America's Cup Economic Development Disaster Forecasted in April 2011
1969-12-31 Released

By Lynn Fitzpatrick

Sent to Tom Ehman on 4/07/11. Originally placed on this site in February 2013.

The only team that registered on time and appropriately to challenge Oracle Racing Team in defending the America's Cup against the winner of the Louis Vuitton Cup in the 34th America's Cup was African Diaspora Maritime. I paid the registration fee for African Diaspora Maritime. Neither the America's Cup Event Authority nor Golden Gate Yacht Club ever mentioned the team in any of the announcements made leading up to or immediately following the registration deadline for the America's Cup, instead, they did everything in their power to eliminate African Diaspora Maritime. While the letter below is long, it should give the reader enough of a grounding in America's Cup history and economic development to understand Golden Gate Yacht Club's motivations for not having any interference in reaching the America's Cup finals.

It is a shame that the City of San Francisco, San Francisco Bay, California and the United States have not benefited from the amount of economic development suggested in the Beacon economic impact evaluation that has been used to support the exaction of concessions from various government agencies and to pass legislation to the benefit of the event. If you get a chance, you should read the report, which suggests that one of the biggest variables to the America's Cup generating economic benefits is the number of defender aspirants. Other documentation, which many will find boring and laden with legalese, but are pertinent, include: the 34th America's Cup Host and Venue Agreement and the documents on the New York State Supreme Court website under the case African Diaspora Maritime v. Golden Gate Yacht Club including Charles Kithcart's affidavit. Kithcart is ADM Sailing's Executive Director.

Please become more active and vigilant citizens and read and respond to the recent media.

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Sent to Tom Ehman on April 7, 2011

Gentlemen:

Need I remind you that the federal government has begun advanced preparations for a possible shutdown as Democrats and Republicans continue negotiating over a spending package to fund the government after midnight Friday? Roughly 800,000 federal employees would be furloughed, out of a total federal non-military work force of about 2 million, and services across the executive branch would stall at the end of Friday.

Governor Jerry Brown has already signed $11.2 billion in spending cuts, mostly to social services, which leave the State of California with a $15.4 billion budget deficit. Governor Brown is hoping to win a vote in the Legislature to ask Californians whether they want to extend increases to the sales, personal income and vehicle taxes to help close the rest of the state budget deficit. Another measure proposed by Governor Brown is to abolish more than 400 local redevelopment agencies, which have traditionally been involved in cleaning up urban blight such as that seen in parts of San Francisco, bankrupt Oakland and the closed Alameda Naval Air Station.

The Allianz Economic Impact Report into the America’s Cup states, “analysis of the scale and economic impact of the America’s Cup suggests that it is the third largest international, competitive sporting event after the Olympics and the FIFA World Cup. The America’s Cup is “the largest inter-club sporting competition in the world in terms of economic scale and impact. The report indicates that the direct and indirect impacts of the 2003 America’s Cup were $1.5 and $6.5bn, respectively for a total of $8bn.

The immediate direct effect in Valencia would include any expenditure by the competing teams locally, investments by ACM locally, costs incurred by their families and friends, and all the sponsors, media companies and tourists who attend the series of events that make up the America’s Cup. Altogether, these have been variously estimated at “1,960 million Euros (or $2,670 m) in the four years that the competition lasts”. “Of this $2.6bn, around $1.25 bn is directly linked to the combined Louis Vuitton Cup and the America’s Cup Regattas during April, May and June 2007.”

“The syndicates typically involved 200-300 individuals – if families are included. In 2003 this led to an estimated investment by the Syndicates of around $200m in the run up to the Cup itself.” The report goes on to explain that some of the “difference in scale (among the 10 biggest sporting events in terms of direct and indirect impacts) is explained by the technological foundations of the America’s Cup; especially the investments by Syndicates in yacht design, hull construction, sails, rigging, information technologies, materials, GPS and other navigation related technologies.”

As the report points out, on the one hand – “Remember there is no prize money, only everlasting fame, sailing glory, national pride and notoriety are the rewards. On the other, the biggest economic reward in world sport, the ability not only to host the next tournament, but to write many of the rules for the competition.”

Clearly some of the rules for the competition have yet to be written, including the Defense Protocol. It is clear from reading through the AC34 Host and Venue Agreement dated December 14, 2010, that thought has been given to not holding a Defense Selection Series. See Recitals, Section D on Page 1 of the Agreement, “D. The City wishes to host AC34, including certain of the America’s Cup World Series Pre-regattas, the America’s Cup Challenger Series, the America’s Cup Defender Series (if held) and the Match.” See Section 3.1 (iv) describing the Event, “the America’s Cup Defender Series, if GGYC elects to hold one…”

