sail-world.com
 
 
News Home Cruising Photo Gallery Video Gallery

 

Sail-World.com : America's Cup: What turned the tide in favour of San Francisco?

America's Cup: What turned the tide in favour of San Francisco?

'33rd America’s Cup - Reception at San Francisco City Hall'    BMW Oracle Racing © Photo Gilles Martin-Raget    Click Here to view large photo

The decision to name San Francisco as the venue for the 34th America's Cup is a big turnaround from just over two weeks ago when the lead negotiator for the Defenders, Oracle racing's Chief Operating Officer, Stephen Barclay, described their team as being 'exasperated' with San Francisco's City Hall.

San Francisco was accused of using a 'bait and switch' negotiating technique - where you negotiate a deal on one set of expectations, and then switch key elements in the deal once the other party has taken the bait.

The bait, in this instance was a four month negotiation over use of the central piers including Pier 50, which in return for investment in reconstruction, the America's Cup organizers would obtain long term rights to the use at very favorable commercial terms. The cash-strapped City would also be required to make a substantial investment in the range of $50-100million.

That price tag while modest by international standards was too much for City Hall and they re-jigged the deal, putting up a new location to the north, using piers that had a life of just 5-10 years. That was a deal that had significant commercial risk for Oracle Racing, and they re-ignited the suspended discussion with Newport, Rhode Island and Rome, Italy.

33rd America’s Cup - Reception at San Francisco City Hall -  BMW Oracle Racing © Photo Gilles?nid=78680 Martin-Raget   Click Here to view large photo
The so-called Northern Alternative was endorsed by the San Francisco Finance Committee and then passed by the Board of Supervisors with an unprecedented margin of 11-votes to nil.

It was a great deal for the City - picking up an estimated 8,000 new jobs, $1.2billion of Economic Benefit and by one calculation, made a profit on the deal of about $20million.

The Defenders had a lot of downside - being saddled with a 12 month period of planning hearings and process before they even knew that the construction would be allowed to proceed; required to make an investment of $100-150 million to reconstruct piers they had hardly seen; and offered a very loose means of investment recovery. It was deal that did not seem to have too much upside, and while Oracle Racing were happy with the cash-strapped San Franciscans being given the chance to get a break even deal, the America's Cup Defenders felt it only fair they should have the same opportunity.

The Defenders, who decide the Venue for the next match under the 19th century Deed of Gift that governs the America's Cup competition, also took the opportunity to see what other deals were going in the America's Cup venue market.

While the initial signs looked promising with Newport, Rhode Island, many of the issues inherent in the San Francisco situation were also present on the East Coast venue. In their favor, a very progressive leadership in Rhode Island was much easier to deal with than their West Coast counterparts, however time was always against the Newport deal. Earlier this week, officials raised the white flag, saying they could not get a firm bid together in the time available and were hoping for an extension into the New Year.

The Italian bid - despite having a new marina already under construction, and a large rumored Event Fee - could not be pulled into providing a concrete bid to satisfy the requirements of Oracle Racing. 'For a large part of 2010, the Italians were our #1 favorite to be the Venue, but in the end were not able to contribute the certainty we needed,' said Barclay. 'With a purpose built marina under construction a decision in their favor would have been relatively easy six months ago', he added.

In Sail-World's earlier story?nid=78680 it was clear that if the Northern Alternative did proceed (and it was attractive to Oracle Racing, moving the racing closer to the team bases and spectators) then the investor, Oracle Racing, had to see how they could get their money out at the conclusion of the America's Cup(s) in San Francisco.

While that process was alluded to in the agreement - by way of rental credits - it seemed that Oracle Racing had not been consulted properly, and was unclear as to how that recovery would work, to their satisfaction - rather than just staying within City Hall's comfort zone.

The fact that Oracle Racing's billionaire owner, Larry Ellison was a San Francisco resident was a double weakness in that many in the city believed he was obliged to stage the 34th America's Cup in his home-town, and secondly given his wealth and the City's indebtedness, Ellison should be happy about funding the deal too.

'We had to get the risks under control,' said Barclay. 'It was too risky for us. We had some long chats with their team, and we got the opportunity to get the risks under control, and that gave us to the opportunity to say 'Yes'.

'We hadn't even had a chance to have a good look at the Northern Piers. Everyone said we had to spend some money. The original agreement had no way of dealing with that. It was silent on how we would be repaid for any of the work done on those piers. The new agreement says that investment is now treated the same as any other - we recover through rental credits that we get for legacy use.'

'We think we have given ourselves a good chance of getting our books back in balance, and are very confident that have to a large extent de-risked the project,' he added.

'There was no guarantee that if we made the investment in the reconstruction of the piers that we would get the rights on a long term basis.'

Mayor Gavin Newsom with Oracle Racing’s Larry Ellison -  BMW Oracle Racing © Photo Gilles?nid=78680 Martin-Raget   Click Here to view large photo

Oracle Racing will not be signing the agreement passed by the Board of Supervisors before Christmas. Instead a new agreement will be drafted and signed by the parties. Barclay is adamant that the new agreement is within financial fences of the previous agreement in terms of financial cost to the City.

However the City is not out of the woods yet. the next crunch date will come in a year's time - at the end of 2011 the necessary CEQA approvals must be obtained, to allow construction to commence in January 2012.

If that process does not proceed at the pace expected then other venue options will be considered, and the talks with Newport over the plan to rejuvenate the historic Fort Adams site into an America's Cup Centre will continue.




by Richard Gladwell

  

Click on the FB Like link to post this story to your FB wall

http://www.sail-world.com/index.cfm?nid=78680

11:59 AM Sat 1 Jan 2011 GMT






Click here for printer friendly version
Click here to send us feedback or comments about this story.

