By Mark Seal
They will always be Pete, Dick and Clint, three Northern
California kids who came of age at Pebble Beach.
Pete was a country club caddie, barreling up to Pebble with
his buddies and sneaking on to play the fabled greens at
midnight, reveling in what he calls the magic. "Whether you're
religious or not, you realize this is some of God's great
work," he says. Dick was a wild child on Easter break from
Berkeley High School, falling in love with the place on a lost
weekend best kept private, he says, "because I don't know how
long they keep the police records." Clint was a G.I. when he
first arrived in 1951, sneaking into Bing Crosby's Clambake
show, "lookie-looing around" at Bing and Bob, Rosemary Clooney
and Phil Harris as they entertained the golfers after Crosby's
||The gang of four:
Arnold Palmer, Dick Ferris, Peter Ueberroth and Clint
Eastwood headed the consortium that bought the Pebble
Beach Company for $820
By the spring of 1999, Pete had become Peter Ueberroth,
former Commissioner of Baseball, engineer of the 1984
Olympics, which transformed Los Angeles into a patriotic pep
rally and left a $225 million surplus, the 1984 Time Man of
the Year once considered a sure bet to run for the Senate,
perhaps even the presidency. Dick was Dick Ferris, former
president of United Airlines and current chairman of the PGA
Tour Policy Board who, with Ueberroth as his partner, had
expanded the Doubletree Hotel and Guest Quarters hotel group
into a 1,400-unit chain. And Clint was, of course, Clint
Eastwood, Oscar winner, American icon.
But in many ways they were still those illicit kids on the
idyllic greens, which had, in the years since, been passed
through multiple men's hands. When it was put up for sale by
its Japanese owners early last year, Ueberroth, one of half a
dozen salivating suitors, seized the opportunity to replant
the American flag into the jewel of American golf by enlisting
his two Northern California-bred counterparts, along with a
powerful fourth: Arnold Palmer.
On Feb. 8, 2000, Ueberroth, Ferris and Eastwood returned to
play Pebble Beach. Entering his 18th AT&T Pro-Am,
Ueberroth (by the luck of the draw?) had won a place in Tiger
Woods' foursome. Tiger roared to victory from seven shots
behind, reducing the attending billionaires and movie stars,
including normally taciturn Clint Eastwood--"I was there to
give him his trophy," he says--into slack-jawed groupies.
"I was baseball commissioner," says Ueberroth, "and I never
once got to catch a fly ball in the outfield. But to play with
Tiger Woods in a tournament at Pebble Beach? That's way beyond
The moment was a coronation. After nearly a decade of
Japanese ownership, Pebble Beach was back in American hands.
Assembling a ferocious foursome of partners--Eastwood, Ferris,
Palmer and himself, along with 132 individual investors
ponying up a minimum $2 million each--Ueberroth had engineered
an $820 million purchase of the Pebble Beach Company,
including the famed U.S. Open venue, three other golf courses
and two luxury hotels. Now comes the bigger challenge: to
simultaneously preserve the prized property and position
Pebble as the premier golf resort of the new millennium.
This is the land that humbled a billionaire, bankrupted a
Japanese boom-time golden boy, and, most recently, sent an
army of Japanese bankers back home with little to show for
their seven years of superlative stewardship but their good
names. "The Greatest Meeting of Land and Water in the World,"
Pebble Beach was the playground for an innocent time in
America, built upon the most democratic of concepts--public
golf--to which the longtime residents of "the Forest," the
5,300-acre Del Monte Forest that encompasses the resort,
pledge absolute allegiance. Here, golf was designed to coexist
with the natural splendor. Because that's the way "The Duke of
Del Monte"--Pebble Beach founder Sam Morse--planned it.