Section H of the Recitals describes how the “City through its Port, will enter into Venue Leases (or licenses in certain instances) with the Authority for those facilities the Authority requires to stage the Event in the City (each, a “Venue”), as identified in the final Event Plan, and the term of each Venue Lease will continue for a specified period after the end of the Event, provided that the Authority may extend that term if the GGYC is successful in its defense of the America’s Cup (my emphasis); (2) after expiration of the Venue Leases, in consideration of the Authority’s investment in infrastructure required for the Event, the Authority will have commensurate long term development rights as provided in this Agreement under Disposition and Development Agreements (the “DDAs”), which will provide for the execution and delivery Legacy Leases and a Transfer Agreement on the satisfaction of certain conditions; (3) the execution of the Venue Lease (and Licenses), delivery of possession of the sites subject to those leases and licenses, and the execution of DDAs, would all occur simultaneously, promptly following the completion of environmental review for the Event under the CEQA...”

Not having a Defender Selection Series increases the probability that the current Defender will prevail and will receive the reward of the transfer of the Legacy Leases to some of San Francisco’s best waterfront parcels.

History has proven that Defense Aspirants stand a high probability of being eliminated during the Defender Selection Series and that the Defender from the last America’s Cup is likely to go on to race in the America’s Cup finals. That said, at least three teams expressed interest in becoming Defense Aspirants. All were dissuaded in various ways from registering as Defense Aspirants, including African Diaspora Maritime, which is currently being vetted by you.

Team Adventure realized that to have a legitimate Defender Selection Series it would be necessary to iron out the Protocol for the Defense. All Defense Aspirants realized that Section 8.3 of the Protocol in which “GGYC will review Defender Candidate applications and will accept those it is satisfied have the necessary resources (including but not limited to financial, human, and technological) and experience to have a reasonable chance of winning the America’s Cup Defender Series,” is very arbitrary. Despite that the principals of Team Adventure still tried to raise the private monies necessary to initiate a campaign for the defense.

Argo Challenge went from being a team that was hardly given lip service at a competitors’ forum in Dubai in November 2010 to producing more media than all of the other America’s Cup entities combined and filing as a non-profit corporation with a mission under IRS Chapter 501(c) (3). At some point, Argo Challenge will be able to take donations on line. The non profit corporation touches not only the 54 million Americans who are disabled in one way or another, it touches a global population that is far greater than the global sailing community. According to the Sailing Anarchy article of April 5, 2011, Argo Challenge “presented the ACEA and ACRM with a proposal, where upon the Argo Challenge would actively participate with the ACEA as a partner, not as a challenger.” Whether coached or not, Argo Challenge did not file as a Defense Aspirant.

Charles Kithcart, who had been involved in a previous attempt to register a black team to a previous America’s Cup, took a different tact. Rather than be public about the team’s efforts, African Diaspora Challenge worked with the economic development officials of the State of North Carolina and others, to line up support. On March 31, 2011, Charles Kithcart complied with and satisfied the terms of Schedule Two – Application of Defense (Article 9) of the Protocol.

Of course, I assisted Charles Kithcart. As an independent, I have volunteered to assist every Defense Aspirant. It is what any passionate American sailor with a background in economic development and waterfront redevelopment and a history of being the press officer and journalist for many of the world’s most renowned regattas would do. It is in the economic interest of San Francisco, San Francisco Bay, California, the United States and the World for a Defender Selection Series to take place, especially if that series includes teams with a cause that touch populations that are much greater than the worldwide sailing population. Any of these teams could have permanent bases on San Francisco Bay, elsewhere in California or in another state. All of these teams will engage the maritime community throughout the United States during this economic recession. All of them will help to lower the budget deficits of various municipalities and governments. All of these teams should be in the 34th America’s Cup that is being held on US soil and waters. I guaranty that these teams will have personalities and individuals on them that will make them the media darlings of the America’s Cup. They have more skin in the game than other professional sailing teams from other countries. They also have a large, multi-faceted and in at least two out of the three cases, international cheering squad.

New York Yacht Club member John Stevens built a boat to prove that American sailing and design skills were second to none and won the 100 Guineas Cup regatta in 1851. The United States held on to the America's Cup for 132 consecutive years. It is outrageous to think that the oldest international sporting competition would have no other American teams registered other than the Defender, which has laid off staff.

My $25,000 contribution to African Diaspora Maritime can stay with the team for as long as Charles Kithcart needs it.

Frankly, I can not believe that you requested that I send a letter to you indicating what I do with my money. If it takes $25,000 to persuade you to do the right thing, persuade the State to investigate this, persuade everyone to consider the flawed proposed format for the 34th America’s Cup and to re-evaluate the value of sporting events given the world’s current social, economic and political environments, I believe I have made a worthwhile investment.

Regards,


Lynn Fitzpatrick
Cc:
Governor Jerry Brown
Jack Brewer
Joe Eskenazi
Charles Kithcart
Cam Lewis
John Shirey
Tavis Smiley
Antonio Spinelli
Scot Tempsta
John Upton
Dan Walters
Oprah Winfrey

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