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Sea Monsters: There's Only One America's Cup Winner. But There are Many Losers 

Wednesday, Sep 25 2013

Cover illustration by Tin Salamunic.

It's not quite 11 a.m. on the Emirates Team New Zealand hospitality boat, and the bartender is already working up a sweat, cracking open bottles of Steinlager. Beneath a table, someone has trustingly stowed a Louis Vuitton purse; atop it sits a flat of burgers conveniently labeled "New Zealand Elk Sliders with Pickled Toybox Squash." As New Zealand traces its gastronomic roots to Great Britain, the sliders are seared to a puck-like well-done.

Passengers find their way aboard by following a trail of veiled Emirates stewardesses. They smile radiantly and actually glisten in the morning sun.

Kiwi-accented schmoozing commences within the vessel; government officials unabashedly refer to this as "captive time," so it's little surprise when the engines — and the bar — fire up a good two hours before the day's America's Cup races. "We give 'em a lotta Kiwi beer and show 'em a lotta Kiwi tech," explains New Zealand Consul General Leon Grice. There's plenty of both onboard — a technician monitors 11 separate screens re-creating virtual races via data gleaned from the gadget-laden yachts. Grice is outfitted in an All-Blacks rugby jersey, a ballcap, and Adidas soccer flats; he resembles a dad squiring the kids to a Little League game. His colleague assures a would-be investor that, in New Zealand, "We don't have any terrorists. No one's gonna bomb us."

"Leverage" is a word that comes up a lot here. A great deal of Kiwi money has been expended on yachts and beer and elk sliders in an attempt to leverage San Francisco's regatta into something working out better for New Zealand than the host city. On this day, that investment looks to be coming up roses. That would change, and right soon.

But not on this day.

Tech CEO David Darling's captive for the day is a New York investment banker "who has become very helpful for us in the marketplace." Darling helms a New Zealand biomedical diagnostics company called Pacific Edge; he's opened a new laboratory in Hershey, Pa. But no one will confuse his product with a Hershey's Kiss.

Darling deals in urine.

With just five milliliters of the stuff, his tests can determine if you've got bladder cancer. Darling smiles. "You won't have to have a cystoscopy where they jam that scope up your wiener."

Before he can elucidate further, an eerie hush falls over the boat. Emirates Team New Zealand's AC72 catamaran glides close on a practice run. The yacht's incredible size and speed grow ever more apparent as it approaches at a remarkable clip. With a flourish yanked from The Ten Commandments' parting of the Red Sea-sequence, the ship levitates onto its fin-like foils and its left hull elevates high out of the water; it balances with the precision of a gyroscope while cutting through the water at speeds approaching 50 mph. The catamaran passes a scant 30 yards from the awed onlookers before dropping back into the sea, carving up a thunderous froth. A crowd of men and women hailing from a nation in which children learn to sail before they can ride a bicycle gasps in unison. No one has ever seen anything like this before. Considering the human and material losses these boats inflicted upon the America's Cup, it's likely no one ever will again. Knowing this, nobody says anything for quite some time.

And then the talk of cystoscopies begins anew.

Three years prior, erstwhile Mayor Gavin Newsom glided down the City Hall steps, his shiny visage reflected in the even shinier America's Cup trophy. "Who the heck needs the Olympics and the Super Bowl when you've got the America's Cup?" he proclaimed, handing Oracle CEO and yachting billionaire Larry Ellison a key to the city.

Ellison, of course, wanted more. And Newsom's question would soon cease to be rhetorical. The honey-drizzled claims of Cup organizers and their bedazzled government cheerleaders promising dozens of free-spending yachting teams and cavalcades of racing fans never came to pass. Byzantine real-estate deals demanded by Ellison's America's Cup Event Authority in return for a couple of weeks of racing could have bestowed vast portions of the waterfront upon the billionaire, with rent-free arrangements stretching into the 22nd century. San Francisco ended up hosting just three challengers to Oracle Team USA; promises of a windfall on water unsubtly transformed into assumptions that the city might break even after all the visitor-generated taxes were tallied up. That was before Team Artemis' boat disintegrated during routine practice conditions in May, killing Olympic sailor Andrew Simpson. That was before teams were farcically forced into solo "races" sans competition. And that was before the "home team" was nailed in a cringe-worthy cheating scandal, and docked two races in the event finals.

San Francisco was viewed, the world over, as the city sold on the joys of whitewashing a yacht. Supervisor John Avalos' primordial lamentation that "All the members of the Board of Supervisors were fucking played" echoed out into the international press, where its message was clear even in translation.

