Five years ago, Walter Cuenin and Bob Bohn were retiring from the military. Don Konz was in real estate. Cuenin and Bohn were seeking a business venture. Konz became a partner because of a common thread: they were either handball or squash players.

Their projected scale was smalltime. They saw a need for a commercial court club for handball and squash enthusiasts outside the institutionalized environment of YMCAs and military bases. The club they opened in Merrifield, Fairfax County, 4 1/2 years ago was the first commercial membership court club in the Eastern United States.

"We were successful for the wrong reasons," Bohn said recently. "While our club was under construction, we got more attention from racquetball players. When we opened, 70 percent of our play was racquetball. Today it is 90-95 percent."

Today, these three men, known commercially as the Courts Royal Group, are the biggest entrepreneurs in the Washington-area version of the racquetball explosion - a sports phenomenon in which an estimated 6 million Americans now participate, compared to 600,000 five years ago.

Courts Royal now operates 40 courts at four locations, about one-third of the total membeership courts in the Washington area. Racquetball and handball can be played interchangeably on the court 20 feet wide by 40 feet long by 20 feet high.

The FBI has its own courts; so do the Pentagon and the Marriott Corp. Time Inc. recently got into the court-building business and Leach Inc, the nation's largest manufacturer of racquetball rackets, was bought last year by a giant conglomerate, Colgate-Palmolive.

CBS is televising a June sports special on racquetball. Jim Flood, a California promoter, is producing the A-P Racquetball Tour and currently negotiating with the networks. The tour, sponsored by Coors beer, involves pro athletes from other sports in competition already filmed. The baseball final pairs Al Oliver against Don Kessinger; the football final matches Randy Vataha and Jim Bakken. The eventual winner gets $50,000.

Obviously, racquetball is booming and businessmen do not expect this sport to go the way of the hula hoop. It has its economic advantages over tennis to both the owners and the players.

And neophyte racquetball players, especially women, have discovered the game is infinitely easier to learn and somewhat master and thus less frustrating than tennis.

For physical fitness it is almost twice as rewarding as tennis, according to the National Club Court Association, of which Bohn is a director. A tough racquetball singles match burns 600-700 calories per hour, compared to 300-400 for tennis, according to the NCCA.

Yet, for all the dollars now being made by the pioneering racquetball entrepreneurs, there already is concern in the industry about saturation, as happened previously in the bowling and indoor tennis booms, when facilities were overbuilt and some went bankrupt.

The racquetball explosion started on the West Coast and has pushed eastward. According to Konz, overdevelopment and its economic consequences already have been reached in Chicago and Detroit, is in process in Pittsburgh and is about to happen in Philadelphia and St. Louis.

"There are 15 clubs on the drawing board in this area and that's too many," Konz said, "probably 10 too many."

The game of racquetball is played on a four-walled court with a small rubber ball, and resembles handball. But rather than striking the ball with their hands, the players use tennis-like rackets with short handles.

However, a promoter like Flood disputes that claim and Colgate-palmolive, in a confidential survey, projected that 25 million people will be playing racquetball by 1983.

Flood said he bases his opinion on the fact that racquetball is a sport still relatively unknown to the American public. He says the sport will really boom when fans see their favorite athletes from other sports competing in televised racquetball matches.

But he conceded that if that boom does not occur as he envisions it, the market will, indeed, have too many courts for 6 million players.

In 1973 there were only 15 membership court clubs in the entire nation. Now there are 600-650, at least 19 in the Washington area. That figure does not include public courts at the Wakefield recreation center in Fairfax County, the new downtown YMCA or the Arlington YMCA, nor the FBI's, Pentagon's or other employe facilities like the Marriott's.

At Court Royal's newest and plushest club, within walking distance of the White Flint Mall in Montgomery County, membership has not reached capacity eight months after opening.

Alexandria, second of the club's four locations, sold out in six months.

Of the new courts planned, most are in the suburbs. Gary Malaski of DeFranceaux Realty Group is putting together a club project for a unnamed client at a downtown Washington location, which he says he cannot disclose at this time but which he calls "unique."

It will be part of a larger building, Malaski said, because a downtown Washington real eatate prices, $50-$250 per square foot, it is not economically feasible to build a separate facility. Thus, the clubs are built in the suburbs, where some owners pay about $10 per square foot for the land.

When indoor tennis facilities were overbuilt, those that survived did it through strong management and excellent location. It is a lesson that has not been lost on the Courts Royal Group and its new competitors.

Malaski said his group did extensive survey work and so has Courts Royal. The latter, according to Konz, decided that choice location and, therefore, paying bigger bucks for land was better than acquiring cheaper land in terms of long-range profitability.

The sheer dimensions of the court make racquetball more attractive to the developer. It takes less land, although a racquetball court cost as much, if not more, than a tennis court to construct. However, you can put six racquetball courts in the 60 x 120-foot space needed for a tennis court. You also need a 35-foot ceiling in tennis compared to racquetball's 20.

For the player, the cost can range about half the hourly fee for indoor tennis. Yet, for the owner there are not the attractive ancillaries that come with tennis.

"You can't perpetuate the myth of lessons," said Konz. "Some people have taken tennis lessons for 10 years. Four to five lessons in racquetball is about the limit."

In addition, the racquetball player does not seem to be fashion oriented like the tennis player.Thus there is little pro-shop business in profitable clothing lines. A recent Wall Street Journal article said "dress is best described as scruffy."

On the other hand, each new club seems to offer more amenities in order to keep up and outdo the expanding competition. Examples: exercise and weight rooms, saunas and whirlpools, plusher rooms, larger nurseries for baby-sitting and better stocked pro shops.

The interests of women players was what made the game a good commercial venture, according to Konz. More than half the players at Courts Royal are women, he said.

"You can keep the ball in play," he said. "It's instant gratification to pick up a racket and be efficient. We were very happy to have the one club (at the outset). We didn't anticipate this. It took the nation by surprise."

"It's easy to learn. It's fun without being frustrating," added Bohn. "The skill level to enjoy yourself is low. But, conversely, the competitiveness is up there with any sport for the pros."

In fact, said Bohn, the impact of the women was so underestimated that his group did not provide equal shower facilities for them and, despite improvements, is still behind the demand.

"You can bet," he said, "they've let us know about it."