Plot hole: The tournament that Daniel is in is the All Valley under 18 tournament, but we already know that he has graduated from high school and was about to attend college. His birthday is in December, so he must already be 18.
The Karate Kid III (1989)
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Directed by: John G. Avildsen
Starring: Ralph Macchio, Pat Morita, Robyn Lively, Thomas Ian Griffith
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More mistakes in The Karate Kid III
Daniel Larusso: I know you don't believe in fighting, but tournament karate isn't exactly fighting.
Mr. Kesuke Miyagi: Not exactly ping-pong, either.
Trivia: The bonsai shop building in the film was torn down years ago, but the stairs outside still remain to this day.
Question: How did Kreese lose his dojo?
Answer: Kreese strangled Johnny, after the latter lost to Daniel. This proved just what kind of teacher, as well as person, Kreese is. His students after seeing this, realised just what Cobra Kai puts in their head, as well as just what kind of person and teacher Kreese is. Specifically, after seeing Kreese strangle Johnny, they thought, "I WON'T be your student, if you're gonna treat me like that!" Therefore, they left, and Cobra Kai went out of business.
Answer: He lost all his students after he flipped out on Johnny. Without students, he couldn't pay his bills.
Greg Dwyer