"The father of the environmentalists," Morse, nephew of the
inventor of the telegraph, arrived in 1915 to find what would
become the Pebble Beach Golf Links marked off in 80-foot lots,
destined to become a subdivision. Morse had been sent to
liquidate the property by its owner, the Southern Pacific
Railroad. Instead, he assembled a consortium to buy it for
$1.3 million, banished the home sites to the hills,
prohibiting homeowners from cutting a single tree without
permission, and enlisted Jack Neville and Douglas Grant to lay
out the Pebble Beach Links so as many holes fronted the
shoreline as possible, creating a public course that could be
enjoyed by anyone. "If I were offered $500 million for
oil-well rights, I would not allow anyone to put an oil well
on Monterey Peninsula," Morse once said.
The Forest still stands in delicate balance between nature
and development, between progress and exploitation. Home to
sensitive plant and animal species--black legless lizards,
red-legged frogs, wood rats, rare bats, and a host of orchids,
clovers and trees, most notably the noble Monterey
pine--Pebble Beach presents as much of a challenge for
developers as golfers. "You might consider developers here
both blessed and cursed," says botanist David Allen, a former
resident. "Blessed to be in a very unique environment, but
cursed because the area complicates and confounds
Today, not only do Morse's spiritual descendants--local
environmentalists and a blinding array of environmental
protection agencies--rise up in complaints and petitions once
the line is crossed between sensible development and
exploitation, but the forest also faces threats from nature: a
pitch canker fungus has recently invaded the Monterey pine
trees. Experts predict the fungus could infect and kill 85
percent of the trees in the forest in the next 15 to 20 years.
Pebble Beach Company has been proactive in creating a Monterey
pine cloning program to reseed the forest and to comply with
regulations to replant every tree removed by development,
along with instituting forestry, ecology and wildlife
initiatives, including the "adopt-a-wolf" program and erecting
hand-painted fences to allow sea lions to give birth without
the crowds disturbing them--all while aggressively developing
and marketing its most precious asset: golf.
The village of Pebble Beach, adjacent to the Lodge whose
front lawn is a putting green, seems locked in a Morse-era,
Mayberry time warp. Residents receive both mail and gossip at
the Post Office--where Bing Crosby stares down benevolently
from a photograph. They're guarded by one frequently bored
traffic cop. And they're kept informed of local happenings via
The Scoreboard, a newsletter published by The Pebble Beach
Company. "It's so placid around here," says local teacher and
chaplain Paul Woudenberg. "Nothing ever happens."
Nothing but sensational golf and, until recently, the
incessant transfer of the Pebble Beach title. The cycles of
buying and selling began in 1978, when Pebble Beach was sold
for $72 million to 20th Century Fox. Sam Morse had been dead
for almost a decade, and his managers extracted assurances
that Fox would honor Morse's management philosophies and
environmental traditions. But corporations are comprised of
many voices, many minds, and three years after buying Pebble,
Fox was gobbled up for $722 million. The deal included the
movie studio and its various assets, including the Aspen Ski
Company and Pebble Beach.
From the smog of Los Angeles, a new owner emerged, a man
whose appetite for deals was matched only by his appetite for
"I'm a golfer," says Marvin Davis. "And Pebble Beach was
Sitting behind a massive cockpit of a desk, in a
peach-carpeted, crystal chandelier-strewn office in the Fox
Plaza he built, sold at a profit and recently repurchased for
$250 million on the edge of Beverly Hills, Marvin Davis, 74,
looks every inch the dealmaker. A veritable mountain of a man,
gargantuan both in weight and wallet, once known as "Mr.
Wildcatter" for the fortune he made in Rocky Mountain oil,
he's now an undisputed master at buying low, selling high.
Whether it's 20th Century Fox, The Beverly Hills Hotel, Web
TV, radio and TV stations across America or even a recent
attempted takeover of Carter-Wallace Inc.--maker of Trojan
condoms--assets are Davis' canvas, and he paints only in the
color of green. One hand fielding phone calls, one eye
scanning twin "Personal Market Watch" screens, he has granted
a rare interview with one stipulation.
"We'll talk about golf, OK?" he says in a voice that sounds
more New Jersey than Beverly Hills. And only about golf.
