Last Round: America’s Cup Challenge turns into a Boxing Match

This article has been written by Nicolas Stiel, who is a senior reporter for several french magazines, including Challenges. The source article in french is available here. .COM echoes this article with the kind authorization of Nicolas Stiel. (Translated by Yuu Nakamichi)

The 33rd edition of the trophy is scheduled for February 8th in Valencia, Spain. All punches are allowed in the battle between Ernesto Bertarelli and Larry Ellison, the two tycoons embroiled in a bitter legal dispute.
Ernesto Bertarelli and Larry Ellison, Switzerland’s richest and America’s third-richest men respectively, have a combined net worth of 35 billion dollars between them – roughly the size of Tunisia’s GDP. This week, they are out on the water in Valencia, Spain, each with their own yacht. On Monday February 8th, they plan to go into battle on the water with boats made of carbon fibre, true technological marvels that cost tens of millions of dollars to build: a maxi-catamaran for Bertarelli, head of the Alinghi syndicate; and a trimaran for Ellison and his team BMW Oracle. After months and months of training, the helmsmen, navigators, tacticians, and sail trimmers are pumped up and ready for the race. The Swiss trained on Lake Geneva, in Genoa and in the United Arab Emirates, the Americans at the team base in San Diego. There will be no more than three match races at Valencia, after which one of the billionaires will lift up the trophy of the oldest challenge in international sport: the “Auld Mug“, a slightly out-dated silver cup measuring 78cm in height.

Bertarelli and Ellison have been battling each other repeatedly and unsuccessfully in different settings and venues for over two and a half years. Both sides were unable to agree on a common protocol and the two camps are embroiled in numerous legal challenges. On January 13, lawyers for Larry Ellison filed a new motion in court. The subject? – Verify that team Alinghi’s sails comply with the ‘constructed in country’ requirement of the Deed of Gift. That is to say, the sails must be built in the team’s country of origin, Switzerland. This was followed by cries of outrage from the Swiss who maintained that their sails were constructed in Villeneuve, near Montreux. And to top it off, they retorted that Oracle’s catamaran was inspired by a French design…
Will the Cup take place, as planned, from February 8? In principle, yes – but surprises are to be expected. There are doubts regarding the weather; Alinghi has already declared that the races should be called off if the winds exceed 15 knots. But this winter, there were few days on which these conditions were met. Even more problematically, it is not inconceivable that Oracle will continue its fight in the courtroom should Alinghi win. “If Larry Ellison wins in the courts, I’ll bring the champagne and tell him ‘well done Larry‘”, a sarcastic Bertarelli told a news conference.

A History of Excess

The America’s Cup has a long history of clashes both inside and outside the courtroom and is notorious for its excesses. But the battle between Alinghi and Oracle smashes all records, with a budget of more than 200 million dollars, with almost 44 million pocketed by the lawyers. The two billionaires did not skimp on resources: Alinghi’s catamaran was transported by helicopter across the Alps; the trimaran was fitted with a rigid wing two times the size of the wing of a Boeing 747 airplane; unmanned seaplanes, capable of measuring wind speeds at different altitudes, were used. Larry Ellison, the 65-year-old founder of the software company Oracle, is not a stranger to success. Ellison, abandoned as a child and an admirer of Japanese culture, has won dozens of offshore powerboat and sailboat races, including the equally famous and treacherous Sydney to Hobart Yacht Race. An unbridled success story? Almost. The most prestigious trophy in the sport of sailing has escaped him so far, even though he has spent as much as 100 million dollars during each of the last two attempts – in vain. In both cases, it was Ernesto who hoisted the silver trophy.

The Swiss, an excellent sailor, succeeded at his first attempt. Age 44, born in Rome and by all accounts a highly disciplined man, Bertarelli represents everything that Ellison abhors. His family moved to Switzerland during the 1970s for fear of the Red Brigades and the Italian tax authorities. He was content to grow Serono, the bio-technology company founded by his grandfather, before selling it to Merck for 10 billion euros. Bertarelli, a spoiled child, is also a determined man who knows how to surround himself with the right people. During his effort to win the Auld Mug in 2003, he poached half of Team New Zealand, the defending champion. For the tycoons, the 160-year-old Cup is a childhood dream -it allows them to acquire a a piece of soul, a fragment of eternity.

