America's Cup- BMW Oracle negotiators 'exasperated' by San Francisco

The America’s Cup on display at City Hall - where 10 months later no Hosting Agreement is in place.

After a covers were lifted, late last week, on the Venue negotiations for the 34th America's Cup, it would now seem that even if San Francisco's Board of Supervisors meet a deadline imposed by Defender, and signs an agreement, approved by the America's Cup Event Authority, that will only now get the City into a position where its offer to host the 34th America's Cup will be compared to others on the table from Italy and elsewhere.

That, according to lead negotiator, Stephen Barclay who is also the Chief Operating Officer for BMW Oracle Racing, is a big step back from a position the City was previously in early November, where they had a 'winning agreement'.

BMW Oracle Racing COO, Stephen Barclay at the launching and christening of USA-17
'The disappointing thing from our point of view is that we spent four months negotiating this agreement, conceding points, pushing other points until we reached agreement. That agreement was signed off by the City and Port and forwarded to the Board of Supervisors for their endorsement. A week or ten days ago that agreement was basically taken off the table and we awoke to a new agreement literally sitting in our Inboxes.'

'That new agreement was substantially different from what we had spend four months negotiating, which we had told them was the winning document.'

'The City were told that their new agreement would be rejected.'

A copy of this letter has been uploaded on the web and!can_be_viewed_here

Negotiations first began with San Francisco and its Mayor, Gary Newsom during the Victory Tour, just days after BMW Oracle racing, the team representing San Francisco's Golden Gate Yacht Club, returned to California having won the America's Cup from the Swiss based Alinghi team after a two year court battle - eventually settled on the water in Valencia, Spain in February.

Under the 19th century Deed of Gift which governs the conduct of the America's Cup, the Defender, now Golden Gate Yacht Club in conjunction with their accepted Challenger, Italian based Mascalzone Latino announced that the 34th match would be conducted in 72 ft catamarans, using wingsails, and that a new circuit the America's Cup World Series would precede the Match, to be sailed in September 2013. The ACWS would consist of 13 regattas to be sailed at various venues around the world.

As the Club of the Defender, it is traditional that the Match would be raced on the waters of the Golden Gate Yacht Club in San Francisco, and the city with its regular and abundant supply of wind, along with spectacular backdrops was literally in a position where the America's Cup hosting rights, were its to lose.

Two other hosting offers by other US ports, and previous holders of America's Cup regatta, Newport RI, and San Diego, were politely declined in the early stages, in favor of the US uniting behind San Francisco.

Larry Ellison explains all the reasons to hold the Cup in San Francisco - BMW Oracle AC Victory tour
Erik Simonson/ ©
However almost ten months later, in a fraught political environment, San Francisco seems to have done the near impossible and dropped out of leading the running to be selected as 34th America's Cup hosts, just three weeks short of an announcement date.

Barclay describes the America's Cup winners as being 'exasperated' with the actions of San Francisco officials. 'You don't work for four months with a group of people, reach an agreement, and then have that agreement thrown out the window,' he told Sail-World.

'For us that is a significant thing to do.'

The cost of that action could be significant to the City with, by their estimates, $1.4billion of economic return and 9,000 jobs being created, under a deal which would have cost the City very little in financial terms. The agreed deal essentially involve development of disused wharves, at an estimated cost of $150 million to be paid by the Defenders, in return for an 80 year lease on the site. Private benefactors would led a drive to secure sponsorship and private funding to the tune of $270 million Event Fee

Barclay is coy when asked how long time San Franciscan resident, and Team Owner, Larry Ellison feels about the developments of the past few months. 'All of us, Russell, Larry, our negotiating team, everyone on our side, thought we had an agreement. They submitted that agreement after four months of negotiations to the Board of Supervisors and we all shook hands. You don't expect to look in your Inbox, three weeks later, and see for the first time their response, which is a new agreement that you have never seen before, and then an hour later see it in the media.'