Because golf, specifically Pebble Beach golf, is Davis'
passion, as evidenced by a photograph nestled amid acres of
frames of him posing with every dignitary on the planet: a
picture of The Big Man swinging a spindly golf club as agile
as a ballerina, the Pebble Beach Pacific lapping at his
"Oh, I loved every minute of it; very hard to part with,"
he says of his five-year tenure as owner. "I never fall in
love with any asset, but that one I came closest to. That's
why I tried to buy it back."
Not once, but twice, first in 1993, just after he'd sold
it, then again, recently, when he submitted a bid that was
rejected by the Japanese. "Anything that you improve, you're
entitled to get paid for it," says Davis. And Davis, who held
onto Pebble Beach when he sold off his other Fox assets, piece
by piece, for $1 billion, pocketing a $300 million profit,
radically improved his prized resort. He revitalized the
existing golf courses, developed Spanish Bay, with its inn and
coastal course, and made other improvements. But in the late
'80s, residents noticed signs of cost cuts, believed to
bolster cash flow. The season of selling had arrived. Some say
Davis began actively shopping Pebble Beach, with a price tag
of $1.2 billion. But Davis insists that the suitors came to
him. "I hadn't planned on selling," he says. "But the price
got so high ..."
Enter Minoru Isutani, the 1980s golden boy of Japanese
golf, pied piper to 12,000 members of his various Japanese
private golf clubs, master of the million-dollar membership,
seller of $30,000 gold-inlaid golf clubs, a prestige seeker
from the tiny island for whose citizens land is everything. A
tall, handsome workaholic, Isutani rode Japan's boom-time
bubble like a bull rider, amassing a fortune in computers and
sporting goods before turning to golf course development under
his Cosmo World banner. He was perpetually doing three things
at once--buying the Hogan Company for $52 million, launching a
$600 million planned community in the then-ghost town of
Henderson, Nev., scheming to create a global tour of legendary
courses for his members. But one resort defied him. "His dream
was, he wanted to build a golf course like Pebble anywhere in
the world," remembers Isutani's chief assistant, Ted Honda.
"So we looked for a suitable site, not only in Japan but
Europe, United States, Spain, south of France and Japan.
Basically, we couldn't find anything close."
Isutani never imagined that he would have the opportunity
to buy The Real Pebble Beach. "He comes from a culture where
nobody would ever sell anything of that value, and the fact
that he could buy Pebble Beach just floored him," says Perry
Dye, the golf course designer who built six of Isutani's
Japanese courses and chaperoned him on a Lear jet and
helicopter scouting tour of American prospects.
"He approached a friend of mine and said that he would like
to buy Pebble Beach," remembers Marvin Davis. "I said, ‘Sure,
bring him in.'"
"Their group approached us," insists Ted Honda.
Either way, in 1990, Minoru Isutani--surrounded by
interpreters, assistants and attorneys--sat before Davis, in
the ultimate den of ante-up.
"It's an honor to be the owner of the finest golf course in
the world," Davis said in introduction.
Isutani, who spoke little English, spoke to an interpreter
and the interpreter spoke back to Isutani, then addressed
Davis. They came together on the universal language of money.
"He knew the property well and mentioned a price"--$841
million, almost $700 million more than the estimated value of
Pebble Beach itself at the time of Davis' purchase--"subject
to due diligence. We shook hands on the deal and that was it.
Another [Japanese] group came in after that and topped his
price pretty substantially [by a reported $50 mil]. But I said
we'd made a deal already."
Fanatical about golf, Isutani arrived to a golf resort
scorched brown by a seven-year drought. "It looked like
Beirut," remembers Paul Spengler, current senior vice
president of golf properties, who arrived at the end of the
Davis era. "As soon as Mr. Isutani and Cosmo World purchased
the company, at 10 in the morning on Sept. 5, within five
minutes, I got a call from one of his top managers saying for
me to hire Jack Nicklaus for the restoration and preparation
of Pebble Beach for the U.S. Open," says Spengler. Isutani
should have called a public relations expert instead.
