The America's Cup could prove far less lucrative for its San Francisco-based organizers than initially expected.
The organizers, who are mulling a San Francisco host-city bid that's worth $116 million less than they demanded, recently slashed entry fees for yachting teams by more than 90 percent.
The event is controlled by Larry Ellison’s BMW Oracle Racing team, which won the Cup in February. The team plans to announce the main venue by the end of this month for the event, which will be raced with catamarans over multiple years until mid-2013.
The team is based in San Francisco, which is considered the lead contender to host the event.
But last weekend the team announced it was resuming negotiations with other prospective hosts after it became clear that San Francisco’s bid would be far less generous than originally anticipated, with $12 million in public expenses supported by lawmakers of the cash-strapped city instead of the $128 million originally negotiated.
As race organizers face the prospect that economic conditions and sailing’s limited popularity mean they may not be able to demand as much land and other public handouts from a host city as they had anticipated, they are also substantially reducing entry fees for sailing teams.
The entry fee for teams that want to participate in the heavily commercialized event was cut from $1.3 million to $100,000, organizers installed by Ellison's team announced this week.
Bonds that teams must submit to ensure that they follow through on their commitment to race were dropped from $3 million to $1 million per team.
Teams were also provided with a three-month extension on the time that they may take to build their first catamaran that complies with race rules. That extension is not expected to affect planned race dates at the main venue.
The announcements followed workshops held with prospective and registered competitors. They took the yachting world by surprise and are seen as an effort to lure more teams to take part in the event.
Unlike traditional America’s Cup events that featured as few as two competing teams, the next event is planned as a multi-team affair, featuring 10 or more international crews in an effort to maximize worldwide television audiences and sponsorship opportunities.
So far, three teams have registered as challengers in addition to an Italian Challenger of Record and Ellison’s defender team. That means five teams have committed to taking part. Yachting sources say three more teams are on the verge of entering.
Some teams have already said they will not participate in the event, including Swiss team Alinghi, arguinig that the experience Ellison's team has racing catamarans - rather than traditional yachts - provides them with an insurmountable advantage in the planned catamaran regatta.
Some teams, such as Team New Zealand, are reportedly waiting for a host city announcement before deciding whether they will compete. Team New Zealand has stated that it hopes San Francisco will be selected as the host city.
Regatta Director Iain Murray said the decision to reduce entry fees will help teams overcome cost-related obstacles and was made largely because the event aims to pay back more money in dividends to the competitors than it collects from them in fees.
“It didn’t make a whole lot of sense for the money to be coming in as income and going out as dividend,” Murray said Friday.
Teams can register to enter the event until the end of March.