Click for further information on
2013 America's Cup

Related News Stories:

27 May 2014  America's Cup: Oracle Team USA under stress
23 May 2014  America's Cup: Oracle and Team NZ designers reveal AC72 secrets
22 May 2014  America's Cup: Artemis death verdict 'result of an human act'
10 May 2014  A year after the Artemis incident, the sailors tell of the pain
01 May 2014  America's Cup: Oracle and Team NZ tech insights - Free lecture tonight
16 Apr 2014  America's Cup: Expected de Ridder penalty should be reduced
14 Apr 2014  America's Cup: Dean Barker's Blog - A sail with the Duke and Duchess
12 Apr 2014  America's Cup: Coutts claims ISAF Jury on a crusade, backs Kiwi report
10 Apr 2014  America's Cup: Two Kiwis escape hometown action in AC45 rules ruckus
03 Apr 2014  34th America's Cup: A Match of three weeks - Part 3 - Under the Pump
MORE STORIES ...

News - USA and the World





Techno 293 Worlds - France and Italy claim titles by International Windsurfing Association,












420 World Championship - Singapore and Spain out front by 420 International Class Association,






























Lightning strikes cut short CFJ Nationals by Andy Kopetzky, Santa Monica Bay


















America's Cup: Group agrees to co-operate in London Meeting by Richard Gladwell/Sail-World.com/nz,


Copa del Rey Mapfre - Build-up reveals some remarkable enthusiasm
Marblehead NOOD Regatta - Images by Leighton O'Connor
America's Cup: Two AC72 skippers discuss Foiling Moths and the Cup
RS Feva World Championship - Brilliant sailing on day 2
America's Cup: Alameda makes overtures on Venue hosting for San Fran *Feature
Cape Panwa Hotel Phuket Race Week 2014 - Relishing a challenge
Edgartown Race Weekend - BBBR and Round-the-Island Race winners named
Etchells Invitational Cup - Aussies take early lead in Cowes
PWA Fuerteventura Grand Slam - Antoine Albeau strikes back on day 4
Aquece Rio – International Sailing Regatta - All set for test event
ISAF World Sailing Rankings for 28 July 2014
29er World Championship - All set in Kingston
ORC World Championship - Third Course area opens for huge fleet
Day one of the Allen RS Feva World Championships
Anna Tunnicliffe: Final two days of the 2014 Reebok CrossFit Games
Joachim Aschenbrenner takes gold at ISAF Youth Match Race Worlds 2014
Maxi Soh scores double wins in CMRC Summer Doubleheader
29er World Championship opening ceremonies in Confederation Park
PWA Fuerteventura Grand Slam - Action resumes on day 3
Land Rover Sydney Gold Coast Yacht Race Start 2014 VIDEO
Laser Radial Men’s World Championship 2014- Final day   
2014 Pacific Cup - Scarlet Runner wins   
Gladwell's Line: America's Cup - Joint Statement is a curious note *Feature   
ISAF Youth Match Racing World Champ - Top four battle it out for final   
BIC Techno 293 Worlds 2014 - Day 6   
PWA Fuerteventura Grand Slam - Wind teases competitors on day 2   
Women’s Match Race Golfe du Morbihan - Action-packed day of racing   
Herreshoff Marine Museum announces successful fundraising campaign   
Brewin Dolphin Commodores' Cup - The most comprehensive victory yet   
Anna Tunnicliffe fourth at mid-point of 2014 Reebok CrossFit Games   
2014 29er North American Open Championship - Australians win   
INSA Sabot II Invitational Regatta - Erik Hou claims victory   
CMRC Summer Invitational Series - Maxi Soh wins Doubleheader A event   
International Moth World Championships - Nathan Outteridge wins   
International Moth Worlds - Victory for Nathan Outteridge + Video   
PWA Fuerteventura Grand Slam - First blood to Toselli and Angulo   
Melges 24 Nationals - Record entries for 2014 and 2015 venue revealed   
Women’s Match Race Golfe du Morbihan - Anna Kjellberg claims the lead   
Jessica Uniack Memorial Beach to Bay Race at Long Beach YC   
Laser Radial Men’s World Championship - Poland tops the leaderboard   


For this week's complete news stories select    Last 7 Days
   Search All News
For last month's complete news stories select    Last 30 Days
   Archive News







Sail-World.com  


















Switch Default Region to:

Social Media

Asia

Australia

Canada

Europe

New Zealand

United Kingdom


http://www.sail-world.com/event_images/image/Twitter_logo_small.png http://www.sail-world.com/event_images/image/FaceBook-icon.png  http://www.sail-world.com/event_images/image/RSS-Icon.png

United States

Cruising Northern

Cruising Southern

MarineBusiness World

PowerBoat World

FishingBoating World

 

Contact

Commercial

News

Search

Contact Us

Advertisers Information

Submit news/events

Search Stories/Text

Feedback

Advertisers Directory

Newsletter Archive

Photo Gallery

 

Banner Advertising Details

Newsletter Subscribe

Video Gallery

Policies

 

 

 

Privacy Policy

 

 


Cookie Policy

 

 



This site and its contents are © Copyright TetraMedia and/or the original author, photographer etc. All Rights Reserved.  Photographs are copyright by law.  If you wish to use or buy a photograph contact the photographer directly.
XLXL NEW US
LocalAds   DE  ES  FR  IT