Xenophobia inflamed the Forest. The Japanese had already
gobbled up 160 U.S. golf courses and owned 74 percent of the
courses in Hawaii. But many felt that Pebble Beach--where Bing
Crosby had led his perennial cocktail party of celebrity
golfers and where Elizabeth Taylor filmed "National Velvet" in
1944 (returning six years later for the first of many
honeymoons)--was too all-American to be sold to foreign
interests. Isutani would pour $5 million on the courses and
sever relationships with Pebble's Japanese tour
wholesaler--which brought groups of Japanese tourists and
golfers to the resort--to keep his resort exclusive. But the
good he did was lost amid controversy. "Just the idea of
Japanese ownership, well, it was a racial period," says
lifelong resident Hampton Stewart.
The new owner's plan was as incendiary to the residents as
his nationality. Isutani was shouldering a domino effect of
debt: a $574 million loan from Mitsubishi Bank, secured by a
$664 million promissory note from Itoman, an Osaka development
company, which had borrowed its cash from Sumitomo Bank.
Isutani planned to service his loans by selling memberships in
Japan--1,000 memberships at possibly $1 million each,
according to Honda, for which members could reserve tee times
five years in advance--leaving only two hours of tee times
daily for nonmembers.
Why did Isutani think he could privatize the most public of
American golf resorts? Because, he insisted, Marvin Davis
promised him he could.
"We repeatedly asked Mr. Marvin Davis if there would be any
objection," he told The San Francisco Examiner. "He said there
would be no objection."
Davis leans back in his chair, his MD monogram blinking off
his sky-blue shirt like a fast-food logo. "He made a
statement, ‘I got tricked!' " Davis says of Isutani. "If
anybody tricked him, it was his own law firm. They were here
at all times."
When Isutani's membership scheme became public, the Forest
rose up against him, every ecologist, Sierra Club member,
black-tailed deer and seal pup carping the Gospel of Sam
Morse: "The [original home] deeds specified that the Pebble
Beach golf course was designed for the recreational use of the
residents... and the course could not be shut out by
privatization," remembers "coastal activist" Carl Larson, a
leader in the fight against Isutani. Isutani, whose membership
plan passed the county supervisors, was tied up in motions by
the California Coastal Commission, which voted 11 to 1 that
his plan denied the public access to the coast. "They could
have won it, if they'd stayed with it," advises Marvin Davis.
"They could have taken the Coastal Commission to court."
Isutani attempted to file a lawsuit in late 1991, but his
courier reportedly missed the filing deadline by 15 minutes.
Sumitomo Bank tried to refinance the loans. The same week,
Isutani's Cosmo World filed for bankruptcy protection. He was
fined $320,000 for missing a $3.2 million tax payment.
Finally, Isutani surrendered. After only 17 months of
ownership, he was forced to sell Pebble Beach in 1992 to a
partnership involving Sumitomo and Taiheiyo Club Inc., a
Tokyo-based company that owns and operates a dozen courses in
Japan, for $500 million, his $341 million loss becoming,
according to one observer, "The biggest financial failure in
Pebble Beach was back in play.
Promising to polish the "jewel of California," the new
owners, basically a collection of reserved Japanese bankers,
made good on their word, dispatching a team of four men to
manage Pebble, first under the stewardship of Hiroshi
Watanabe, who was Dale Carnegie compared to the reclusive
Isutani. "He and his wife were very social, and he was like a
salesman, very sports-minded," says a resident. But Watanabe's
tenure was short lived.
Seishi Jiromaru, Watanabe's successor, followed in his
footsteps in polishing the Pebble. "They put a lot into this
place," says Hampton Stewart. The company reinvested more than
$100 million over the course of its ownership, renovating the
Lodge at Pebble Beach and the Beach Club, building a new
tennis club, a new seawall, a new fifth hole, the new Spa at
Pebble Beach and a new luxury hotel, Casa Palmero, where Tiger
Woods and other celebs resided during the recent AT&T,
even a new $3.2 million parking garage. While Taiheiyo enjoyed
the dividend of using Pebble Beach as a playground to
entertain major Sumitomo Bank clients, it's estimated that the
company's expenses equaled its returns, making the investment
"an even par," according to one of Taiheiyo's principals.
