The Sale of the Century : How the deal was done: After a decade of Japanese ownership, Pebble Beach is back in American hands-this time for good

Golf Digest, June, 2000 by Mark Seal

In mid-March, Jiromaru called Chadwell into his office. "I've got some bad news," Jiromaru said. "We have to sell the company."

Jiromaru told Chadwell that the company had hired an investment banker, Lazard Freres & Company, to manage the sale process. Four or five days later, the Pebble Beach executive committee met with the Lazard Freres 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 Freres to potential buyers.

Pebble Beach was back in play.

One by one, the suitors flew into the Monterey Peninsula in their private jets, and rental carloads of suits descended upon the Pebble Beach training facility in nearby Pacific Grove, a site chosen for discretion. Of more than a dozen suitors, Taiheiyo agreed to entertain four: Robert Dedman's Club Corporation (owner of Pinehurst and The Homestead), KSL (the golf division of Kohlberg Kravis Roberts & Co.), Marriott Corporation, and Peter Ueberroth's Contrarian Group. (Marvin Davis is believed to have made a bid below the $800 million benchmark price.) Marriott's representatives, apparently deciding against the benchmark, never showed up for the presentation, narrowing the final field to three. Senior management made presentations to each suitor, who then made bids directly to Taiheiyo Club's chiefs in Japan.

Sitting in the Contrarian Group offices in an Orange County business district, Ueberroth is laid-back California cordial. But when his two prized border collies lounging beside his desk snap to attention at the sound of his voice, you get the sense of Ueberroth as a field marshal. Ueberroth's Contrarian Group seeks out businesses to buy for long-term holds, like Doubletree Hotels, which Ueberroth and his partner Dick Ferris began seven years ago with 15 hotels and grew into a 1,400-hotel giant, before selling out last year to Hilton.

Contrarian's name fits. They're not turnaround specialists; they don't even believe in the auction process. Once Contrarian discovers an asset to which they can add value, an offer is made-and it's usually take it or leave it. Ueberroth doesn't believe in bidding wars. This strategy would play to his advantage. Looking over the landscape of potential bidders, Taiheiyo certainly wouldn't find many without an exit strategy. Backed by pension or capital funds from several sources, the conventional bidder would treat Pebble Beach as any other investment: get in with high aspirations, get out when circumstances warrant, pocket the profits and move on.

Pebble Beach was perfect for Contrarian: an underutilized asset with plenty of room to grow. But to win it, Ueberroth would have to assemble a team, not merely with money but with integrity: a contingent whose very names would prove to the Japanese that they would be the best possible successor. If Ueberroth could create a team without an exit strategy, a team not merely dedicated for the long haul, but one that could prove to Taiheiyo that it was ready to take on Pebble forever . . . well, then, that would certainly sway them.