Yachting: Only three challengers means rethink of America’s Cup

5:30 AM Wednesday Feb 1, 2012

America’s Cup team Prada, Luna Rossa. Photo / Brett Phibbs.

The underwhelming number of entries for the 34th America’s Cup has forced organisers to re-think the format of next year’s regatta.

Just three challengers – Emirates Team New Zealand, Luna Rossa and Artemis – have paid the US$100,000 ($121,000) entry fee for the 2013 event. With those teams already well-advanced in the design and build process of their AC72s, America’s Cup regatta director Iain Murray admits it is looking increasingly unlikely that another syndicate will enter at this late stage.

“We’re hopeful of having more teams outside of the teams that are already building, but the reality is the runway is going to run out in the not too distant future as to when they can start building and get to the startline, so it is going to become clear pretty quickly as to who the Louis Vuitton Cup competitors are going to be,” said Murray, who was in Auckland yesterday for a competitor’s forum.

The number of entries are well down on what organisers had been predicting, with the proposed format of the Louis Vuitton challenger series allowing for eight challengers and scheduled to run for two months from July 4-September 1 next year.

But with only three competitors, the regatta is likely to be scaled back significantly.

“It’s going to change what’s on the table for sure,” said Murray when asked if the length of the Louis Vuitton series will be reduced.

“In the next few weeks we’ll start planning on a bunch of potential different formats as to what the Louis Vuitton Cup will look like. We’ll have to look at the mixture of the type of racing we do and how many races we do on each day and the breaks that we give the teams.”

Murray said he was aware of the importance of maintaining the history and heritage of the America’s Cup.

One of the options discussed yesterday was making each of the matches a best-of-three series rather than just a one-off match race.

This format could also be introduced for the America’s Cup World Series regattas this year.

But it is still not apparent how that would fit into an eight-week Louis Vuitton series, much to the frustration of the competing teams who are keen for clarity around this.

Murray said a number of different agendas were emerging in the competitors’ group, with some focused on AC45 issues, with the other four teams more interested in the AC72s.

For the AC72 group their main concerns yesterday were getting the length of course sorted, the format of the racing and the way the racing would be scored.

“What we’re seeing is a number of different agendas emerging and as we go forward we have a number of different subjects we need to deal with,” said Murray.

“The teams that are well-organised and strong are digging deeper into the detail of what we’re going to do.”

Controller: America’s Cup needs “significant additional fundraising”

Buell: “I get zero salary for this, and I’m busting my ass raising (money) for it.” (Photo by Lance Iversen / The Chronicle

The plan was to have $12 million raised a week ago to help cover the city’s costs for hosting the upcoming America’s Cup regatta.

It’s not quite there.

A committee of philanthropic and community leaders raising donations to help offset San Francisco’s projected costs for hosting the renowned sailing race so far has only $8.8 million raised to cover costs for the current fiscal year, and $8 million of that came from a single source: race organizers, according to a new memo from the city controller.

The fundraising group, the America’s Cup Organizing Committee, does have written pledges or agreements totaling $12 million – the target amount listed in the initial agreement with race organizers to have on hand by Jan. 31, Controller Ben Rosenfield wrote.

But $3.2 million of that is pledged for 2012, 2013 or 2014, the memo indicates. The fundraising committee has only $800,000 cash on hand plus an $8 million agreement with the America’s Cup Event Authority for expenses in the fiscal year that ends June 30, the memo says.

Under that agreement, the organizing committee sold its rights to solicit sponsors within the local market to the event authority, the business arm of the Cup racing group headed by billionaire Oracle CEO Larry Ellison, which had access to national and international sponsors. The two have now agreed to combine those efforts into a single outreach campaign to advertisers. That agreement also includes unspecified future revenue sharing beyond the $8 million, according to the controller’s memo.

But the committee needs to ramp it up to meet the target of $32 million over three years outlined in the initial December 2010 deal between the city, the then-newly formed organizing committee and the event authority led by Ellison, who agreed to hold the regatta here.

“Given the ACOC’s expenses and fundraising payout schedules, significant additional fundraising beyond those achieved to date will be required to honor the $32 million fundraising goals,” Rosenfield wrote.

Exhibition races are scheduled to kick off in August, followed by the finals in September 2013.

The committee’s operating expenses were $492,000 last year and are expected to jump to $844,000 this year plus $520,000 in other costs for a total of $1.3 million, the memo says. The total committee costs are projected to jump to $2.1 million in 2013, according to the controller.

Mark Buell, a philanthropist and Democratic Party fundraiser who volunteered to chair the organizing committee, said his group has “absolutely, without question” complied with its part in the agreement to bring the Cup to San Francisco.

The language in that agreement is less than declarative, stating that Buell’s committee “will endeavor” to raise up to $32 million over a three year period, with “targets” of $12 million in the first year and $10 million in each of the next two years.

“The issue at the time when this was written was: Is there the will out there to fund this?” Buell said. “If anything, I see this as a major accomplishment given that we were able to do it.”

Buell also said the controller’s memo doesn’t include $500,000 pledged Monday.

Local Democratic Party chair Aaron Peskin, who has been critical of the current terms of the America’s Cup deal, said Buell’s committee had “broken its commitment” to the taxpayers.

“Contracts are to be read in their simple English language, which leads everyone to believe that Mark Buell was on the hook to deliver $12 million to the city last week,” Peskin said. “As it stands, they raised $800,000 and spent $400,000 on their salaries.”

Rosenfield’s memo notes that the original agreement actually gives “no stated deadline … for payment of the $12 million by the ACOC to the city.”

The original benchmarks were set to give the Board of Supervisors a sense of how feasible funding would be before the city commits to a binding deal on hosting the races that includes turning over to Ellison’s group ownership of one waterfront parcel and long-term development rights on others in exchange for at least $55 million in waterfront upgrades.

Rosenfield’s memo comes as the board is preparing to receive today the binding deal. Plenty of wrangling over several points is expected before a vote on approval later this month.

Buell said his main concern was ensuring that there was money in place to pay the city’s bills at the end of the current fiscal year, which he maintains there is.

“I’ve got close to nine (million),” he said. “I think they’ll only need about eight (million) come June 30.”