An American Bastion

It all began in 1851. The trophy was originally known as the R.Y.S. £100 Cup and took place in Cowes on the Isle of Wight. It was open to British boats only. At the time, Britain ruled the sea. But world was changing during the second half of the 19th Century, and other nations began to emerge. Queen Victoria opened the competition to foreigners. A group of investors from the New York Yacht Club took up the challenge. The match took place on August 22, 1851. Seeing the schooner emerge from the mist, the Queen asked her aides: “Who won? – America. – Who came second? – Your majesty, there is no second.” For the next 131 years, until the victory of the yacht Australia II, the Cup remained in American hands. The Yacht Club formed syndicates financed by the likes of John Pierpont Morgan, John D. Rockefeller and Harold Vanderbilt. They fought back challenges by Sir Thomas Lipton, who for over thirty years tried to avenge the British Crown. Many other unsuccessful attempts followed, for example by the Italian Raul Gardini, the head the Feruzzi group, and even Français Marcel Bich, the boss of the Bic company. But when Ernesto Bertarelli carried away the trophy in Auckland in 2003, it was a big deal.

After 152 years, the silver trophy returned to Europe – and the winner hailed from a country that doesn’t have access to the sea! According to the foundational document of the challenge, the Deed of Gift, the current holder of the cup is tasked with the organization of the next challenge. In 2004, Bertarelli persuaded the Spanish government to invest 1 billion euros into new infrastructure projects in Valencia. He then created a number of mini-regattas modelled on the Formula 1 Grand Prix and held over the course of three days. The yachtsmen, conservative by nature, did not appreciate these changes. While they didn’t mind the economic benefits, they denounced the transformation of a venerable institution into a cash machine.

After Alinghi’s second win, the situation turned more serious. The syndicates believed that Bertarelli was pushing his advantage too far. “He changes the rules of the game when it suits him“, charged Russell Coutts, a former Alinghi team member who is now with the BMW Oracle team. “It’s as if during a football match, one team decides that they can now play with their hands.” On the internet, the sailing aficionados were fuming, castigating Bertarelli as a symbol of an arrogant Switzerland in line with the bankers at UBS. “I want him to feel the heat!“, wrote Bruno Troublé, the former organizer of the Louis Vuitton Cup. To understand these animosities, one must return to the source of the misunderstanding. Valencia, July 3 2007: For the second time in a row, Alinghi won the America’s Cup against Team New Zealand. Bertarelli had barely found the time to drink a glass of champagne, hoist the Auld Mug and hug his beautiful wife Kirsty when he designated his challenger for the next edition of the Cup. Why the rush? Because the Deed of Gift states that once the competition ends, any syndicate can come to challenge the victor, also known as “the defender”. In 1988, the American Dennis Conner, a legendary winner of the Cup with four victories under his belt, was slow to designate an opponent and was challenged by an obscure banker from New Zealand.

A New Format

Bertarelli did not repeat the mistake and chose the Club Nautico Español de Vela (CNEV), a previously unknown entity. “It’s a fake Club – it doesn’t have any members“, alleged Bruno Troublé. Ellison attacked immediately. The boss of Oracle saw an opportunity to settle accounts with the Swiss and perhaps also to triumph without a fight. In November of 2007, the New York Supreme Court found in his favour, and Oracle became the challenger of record. At that moment, the Cup changed its format. Since 1983, the Louis Vuitton Cup was used as the selection series for the America’s Cup challenge; it took place between a dozen syndicates over the course of three months. The winner of the Vuitton Cup was then awarded the right to challenge the defender of the America’s Cup. Due to irreconcilable differences between Alinghi and Oracle, the competition was reduced to a one-on-one Deed of Gift match between the defender and the designated challenger, with no other teams or clubs participating. “We went from 100 people to 10“, says Keith Mills, president of Great Britain’s Team Origin.

Ghost Town

Some teams threw in the towel: Team Germany, South Africa’s Shosholoza, a Greek syndicate, a Swedish syndicate. Meanwhile, the monohulls that had served in the previous Cup gathered dust in warehouses. With no timetable or a clear plan for the 33rd and 34th editions of the Cup, it was hard to mount a challenge, a project that needs a lot of capital. “Since 2007, Valencia has turned into a ghost town“, says Stéphane Kandler, boss of the Franco-German team All4One. But Bertarelli and Ellison, mired in their battle of egos, made fun of each other from their yachts. Meanwhile, the sponsors fled. Louis Vuitton, not wanting to ruin twenty-five years of investment, decided to host a parallel competition, the Louis Vuitton World Series.

The teams blame the two billionaires for the fiasco, contending that Bertarelli took liberties with the rules and regulations of the competition. They equally denounce Ellison’s fanaticism, which had the effect of delaying the start of the 33rd Cup, let alone the 34th edition, in which many of the excluded teams hope to return. The world of sailing sinks, but the party goes on. Like kids on a playground, Ernesto and Larry trade mishaps and remedies.

