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Monday, February 11, 2013

America's Cup: Losing Millions Is the Exact Scenario We Were Warned About, Repeatedly

Posted By on Mon, Feb 11, 2013 at 10:35 AM

click to enlarge Let's all take a bath
  • Let's all take a bath

The news over the weekend that the city could be left holding the bag for millions the America's Cup Organizing Committee has failed to provide is a revelation in the same sense that it's revelatory that promiscuous couples in horror films tend to be killed off.

The very real possibility of San Francisco being made to cough up scores of millions of America's Cup dollars is, in fact, the exact scenario warned of by prudent city officials not cheerleading for the event. Just as so many filmgoers futilely shout "don't go in there!" to ill-fated protagonists, so San Francisco was warned regarding the America's Cup.

We went in there. And now it may cost us. And, in fact, it may cost us a bit more than the (dismal) figures bandied about over the weekend.

See Also: The Cup Runneth Over

According to the most recent analysis by the Board of Supervisors Budget and Legislative Analyst, the estimated cup costs the city will incur stand at $40.2 million. The Port of San Francisco is pouring $21.9 million into the effort, $3.7 million of which do not come with longterm, non-cup benefits.

So, even if the private fundraisers hit their $32 million goal, the city could come up short. And it doesn't look like that goal will be hit; the money has purportedly dried up at $14 million. Keep in mind that much of that was a hand-me-down from the race organizers they described to SF Weekly last year as an "$8 million payment from [race organizers] characterized as an advance on future sales to be derived from a revenue-sharing split on sponsorships."

click to enlarge Avast! To the phones! Fundraise, men!
  • Avast! To the phones! Fundraise, men!
Apparently it's hard to fundraise on behalf of yachting billionaire Larry Ellison -- a fabulously wealthy man with a reputation for surliness and megalomania.

This was pointed out years ago, as was the incredible wiggle room afforded the private fund-raisers tasked with offsetting the city's costs. Within the lengthy contract, it says -- in writing -- they will "endeavor" to raise the $32 million. The nuance here, especially for anyone who's ever told his or her spouse that "I'll try" to do something, is all too apparent. The fundraisers could come up with a dollar and a quarter and still have met their end of the bargain.

"Not one cent" in private funds is guaranteed, Budget Analyst Harvey Rose told us in November 2010. "So there's no guarantee whatsoever we'll get that $32 million." Too bad: "If they don't raise the money, it's on the city," city Controller Ben Rosenfield told us in February 2012.

The budget analyst conveniently estimated that, if private fundraising stalled at around its current take, the city stands to lose some $11 million. This, however, is assuming $20.3 million in hotel taxes from visitors who will supposedly inundate our fair city. That may not happen. Of course, if fewer people show up, you'll stretch the cops, Muni, and other services less, requiring less city money. So that's good. But you won't have the billion-dollar impact on local business the mayor and others keep repeating. So that's bad.

In any event, this ship has set sail. Despite the dire fiscal risks we were warned of, clearly and repeatedly, we have charted this course. You'd think that those responsible for putting us in this bind would lose a little credibility. But they've got other things to think about.

They want us to host the Olympics. Of course they do.

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About The Author

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.


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