The best-of-17 Cup finals, by the way, provided all but certainly the greatest racing ever witnessed in the 162-year history of the America's Cup. This is as good as yacht-racing can get. Despite that two-race penalty, Oracle, at one point down 8-1, has engineered one of the great comeback efforts in all sporting history.

But that's a separate matter from the years of organizational acrimony surrounding this event — and its deeply squandered promise. Numerous high-level city officials — the folks who got us into this — confessed to SF Weekly that they would be thrilled to see the next America's Cup held far from here, regardless of who wins.

"In the Host Venue Agreement, there's all sorts of language about defending the Cup here," says one. "I am perfectly happy to send that to the dustbin." Adds another politico, "Can you imagine this as part of a cycle? Dealing with these people" — Cup organizers — "has been so awful."

San Francisco poured millions into the event in hopes of catching crumbs off the table of a megalomaniacal billionaire. New Zealand, meanwhile, directly subsidized its yachting team with government funds, buying something akin to partial ownership of the product. These were calculated risks. Neither may pay off.

When Ellison first seized the Cup in 2010, one of his initial pronouncements was that yachting must become a state-of-the-art television experience. To his credit, he made it happen. And the San Francisco America's Cup became a reality television show.

From the beginning, the relationship between Team Ellison and San Francisco was asymmetrical. City officials — particularly Newsom, still smarting over the San Francisco 49ers decamping south rather than acquiescing to his demands to erect a stadium atop a radioactive Superfund site — were tantalized by the vision of 15 or more yachting syndicates pumping $368 million into the local economy. The America's Cup impact report produced by Beacon Economics and the Bay Area Council Economic Institute foresaw a $1.4 billion boon, generating 8,840 "jobs," and catering to upwards of 2.6 million visitors.

With the benefit of hindsight, these numbers appear to have oozed out of a fever dream. Despite their increasing divergence from reality, they were, for years, dutifully regurgitated by San Francisco political leaders. Supervisor David Chiu printed them on his mayoral campaign fliers. Mayor Ed Lee, as recently as last year, was still saying he expected 500,000 visitors a day — 10 times more than actually showed up for key weekend races in lovely weather. Lee also dutifully disgorged the 8,840 jobs figure, despite the fact that more than a quarter of those jobs were to have been spawned by the 15 sailing syndicates — and either ignoring or not comprehending that the report measured "work" being generated, not the "jobs" required to do it.

So, that's what floated San Francisco's boat. Team Ellison, however, was fixated on San Francisco for other reasons. The bay's winds are comparatively predictable: "They turn on every day at noon," quips former America's Cup sailor Bob "Buddha" Billingham. Reliable wind is a must for the made-for-TV Cup. And, for the first televised, near-shore regatta, it was important the shore be telegenic. "The cameras love San Francisco," says international sailor and author Kimball Livingston. "There's no better place to film."

The city was merely required to serve as municipal arm candy and look pretty in the background — a task it filled most ably. In the foreground, meanwhile, amazing new boats were conceived to wow the TV viewer weaned on NASCAR collisions and skull-splitting NFL action. The AC72 catamarans developed for the made-for-TV Cup are as tall as a 13-story building and move at freeway speeds. Their imposing, futuristic appearance leaves one wondering if they'll transform into a robot; in a sense, they already have. The bionic vessels are larded with cameras, sensors, and high-tech gadgetry providing unprecedented access to the television viewer — or anyone who downloads the America's Cup iPad app. "They are stunning. I feel privileged to have experienced them," says Stan Honey, the technological wizard behind the glowing football first-down marker — who, backed with boatloads of Ellison dollars, devised the scintillating graphics transforming the billionaire's dream into televised reality. "Part of the story on TV is the spectacular look of these boats."

So, the made-for-TV AC72s made the made-for-TV Cup. But they unmade it as well.

The boats are, as Team Artemis can attest, mercurial and dangerous. Distraught crewmembers described them to The New Zealand Herald as "God-forsaken deathtraps."

These deathtraps don't come cheap: Artemis sank upwards of $100 million into the vessel it raced only a handful of times. As recently as three months ago, says sailing expert and consultant Norman Davant, Oracle design executive Dirk Kramers told him its boat could not rise up on its foils while traveling upwind. This month, it regularly foiled upwind at speeds exceeding 30 knots. Actually, the boats weren't designed to foil at all — yet the Kiwis figured out a way to do it, and everyone was forced to follow suit. Crucially, over the course of one September week, strategic and material tweaks Oracle made to its vessel in the finals transformed it from a hopeless also-ran to, far and away, the best boat on the bay.

