Energy Team and Oracle Team USA competed in the America's Cup World Series August 24, 2012 in San Francisco (photo: Beck Diefenbach)
The Bay Area Council Economic Institute projected in 2010 that America’s Cup would increase economic activity in San Francisco by $1.37 billion, around three times the impact of hosting the Super Bowl, and net the city’s General Fund around $13 million.
The institute celebrated falling vastly short of those projections in a self-congratulatory press release about the “substantial” economic activity generated by the world’s most prestigious racing event.
The 34th America’s Cup created only $364 million of activity, but the institute added in another $186 million in anticipation of completion of a new cruise ship terminal, which was put on a fast track by the Cup. Around 2,900 jobs were created, 3,800 if you count the cruise ship terminal. That’s a bit short of the 8,000 jobs predicted and its hard to say if any of them lasted beyond the summer. One embittered anonymous blogger wrote:
“The 3,800 ‘jobs’ referred to are in fact . . . merely job-years, so, in fact, all the ‘jobs’ ‘created’ are now gone and some of the ‘jobs’ ‘created’ paid less than minimum wage, and some of the workers still haven’t been paid as agreed, and lots of workers came up from SoCal since billionaire Larry Ellison was too cheap to pay Bay Area workers.”
A San Francisco Chronicle review of draft financial figures found that instead of taxpayers making $13 million, they lost at least $5.5 million. The city spent $20.7 million to put on the event, but only recouped $8.65 million from private fundraising. Adding in a $6.6 million increase in tax receipts during the three-month event still leaves the city short $5.5 million of the estimated $32 million costs.
The institute also celebrated the “breathtaking comeback of Oracle Team USA,” but failed to mention the comeback from being down 8-1 was partially necessitated by an early 2-point penalty assessed Ellison’s team for cheating. The event, which includes a series of races staged to select a challenger for the defending titlist in the best-of-19 races championship.
For months leading up to the race, debate raged about the design of the so-called yachts. The previous America’s Cup winner gets to pick the design of the boats and Ellison opted for a radical new catamaran approach that increased speeds dramatically. One British yachtsman, Andrew “Bart” Simpson, died during training in May when his Artemis Racing boat capsized.
Fourteen international sailing teams were initially expected to compete in the race, but that number dwindled to three. The depressed world economy and a switch from sloops to catamarans caused several candidates to drop out. While that reduced expected expenses, it has also reduced the amount of money raised from corporate sponsors.
San Francisco Supervisor John Avalos is not a fan of America’s Cup and called it a “fiasco” in February when it became apparent that the America’s Cup Organizing Committee was going to come up way short of its fundraising goals. On Tuesday, he told the Chronicle, “A $5.5 million deficit, all for a yacht race for billionaires. The whole event has been nothing more than a stupefying spectacle of how this city works for the top 1 percent on everyone else's dime.”
The deadline for signing up to bid on the next America’s Cup is December 22. Ellison said he is interested in bring the Cup back to San Francisco, and city officials have expressed an interest in having him. On Monday, Oracle Team USA captain Russell Coutts told USA Today that San Francisco is the clear frontrunner.