBLES
The College Football Association suffered a major setback last February, when Notre Dame, easily the biggest TV draw among its 64 member schools, chose not to take part in the CFA's new $300 million, five-year contract with ABC and ESPN, which takes effect in 1991. Instead, the Irish sold the TV rights to all their home games from 1991 through '95 to NBC for $38 million.
Notre Dame's defection significantly diminished the CFA's television appeal and may turn out to have been a first step toward the association's demise. Another key CFA school, Penn State, will join the Big Ten in the mid-1990s and thereafter take part in that conference's TV package, not the CFA's. Other CFA members are seeking to realign into large "superconferences," each with its own TV deal.
Last week the association's television underpinnings were further shaken when the Federal Trade Commission announced plans to challenge—and possibly declare void—the CFA's contract with Capital Cities/ABC, which owns 80% of ESPN, because it illegally restrains competition in the broadcasting of games. "We allege that there is a conspiracy between the CFA and its members and between the CFA and ABC to restrict the number of college football games available to viewers," says Kevin Arquit, director of the FTC's bureau of competition.