America's Cup- 'Sign by Friday' San Francisco given ultimatum on venue

by Richard Gladwell on 12 Dec 2010
The well connected America's Cup correspondent for the Associated Press, Bernie Wilson, is reporting that San Francisco City Hall has been given until next Friday, 17 December, to sign an acceptable agreement to host the 34th America's Cup.

He reports the Chief Operating Officer, Stephen Barclay, a New Zealander now based in the BMW Oracle Racing facility in Warkworth, 40 minutes north of Auckland, says that 'a letter was delivered to Mayor Gavin Newsom and other officials informing them of the deadline.

'Barclay says San Francisco officials have changed key points in an agreement that had been negotiated between the city and the yacht club and then sent to the Board of Supervisors for approval. Barclay says San Francisco officials are 'holding on by their fingernails.'

To read the full story http://www.google.com/hostednews/ap/article/ALeqM5idL2yGZAa7FZGRh_kS6BwQgqnnNQ?docId=eca7ddc3a27441f6ba3d164b4a0ae623!click_here

At the heart of the issue is the inability of San Francisco to fund the capital works required for hosting the 34th America's Cup. In turn it has passed this cost, estimated at $150million, onto the Defending team, BMW Oracle Racing and its owner, billionaire and San Franciscan resident, Larry Ellison. In return Ellison and his associates have been offered a long term lease on the facilities in prime waterfront real estate.

Further the City itself would not stump up with a venue fee, but instead proposed an arrangement whereby this fee of $270million would be funded by private sources.

In return the City would receive and estimated $1.4billion of economic benefit, and thousands of new jobs both from the construction and ongoing services during the America's Cup and its supporting events.

Although the deal seemed destined to be passed by the City's Supervisors, and second plan was mooted which would involve moving the proposed base to another location, deemed to be less cost for the City.

BMW Oracle Racing was reported, indirectly, to be comfortable with this move.

However the crunch seems to have come, as the deadline of 31 December 2010, imposed by BMW Oracle Racing and their club, Golden Gate Yacht Club, in their Protocol governing the 34ths America's Cup signed with the Challenging Club Nautico di Roma and their team Mascalzone Latino.

That deadline is now three weeks distant, with San Francisco's City Fathers seemingly unable to decide which course they wish to steer. That three weeks, is in reality just two weeks away, given the Christmas break.

It has been reported elsewhere that negotiations have now been re-opened with Newport, Rhode Island. originally discounted along with the other US venue, San Diego, in favour of a unified US effort in competition with an unnamed Italian venue, believed to be near Rome. Both the other US venues had previously staged America's Cups.

Late last week the a reporter for the San Francisco Weekly wrote:

During yesterday's committee hearing regarding the hosting of the America's Cup regatta, Supervisor Ross Mirkarimi warned his colleagues that former race site Newport, R.I. is clamoring to sail off with San Francisco's prize following any 'glitch or defect in our process.'

This, it turns out, is an understatement.

The city manager of Newport, R.I. confirmed to SF Weekly that officials from his city and state would love to have the race there -- and have long been in communication with Larry Ellison, the Oracle CEO and yachting billionaire, whose successful racing team will eventually pick the site of the 34th America's Cup. Newport's incoming mayor said he and others would do 'whatever it took' to host the regatta.

As well as serving as city manager for Newport, Ed Lavallee is a member of the state's America's Cup Planning Committee. He said that he has 'made overtures to Oracle,' as have state officials from the Rhode Island Economic Development Corporation. 'Emissaries' were sent to San Francisco to meet with Ellison in person, he says.

For the full story http://blogs.sfweekly.com/thesnitch/2010/12/americas_cup_newport_larry_ell.php!click_here

Another option, in Valencia was also excused from consideration at a later stage, which was followed by an outburst from a disappointed Mayor of the Spanish city which has twice staged America's Cup regattas.

Bernie Wilson also reported that Newsom's spokesman, Tony Winnicker, confirmed receipt of the letter from Barclay. 'We're confident we'll put forward the best possible bid for the team to consider well in advance of the date it has set,' Winnicker told Wilson.

'We have always believed that this is a serious competition,' Winnicker said. 'We believe this would be an unmatched opportunity for the America's Cup right here in San Francisco. We're going through this because we want to win. We want to bring it here.'

Despite the fine words from City Hall, 10 months after winning the America's Cup, there is still no Heads of Agreement contract in place between the City Officials and Golden Gate Yacht Club. Other venue options are being actively pursued, and that tempo has increased in recent weeks.

Five teams have entered the 34th America's Cup, with others, such as Emirates Team NZ, the most successful professional racing team in sailing, saying they cannot really progress discuss discussions with sponsors until the venue is selected - be it in USA or Europe. They have also said that Europe is clearly the least preferred option for them.

Upwards of 20 teams have been represented at two prospective challenger meetings staged in Paris and Dubai, however the indecision from San Francisco would now seem to be an obstacle to participation. Even if the venue were announced within the deadline set by BMW Oracle Racing, the prospective teams only have three months left to assemble funds and sponsorship before the entry deadline of 31 March expires.

By contrast the City of San Francisco has had almost ten months to come up with a determination that it will be the Defence venue, and to provide the very modest level of funding required.

Previous America's Cup venues constructed on a ground zero basis - Auckland's Viaduct Harbour and Valencia's Darcena have been City and national government financed projects - turning derelict waterfront areas in major focus points for their downtown areas. Auckland's is now being redeveloped for a second time, with team bases cleared away and large event stadiums being constructed on the flat areas providing for a major convention industry and associated services.

San Francisco's plan to rejuvenate dilapidated wharves is less ambitious, and does not involve the contentious dredging activity associated with Valencia and Auckland.

While many will wax long about the philosophy of state funded facilities, the simple fact is that without state or local body funding many facilities, now regarded as absolute City jewels, would not be built. For Governments, the trade-off is not so much how much money is required to be outlaid, but the return in terms of all forms of taxation, increased tourism, publicity and exposure for the City - often in areas and media that just could not be bought in conventional terms. That exposure in turn has a spin-on effect for the City in terms of commercial spend and other economic tangible and unforeseeable benefits.

It is an economics lesson that San Francisco's City Fathers seem to have yet to learn.

For an earlier story on the venues issue http://www.sail-world.com/NZ/Gladwells-Line:-Americas-Cup-Venue-is-San-Franciscos-to-lose/74468!click_here