The AC72s are the bumblebees of the nautical world; they seem to be sailing beyond their designed abilities. They are as mysterious as they are fast. Pouring more than $100 million into such an amorphous and volatile toy is not for everyone. In fact, it's for hardly anyone. A great and terrible boat with a price tag to match worked for Ellison. But it did not work for San Francisco.

The needs of the billionaire and the city diverged.

The city suffered.

The America's Cup is one of the least egalitarian sporting competitions on the planet. The winners choose the host venues and craft the rules to suit themselves, and wealthy syndicate-owners can, intuitively, buy better boats. The sums thrown around by Ellison and his billionaire cohorts are a shade greater than those expended in the past. The ceiling has been raised, just a bit. "But the floor has come up! They didn't anticipate the boats would be so crazy," explains Davant. "The boats have become so sophisticated, there's no way a small-time team can get involved via a $20 million campaign." So, the dozens of free-spending syndicates promised by the economic impact report and its acolytes saved their money and stayed home. So did their fans. Cup organizers' head counts put actual attendance at around one-third the predicted numbers.

If more modest boats had been designated for the Cup, "it would have been a smash hit," says Richard Spindler, the founder and publisher of sailing magazine Latitude 38. "You'd have had to chase entries away. Lack of participation and competition were problems one, two, and three."

Such boats wouldn't have crumbled on the bay in routine conditions. And they wouldn't have required the resultant strict wind limits, which nixed numerous America's Cup races. Three races were abandoned with New Zealand leading, and the delays drew out the event interminably — casting a shadow of farce upon one of sports' most astonishing comebacks. (Those delays did, however, aid the city's bottom-line by forcing yachting fans and media to stick around).

The enthralling racing between Oracle and New Zealand, then, was bittersweet. It was a reminder of what could have been.

The finals, by definition, feature only two boats. So, San Francisco forfeited the opportunity to truly profit from a viable event when a paltry three challengers showed up for the preliminary races: New Zealand, the doomed Swedish Artemis team, and the hapless Luna Rossa from Italy. Artemis' disaster and Luna Rossa's preening boycotts led to the surreal spectacle of boats forced to race against themselves, and its near equivalent: New Zealand winning by lopsided margins in torpid affairs marred by mechanical failures.

Speedy, massive, and menacing boats fed Ellison's dream of a high-octane televised extravaganza. Even as they starved the city.

Until their victory parade hit an epic pothole, Kiwis soaking in the America's Cup had been kicking San Francisco's ass with a smile — and the city was thanking them for it.

"It's weird, isn't it?" confesses a New Zealand government apparatchik. "[Americans] I meet here tell me 'we're winning.'" — aligning themselves with the Kiwi underdogs. At least for a while, perhaps everyone liked a plucky winner. It was obvious whom most folks didn't take a shine to.

Larry Ellison's ranking on lists of the world's richest men would be interchangeable with his spot on compendiums of the world's least-likable men. He loomed over this America's Cup like Darth Vader. Ellison defenders point to the incredible money and effort he poured into developing his beloved sport and creating spectacular TV coverage. A fair point. But Vader likely poured incredible money and effort into the Death Star.

People cheered when that blew up, too.

San Francisco is a company town; people argue about Apples or PCs here in the same way folks in other parts of the country draw lines regarding Chevy or Ford pickups. But it's asking a lot for locals to root for a corporation instead of a country — especially after an agonizing years-long organizational process was capped by Oracle being nailed in a cheating scandal in which sailors and crew members conspired to illegally modify boats in a 2012 regatta. In a sport where the winners already get to dictate the rules, Oracle had to go further.

So, the knee-jerk backlash against an oligarch — especially from the city's left-leaning establishment — was understandable. But it came off as more than a tad naïve: In a move no American lefty would endorse, the Kiwis directly subsidized their yachting team to the tune of 36 million New Zealand dollars ($30.1 million American). Considering the relative gross domestic products of the United States and New Zealand, a comparable federal handout to American yachting would be $3.4 billion.

For the New Zealand government, this was a massive bet on winning the Cup, spiriting it back to Auckland, and profiting handsomely through hosting the next regatta. That investment also provided the leverage to allow more than 180 Kiwi businesses to gallivant through San Francisco in a networking free-for-all ("a lotta Kiwi beer and a lotta Kiwi tech.").

