Japanese golf boom lands in the bunker, beside the economy

ONE MAN accused him of drug abuse and swindling. Another described the spiral of debt and depression into which he had fallen, and demanded the heaviest penalty for the man responsible. "If this had happened during the Edo period," a third correspondent wrote, "he would be dragged around the city and crucified on the prison gate."

These letters are not the work of impoverished crime victims, but wealthy Japanese salarymen. The man they are execrating is not a murderer or extortionist, but the besuited former president of a respectable company. And the cause of their rage and anguish is nothing more dramatic than the gentle sport of golf.

All over the world golf has as much to do with social status and money as with exercise and skill, but nowhere has this dislocation been taken further than in Japan, particularly since the 1980s, when surging stock market and land prices transformed a comfortably-off nation into an economic superpower whose footsoldiers, Japan's "salarymen", were by global standards rich.

Japanese cities, with their limited space for luxurious homes, cars and possessions, offer little opportunity for the display of wealth. For salarymen with money to burn, a golf club - expensive, prestigious, and useful for entertaining clients - seemed the perfect place to place their money. The story of that money is a parable for the greed, excess and self-delusion of the so-called "bubble economy".

From just a few hundred golf clubs 20 years ago, Japan now boasts some 2,000, most of them built and managed by big firms among which a company called Maria was fairly typical. The company planned three golf clubs, in Chiba prefecture, adjoining metropolitan Tokyo, and gave them typically grandiose names like Grand Maria and the Glenmore Country Club.

It was typical too in the way it financed their construction - by borrowing money from its future members. Land prices being what they are, the cost of building a golf club in Japan is astronomical, averaging at around 10bn yen (about pounds 45m) per 18 holes. But during the bubble, demand for membership so far exceeded supply that the clubs could set their terms. Prospective members were required to put up deposits; at Maria's courses these varied from 6m to 100m yen - pounds 450,000.

The golf clubs paid no interest or dividends to their members but so intense was golf fever that memberships were bought and sold like stocks - even now, papers publish a daily Nikkei Golf Membership Index, alongside the list of company shares. The money was used to build the courses, and invested in property, equities and other lines of business. All the participators got was a guarantee of membership in the planned golf club and a promise that if they left they could claim their money back in 10 or 15 years' time.

In the early 1990s, at the peak of the club-building frenzy, the bubble collapsed. Unemployment increased and optimism evaporated. Fewer people came to the courses and, when the time period came up on their deposits, many golfers asked for their money back. But the value of the land on which the courses had been built had dropped dramatically. The stock exchanges in which the clubs invested had taken a tumble, as had the Golf Membership Index. Many of the clubs have simply been unable to pay the money back.

Maria has gone into receivership, and although two of its clubs are still open to business, the 3,000 members of the Grand Maria Country Club have nothing more than a muddy field on which to tee off. Green Sky Line, a newsletter published by the Maria victims' association, is full of heartbreaking vignettes of golfing lives shattered by the economic collapse. "By this time I should be playing golf at a hotel with a swimming pool," mused one writer. "Who shattered my little dream?"

"We have got 7,000 members, and a lot of them are really suffering," says Mitsuru Hirasawa, vice-chairman of the victims' association, who himself owns memberships which cost him 120m yen. "Lots of people borrowed money which they can't repay. They used their savings or mortgaged their houses." As the deposit periods elapse, more and more clubs will go under as their members demand their money back. Japan's Ministry of International Trade and Industry estimates that 9.5 trillion yen of refunds will eventually come due.

Given such vast sums, some analysts believe that the collapse of the golfing market could actually have a measurable effect on the Japanese economy. If 20 per cent of golf clubs went bankrupt, according to a recent report, the average stock price on the Tokyo Stock Exchange would by fall 60 yen per share, consumer spending would go down, and 16,000 people would lose their jobs. The report, which is disputed by other economists, warned that the golf crisis could "lead to a spiralling deterioration of the economy". It would be ironic indeed if Japan's prosperity was knocked into the rough by the game of golf.