"As the green fee came close to $200 six years ago, my
concern was that the quality of the course equal the value,"
says Paul Spengler. "We used to have twilight play, which
really impacted the first 10 holes. Isutani requested that we
discontinue twilight play, and Taiheiyo agreed so as to have a
This year, the green fees were increased to $300. "The golf
course has never looked better," says Eastwood.
From the moment Sumitomo/Taiheiyo bought Pebble Beach, it
became the target of envy, a prized asset around which
potential suitors swarmed. "I used to get calls every month:
'Are you for sale?' " remembers Pebble Beach president John
Chadwell. Developers from San Diego to Dallas panted overtures
by telephone. Starwood Resorts--which develops and manages
hundreds of hotels worldwide--dispatched representatives to
Japan to sweet-talk Sumitomo bankers. And Marvin Davis--always
Marvin Davis--kept Pebble Beach on his emotional speed-dial.
"There were rumors that Marvin Davis was buying it back every
year since he left," says Chadwell. Local realtors would leave
calling cards, insisting they were fronting for "a really big"
enterprise. Rumors of potential suitors floated up like golf
balls from the Pacific: the Sultan of Brunei, the USGA (a
suggestion later dismissed by USGA personnel as "whiskey
talk"), even Clint Eastwood, who says he was contacted
constantly by suitors.
But Taiheiyo wasn't interested in selling. By late 1998,
however, they'd be brought to the table, not by takeover
sharks but by their own bankers. Back in Japan, with private
funds bailing out the country's battered banking industry and
a banking regulator breathing down their necks, the banks
began seeking salable assets. Sumitomo also wanted cash to
move into Internet banking. Pebble Beach was a rock of black
ink in a sea of red. "The Japanese think in very indirect
ways," says golf course architect Robert Trent Jones Jr., who,
on a trip to Japan in 1998, heard from a friend who introduced
him to a Sumitomo banker. "They didn't say they wanted to
sell, but I understood: He's a banker and I'm a golf course
architect... " remembers Jones. "So
I gave them some advice: 'If you choose to sell it, it
would be wise to get someone who is well-known in America and
who has impeccable credentials.' "
The bankers apparently took Jones' advice. Flooded with
calls from buyers with bottomless pockets, the Japanese
bankers vowed to return the jewel they'd "polished" to the
best American stewards possible, someone who would be in it
for the long term. "They didn't want any barbarians at the
Highway 1 gate," says one observer of the Japanese bankers'
Still red-faced over the Isutani debacle, the Japanese
owners didn't want to sell at an exorbitant price that a new
owner would find impossible to debt-service, thus sentencing
Pebble Beach to yet another cycle of buy-and-sell. "We wanted
to demonstrate that a Japanese company could do a great
thing--care about the community, care about an American
treasure," said Shoichi Okochi, president of Taiheiyo.
In early 1999, the word filtered out to possible suitors,
including Peter Ueberroth, a longtime guest of the Lodge, a
fixture on the golf courses, who would drop in on Seishi
Jiromaru practically each of his 10 annual visits to Pebble,
repeating, "If it's ever for sale... " like a mantra. Not one
to "waste emotion" on a deal that might never happen,
Ueberroth had no idea what he would do if ever given a chance
to actually bid on Pebble Beach. But in February of last year,
he and other possible bidders received calls from Japan: Well,
yes, there will be a quiet auction with many bidders, and may
the best team win.
In mid-March, Jiromaru called Chadwell into his office.
"I've got some bad news," Jiromaru said. "We have to sell the
Jiromaru told Chadwell that the company had hired an
investment banker, Lazard Frères & Company, to manage the
sale process. Four or five days later, the Pebble Beach
executive committee met with the Lazard Frères reps, who had
prepared 10-year projections of Pebble's future. Presentation
books were compiled. The word was put out. A benchmark price
of $800 million was conveyed by Lazard Frères to potential
buyers.Pebble Beach was back in play.