For the past ten days BMW Oracle Racing has made it clear to the City of San Francisco that the document which they are currently considering, and on which they presumably will be voting on Monday and Tuesday, is not in fact endorsed by BMW Oracle Racing, and will be rejected, even if it is passed.

01/07/2010 - Newport (USA,RI) - 33rd America's Cup - BMW ORACLE Racing - East Coast Victory Tour - Day 4***01/07/2010 - Newport (USA,RI) - 33rd America's Cup - BMW ORACLE Racing - East Coast Victory Tour - Day 4

Barclay says that, in fact BMW Oracle Racing have twice been back to the City with alterations which recognize the city's financial situation. 'We have looked at ways of saving the City money, but still leaving in place an agreement that the America's Cup Event Authority can live with. Our first suggestion saved them $30m, a bigger saving than they had come up with in their amended agreement. Our agreement was rejected. The second alternative was delivered a couple of days ago and still has a saving in excess of $30m to the city’.

He adds that because the America's Cup Defenders, who have the right to select the venue for the next Match, are not conducting an Olympic style bidding process, they need to be cognizant of the political effect on losing cities.

'We went back, for example, to Italy and said to them: 'You've seen the agreement, its posted on the website, you know the numbers, if they sign this off, they (San Francisco) are going to win. We should start talking about other things like World Series events.'

'Waking up to a new agreement in our email Inbox about a week or ten days ago has initiated a process where we are rekindling interest in hosting the America's Cup with Cities other than San Francisco. And we will be looking very hard at those options.'

21/02/2010 - San Francisco (USA,CA) - 33rd America's Cup - BMW ORACLE Racing - USA Victory Tour - Day 2 -Reception at City Hall*** - San Francisco (USA,CA) - 33rd America's Cup - BMW ORACLE Racing - USA Victory Tour - Day 2 -Reception at City Hal

Barclay won't specifically name those venues, however an option close to Rome, and the Challenger of Record, Club Nautico di Roma has been publicly revealed. One the Board of Supervisors, who originally hailed from Newport, Rhode Island told the San Francisco Finance Committee hearing last Friday recently of former America's Cup venue's interest in staging the 34th America's Cup. Barclay also confirmed that America's Cup negotiators had stayed on in the United Arab Emirates after the recent Louis Vuitton Trophy regatta to progress venue discussions.

'There has been a lot of interest from a lot of different places, Australia is one of them, but that has been coming on for many months. But right now we are focusing on the Cities that we have begun negotiations with, but had shifted to World Series hosting discussions, rather than America's Cup hosting, as it became clear that San Francisco, in our view had the winning bid. Those are the places that we have and will be re-kindling interest with.'

Barclay flies back to San Francisco tonight, for another and maybe final round of discussions with San Francisco city officials to discuss the final document that was given to them by BMW Oracle Racing. 'I am making myself available, but they are hanging on by their fingernails at the moment.'

But even if City Hall does sign that document, submitted by BMW Oracle Racing, that might not be sufficient for San Francisco to win the hosting rights, and it will be considered alongside other bids that have already been received or are being actively discussed.

Barclay confirmed that BMW Oracle Racing were planning to make the venue announcement on 31 December 2010, as stated in the America's Cup Protocol negotiated between them and Challenger Mascalzone Latino. 'But the closer that date gets, the more we are going to need to look at contingency plans,' say Barclay. 'But at the moment we are focused on the 31st,' he adds.

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To view the BOS Budget and Finance Committee Hearing!click_here, or on the Player above. The hearing was held on Dec 8th. The AC agreement is item #14 on the agenda. You can see which item is being discussed next to the video slider. Full heardings of the Board of Supervisors can be seen by!clicking_here.

08/11/2009 - San Diego (USA, CA) - 33rd America's Cup - BMW ORACLE Racing - Wing test - day 1***08/11/2009 - San Diego (USA, CA) - 33rd America's Cup - BMW ORACLE Racing - Wing test, day 1