Because the prohibitive expense of the AC72s scared off other syndicates, Kiwi government and business schmoozers didn't have to compete against their Australian, Korean, Chinese, or French counterparts. And, when showcasing "a lotta Kiwi tech," they were able to start with those amazing, telegenic boats. Three of the four crafts were largely or entirely constructed in New Zealand — Ellison owns one of the major New Zealand fabricators. (Left unsaid — but hardly unstated — was that the fourth boat, built entirely in Europe, collapsed in a lethal wreck.)

But, minus a Cup championship and Auckland regatta, all of these gains don't amount to 36 million New Zealand dollars worth of fun. Thanks to its heavy investment in Emirates Team New Zealand, choking away the Cup in the greatest of all sporting letdowns won't just break New Zealand's heart.

It'll also break its bank.

After the last Kiwi floats out of town on a river of Steinlager, the denouement for those left to deal with the aftermath of the America's Cup will be that it could have been so much worse. The thrilling on-the-water action obscured murky land deals and the tenuous city benefits of playing gracious host.

Early iterations of the deal pushed by Newsom involved ceding vast swaths of the central or northern waterfronts to Ellison-controlled entities at a nine-figure loss to the city. An examination of the fine print of a subsequent proposed $136 million pact indicated the city could have been reimbursing Ellison-controlled companies for development undertaken on land, ceded rent-free, into the 22nd century.

Now-Lt. Gov. Gavin Newsom did not return calls or e-mails. SF Weekly has learned, however, that even in casual settings among friends, he steadfastly insists the America's Cup has been an unbridled success.

Internal Port of San Francisco e-mails SF Weekly obtained last year revealed existential angst over the proposed Pier 27 cruise ship terminal, a project conjoined with the America's Cup. The terminal's hefty price tag prevented it from being constructed years ago — and, including state-imposed environmental mitigation costs, its budget doubled between 2009 and 2012. "Frankly, the cruise ship terminal isn't worth the risk," Port director Monique Moyer wrote to her staff in January of last year. "Sorry to be the 'Debbie Downer' on this, but I spent a sleepless night and I came to the conclusion that I can't be the one who does this to the Port."

Later that month, ground was broken on the terminal. Resembling a lecture hall on a mid-century Cal State campus, it is now complete. City officials portray this and other capital projects as a long-term benefit of the Cup. But, in May, Port officials admitted the terminal may yet lose the city $611,000 a year.

On the cusp of a February 2012 Board of Supervisors vote to greenlight that potential $136 million pact, Team Ellison abruptly pulled the plug on the contentious real-estate scheme. This came "out of the blue sky," per city officials, and was not negotiated; Cup organizers at the time were faced with nonexistent sponsorship income and the huge cost of developing groundbreaking TV technology — plus, actually paying a network to televise sailing, rather than vice-versa. Half of the America's Cup Event Authority's employees were subsequently liquidated.

Members of the Board of Supervisors now tell SF Weekly that vote was in doubt — they were wary of giving away land to Ellison. This is not how City Hall operators pushing the deal recall things: "That's bullshit," states one intimately involved player. "We had the votes."

So, but for the unilateral action of Team Ellison, the city would be in hock for up to 101 years in exchange for the uncertain returns from a few weeks of boat racing. As Cup backers portray the event as an overall success in the coming weeks — it generated a fraction of the promised money and jobs, but surely generated some — it's worth keeping this in mind. "It's great the city hosted something like this. But the totality of what it took to get this?" queries a San Francisco official with deep ties to the event. "It's breathtaking. It's so uneven. It's so disproportionate. All of that — delivered this."

Even the pared-down America's Cup has been a fiscal dirge. Private fundraisers tasked to "endeavor" to offset city costs struggled mightily convincing donors to underwrite Larry Ellison's boat race. The private America's Cup Organizing Committee claims to have amassed more than $16 million — but city costs figure to be millions higher than that. Visitor-generated taxes originally pitched as padding San Francisco's bottom line have been repurposed into offsetting paltry fundraising efforts.

That meager fundraising, meanwhile, led Mayor Ed Lee to step in and start asking for favors. He got them.

It's a dicey situation when private companies or individuals, perhaps with business before the city, can contribute unlimited amounts of cash to politically preferred causes. In June, a company called Kilroy Realty gave $500,000 at Lee's behest to the America's Cup Organizing Committee — a sum dwarfing other donations. In August, the Planning Commission approved Kilroy's request to alter its already-approved plans for a highrise at 350 Mission by adding six additional stories — vastly augmenting the value of the future structure.

