America’s Cup yacht race officials have successfully navigated complex city approvals in recent months, but financial wrangling over the details of the regatta could take the wind out of their sails.
What once appeared to be a lovefest over the planned series of events is now entering a phase of touchy negotiation.
Later this month, the Board of Supervisors will hammer out terms for lucrative Bayside development rights to be obtained by race officials in exchange for pier improvements. Supervisors will also influence who gets hired for the development projects and consider drifting estimates of how many spectators — and even contestants — will actually attend the race.
Board President David Chiu has asked the Controller’s Office to examine whether the nonprofit America’s Cup Organizing Committee is on track to raise The City’s $32 million portion of the event’s $300 million cost. As of Wednesday, city officials expected race organizers to have lined up $12 million, with $20 million more due to be raised over the next two years.
Committee Executive Director Kyri McClellan said the group has “commitments” for the full $12 million, but not necessarily cash in hand. Technically, that would allow The City to terminate its agreement with the America’s Cup. Although that appears unlikely, the blown deadline could give The City leverage in negotiations over the details.
Adding to the race unknowns, only three challengers have confirmed they’ll be chasing Bay Area billionaire Larry Ellison’s Oracle Racing team to claim the championship. Five more teams have expressed interest in building and racing one of the 72-foot catamarans that will be featured in the September 2013 finals in San Francisco, although time is running short for them to commit.
Stephanie Martin, a spokeswoman for the America’s Cup, said worries about lax participation are overblown.
“Entry fees are not due until June,” Martin said. “Five other teams are in the planning and construction process, and it’s premature to think that they won’t complete that.”
All nine teams are expected to participate in World Series events this spring in Italy involving 45-foot boats like the ones coming to San Francisco this summer. Those vessels generally cost less than the 72-foot versions planned for the 2013 finals. Martin said some of those teams could still be awaiting the go-ahead from their funders to build the bigger vessels.
Iain Murray — America’s Cup regatta director — was quoted this week by New Zealand media as saying the race format might have to be scaled back to accommodate fewer teams. But Martin said the only changes would involve more and shorter races to accommodate a television broadcast. She said rights for the race have been sold to a major broadcast network, but she declined to say which one and at what cost.
CORRECTION: The Feb. 2 story “America’s Cup hits choppy patch” stated that the America’s Cup Event Authority owes The City $12 million to cover its costs for the yacht race. But the 2010 Host and Venue Agreement between the authority and The City states only that the group is required to “endeavor to meet its fundraising target of $12 million.” Authority officials say they have received commitments for the full $12 million but do not yet have all that cash in hand.
4 Teams currently signed up for 2013 race finals in San Francisco
9 Teams participating in preamble
World Series events
$300M Total estimated cost
$32M Costs to San Francisco
$12M Currently owed to The City by race fundraisers
$1.4B Estimated economic activity
8,000 Jobs generated by the event and associated infrastructure improvements
Source: America’s Cup Event Authority
Pressure is mounting for organizers of the America’s Cup yacht race to guarantee jobs to local residents for the waterfront construction projects needed for the event.
With thousands of jobs accompanying planned projects such as the America’s Cup Village at Piers 30-32, advocates of San Francisco’s 2011 local hiring law want its mandates to apply to the event’s work.
The law requires at least 20 percent of the work on city-contracted jobs to go to local residents. Although the law may not apply to the America’s Cup Event Authority, race organizers have agreed to a goal of at least 20 percent.
But during Wednesday’s Budget and Finance Committee hearing, labor leaders, community advocates and Supervisor John Avalos, the law’s author, said mandates, not good faith, are needed.
“There are many ways that local dollars are going into the America’s Cup event,” Avalos said.
Discussions will continue in the coming weeks, with a focus on near-term infrastructure projects and an eye toward similar mandates for post-race development. Such provisions could be included in the development agreement between The City and the authority.
— Joshua Sabatini