Teams spend big money on America's Cup
But costs for 2017 series have been cut
Smaller boats called "a game-changer"
British entry has already raised $73 million
When advising an acquaintance who wanted to buy a yacht, American financier J.P. Morgan once famously said: “If you have to ask how much it costs, you can’t afford it.”
Morgan, one of the most powerful men at the turn of the last century, created the world’s first billion-dollar company with U.S. Steel. A sailing enthusiast, he co-owned the yacht Columbia, which successfully defended two America’s Cup challenges in 1899 and 1901.
“It’s the ability to take part,” sailing historian Bob Fisher said in a phone interview from Lymington on England’s south coast. “Money has been at the forefront of the America’s Cup since the days of J.P. Morgan and the Vanderbilts.”
Larry Ellison spent $115 million on Oracle Team USA’s successful 2013 America’s Cup title defense, according to the Wall Street Journal. That’s small change for the founder and chairman of software company Oracle, who is worth around $50 billion according to Forbes.
In this weekend’s Louis Vuitton America’s Cup World Series event staged on the waters off Manhattan, Ellison and his skipper/helmsman Jimmy Spithill, an Australian who has won the last two editions, will be up against five challengers from Sweden, New Zealand, France, Japan and a British team led by Olympic sailing legend Ben Ainslie.
The cost of competing in the world’s oldest continuous sporting event is so “extravagant” that only the very wealthy can afford it, says America’s Cup historian John Rousmaniere.
“The boats that were required in the original America’s Cup, and throughout its history, were so large that they cost a great deal of money to build, they needed professional crews and had to be shipped across the water,” Rousmaniere said by phone from New York.
In an attempt to make the sport more appealing to the public, the 2013 Cup was held in 72-foot catamarans capable of going close to 50 miles per hour. It made for spectacular sailing and television pictures, but the $100 million price tag for each of the teams meant there were only three challengers.
In 2014, Team Australia withdrew from taking part in the 2017 event. The late Bob Oatley, an Australian wine tycoon who had intended to compete via his Hamilton Island Yacht Club, told Australian media at the time a bid “just wasn’t financially viable.”
Last year, organizers decided to hold the 35th edition in much smaller boats to reduce costs and attract more challengers – though the decision led to Italian syndicate Luna Rossa pulling out.
Groupama Team France skipper Franck Cammas called the 45-foot catamarans “a game changer” on the America’s Cup website because a budget of up to €20 million ($23 million) would now be enough to win.
The richest owner of the five challengers is Masayoshi Son, the founder and largest shareholder of Japanese and investment group SoftBank. Son, whose Softbank Team Japan hired former Team New Zealand skipper Dean Barker last year to try to become the first winners from Japan, is worth $11.2 billion, according to Bloomberg.
Barker, the son of New Zealand clothing retail multimillionaire Ray Barker, is seeking a new challenge as team leader after two finals defeats.
Artemis Racing is bankrolled by Swedish billionaire Torbjorn Tornqvist. Nicknamed “the quiet man” of the America’s Cup for his understated management style, Tornqvist made his $1.8 billion fortune as co-founder of commodity trader Gunvor Group, according to Forbes.
Tragedy struck the team in 2013, when two-time Olympic sailing medalist Andrew Simpson died in a training accident in San Francisco Bay.
Simpson’s friend Ainslie, meanwhile, put together the Land Rover BAR team after playing a key role in Oracle’s 2013 comeback when he was brought in as the team tactician at the last minute. His aim now is bring the Cup to Britain for the first time.
Ainslie, the most successful sailor in Olympic history with four gold medals, has raised £50 million ($73 million) from various sponsors, including British car brand Land Rover and online trader CMC Markets. He’s targeting £80 million ($116 million).
Although the first America’s Cup in 1851 was staged on the Isle of White on England’s south coast and watched by Queen Victoria, Britain has never won it.
However, Ainslie – who also has financial backing from the modern-day J.P. Morgan – is expected to be in close contention.
“He’s a superb sailor who can sail anything and win it,” says Rousmaniere, who is also the author of numerous sailing books.
Having led the 2013 final 8-1, Emirates Team New Zealand suffered a painful loss when Oracle Team USA fought back to retain the Cup by winning 9-8. The team and its chief executive, Grant Dalton, were heavily criticized for the defeat back home with some journalists calling it one of the greatest chokes in sports history.
More controversy followed last year, when Barker heard he was being replaced through the media.
The Kiwi team, which won the Cup in 1995 and 2000, has been backed by its main sponsor – Dubai-based airline Emirates – since 2004, while it also receives government funding.
Just like Britain, Sweden and Japan, France has never won the America’s Cup. The team is supported by the French government, while last year it signed a €5 million sponsorship deal with French insurance group Groupama – which has backed Cammas’ sailing projects since 1998.
While it’s costly to take part, it’s even more expensive to host the America’s Cup, Fisher says.
After the multi-city World Cup series, which started in 2015, the challengers will head to Bermuda next year to take part in the Louis Vuitton Cup – whose winner will take on Oracle for the ultimate prize.
Bermuda, a small British overseas territory located east of South Carolina, is spending $77 million on hosting next year’s Cup. This includes a $15 million sponsorship fee, $25 million on infrastructure improvements and new facilities and $12 million in event operating costs. Bermuda also had to underwrite a $25 million guarantee against commercial sponsorship.
In return, the island’s economic benefit may be as high as $250 million, the America’s Cup Bermuda (ACBDA) estimated.
“Hosting the America’s Cup will create a short-term boost to the economy and at the same time have a long-tail impact through increased exposure and awareness of our tourism product,” ACBDA chief executive Michael Winfield said in an email.
Can Oracle retain the Cup? Tell us on our Facebook page
CNN’s Sailing Success show goes behind the scenes in America’s Cup racing