Department officials and development-watchers claim a mid-process modification of this magnitude — and the expediency with which it was granted — are unprecedented.

Along Fisherman's Wharf, tour-boat operators wheedle passersby to hop on and behold the America's Cup finals. When asked how the regatta has treated them, their smiles evaporate. "Lousy," says one. "Just awful," adds another. "A fucking terrible experience," spits out a third. Nearby, the ubiquitous bushman plies his trade: scaring the bejesus out of tourists by shouting from behind the foliage he carries with him. In his estimation, "There ain't as many people here as there should be." But, on the plus side, Kiwis he's terrified "take it real good."

At the America's Cup village on Marina Green, bleacher tickets cost $70, $110, or $120. That expenditure makes even less sense than the $10.50 drafts of Peroni; you can wander in front of the bleachers — and get a better vantage point of the action — for free. Not surprisingly, the bleachers are largely devoid of humanity.

The sad truth is, as an in-person spectator sport, yachting makes a great televised sport. "I have never seen so few boats watching an America's Cup," penned sailing commenter Gary Jobson on Monday on "I spoke at a local yacht club here ... I asked why more boats were not out on the bay. Several people at my table said, 'It's better watching on television.'"

The AC72s' power and grace are mitigated by distance. From the shore they resemble two ungainly cartoon sharks tracing figure-eights on the water. Without a television or iPad handy, you can't even tell who's winning. "I've been to every America's Cup since 1980, and raced boats. I understand what I'm looking at," says Livingston. And, from the shore, "I can't tell you what's going on."

But it is, unabashedly, fantastic television. The high-definition cameras emphasize the velocity of the boats and constant motion of the sailors. The graphics — which require scads of military-grade GPS equipment, a NASA-like control room, and three helicopters hovering over the course — make sense of the morass. The boats creak and groan, emitting ominous noises reminiscent of Moby-Dick breaching the Pequod.

No surprise, then, that spectators at Marina Green gravitate to the massive TVs. This leads to the odd scenario of viewers glued to the screens, watching boats clearly visible behind them. Fans are so besotted with the televisions that, during a recent race, half a dozen of them managed to absent-mindedly wander into the same mud puddle while watching the coverage. This televised spectacle, which Ellison funded lavishly to develop and purchase airtime for, garnered about 1 million American viewers in the early going. As the races grew better, however, coverage shifted to more obscure channels, cutting viewership to between 100,000 and 250,000. Sans a yacht-enamored billionaire, none of these viewership totals justifies the massive costs currently required to televise regattas. So, barring far more advertising or far lower overhead, Ellison et al. will have to be satisfied that they have created the world's greatest infomercial.

Onboard the Kiwi hospitality boat, there is palpable desperation. The Kiwis pull ahead — though you'd never know without the in-house technician and an expert race commenter — and a cacophony of hoots and shouting ensue. Hands are wrung. Talismans are fondled. Beers are stockpiled. "Come on you boys!" shrieks a woman in an All-Blacks jersey.

New Zealand's lead dwindles. From 157 meters it's reduced to 60, then, 45, then a mere 28 meters. This comes even as the Kiwis blast upwind at a ludicrous 32 knots. The lead drops to 15 meters, and everyone starts drinking.

One day prior, in what may yet emerge as the hallmark image of this Cup, New Zealand's yacht nearly capsized, tottering awkwardly on one hull for a full 10 seconds before righting. On a catamaran, any hull angle past 45 degrees will likely ensure a wipeout. The technician aboard the hospitality boat says his equipment measured Team New Zealand's angle at 44.8 degrees.

That's how close the Kiwis came to wrecking their boat and pissing away the Cup right then and there. It's the little things that add up in the end.

The Kiwis will certainly be thinking about large numbers of little things for many years to come.

But not on this day. They pull out of a dead heat with Oracle and extend their lead to 100 meters. Then 190. Then 330.

And then they win.

There is jubilation on this vessel. A venture capitalist who, not long before, had been bragging about how "we've got the Chinese interested" in some big-shot deal dances a jig like a happy little boy.

Rougher seas were in store.

But not on this day. And, in order to foresee that, well, you'd have to be an oracle.

The Emirates Team New Zealand yacht cuts along the waterfront for a victory lap. It passes in front of the sun and, in silhouette, the city's skyline briefly appears to be graced with one more tower. But this tower moves on.

And, regardless of the victor, so may the America's Cup.

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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