Before the controversy over the nationality of the sails, there was the dispute over the venue of the regatta. On 4 August 2009, Alinghi announced that the race would be held in Ras al-Khaimah, UAE. Why there? Because, say the Swiss, “the weather and sailing conditions are exceptional.” The calm weather conditions in the area favour their catamaran, which is much lighter than Oracle’s trimaran. For Ellison, it was too much. Oracle replied that the Swiss were once again violating the Deed of Gift which states that if the Cup was held between November 1 and May 1, it must take place in the Southern Hemisphere, with Valencia Spain as the previously agreed and only exception to the rule.

Oracle’s CEO appointed David Boies, a high-profile lawyer at the New York Bar, who proceeded to unfold a map of the United Arab Emirates in front of Justice Shirley Konreich: Iran, he proposed, was a mere 100km from Ras al-Khaima. Barry Ostrager, as counsel for Alinghi, retorted that a terrorist attack was more likely in Spain. Similar rhetoric came from the lawyer for the emirate, who contended that Dubai hosts world-class sporting events all the time without security concerns. Justice Konreich found in favour of Oracle – the Cup was to be held in Valencia. The teams of Alinghi and Oracle prepared for the voyage. The yachts were dismantled and prepared for transport. His Highness Sheikh Saud Bin Saqr al-Qasimi had lost the Cup. The crown prince of Ras al-Khaima invested 120 million dollars to host the Cup – in vain.

Monster Boats

The size of the boats – some 27m long by 27m wide, the largest dimensions allowed by the Deed of Gift – also led to a confrontation. The Americans decided upon their improbable measurements in order to push the Swiss to the negotiating table. “We wanted to put pressure on them“, admits Joseph Ozanne, a member of Larry Ellison’s team. But the Swiss called their bluff and both teams built monster vessels almost as delirious as the Spruce Goose, Howard Hughes’ gigantic seaplane. These yachts defy imagination. They are capable of running at speeds of up to 40 knots (70 kilometres per hour).

For safety reasons, some sailors are wearing security helmets. The Swiss catamaran, with its engine-powered hydraulics for moving the sails, looks like a giant dragonfly. Its width is that of two tennis courts side-by-side. The 60-metre wing of Oracle’s trimaran weighs 3.5 tonnes and takes 3 hours and two cranes to mount it on the boat. After the end of the regatta, these monsters will go back into storage – they are too fragile to participate in another competition, and the next America’s Cup is expected to use monohulls yachts once again. But first there will be a spectacle on the water. According to experts, it is an open match due to the variable weather conditions in Valencia. But regardless of what happens next, the squabbles and excesses of Ernesto Bertarelli and Larry Ellison have nourished the myth of the race even if the sporting interest has been diminished in the process.

The Pacific Spirit

“The competition will regain its former status“, predicts Sir Keith Mills of Team Origin. “Once the tension subsides, the time has come to reform the Cup“, adds Alain Gautier, helmsman for Alinghi, at his side. “The venerable American needs a facelift.” One should return to the source and revive the original spirit of the contest. The Deed of Gift stipulates that it should be organized “by mutual consent” between two teams – “to promote friendly competition among nations.”
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Unfriendly yours

• Ernesto Bertarelli (Swiss)
  • born 22 September 1965 in Rome. President of the yachting syndicate Alinghi, which represents the yacht club Société nautique de Genève. Net worth according to Forbes magazine: 8.2 billion dollars.
  • Previous America’s Cup record:
    • 2003 – winner against Team New Zealand
    • 2007 – winner against Team New Zealand
  • Alinghi 5, a 27m-wide carbon composite catamaran, was built in Villeneuve near Montreux, Switzerland in approx. 100.000 man-hours.
• Larry Ellison (American)
  • born 17 August 1944 in New York. Owner of the BMW-Oracle team on behalf of the Golden Gate Yacht Club in San Francisco, California. Net worth according to Forbes magazine: 27 billion dollars. BMW-Oracle work force: 200. Budget: over 100 million dollars.
  • Previous America’s Cup record:
    • 2003 – finalist of the Louis Vuitton Cup, lost to Alinghi
    • 2007 – semi-finalist, lost to Luna Rossa
  • The BOR90, a 27m carbon composite trimaran was developed by a French firm in Anacortes Washington in 130.000 man-hours.

Nicolas Stiel – Senior Reporter for Challenges magazine.

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