art • cuLture • sPorts
YOU HAVE TO SPEND MONEY to make money, right? At least,
according to Roman playwright Plautus and every blow-hard entrepreneur that came after him. That’s why the One Bermuda Alliance fought
so hard to secure Bermuda as host for the 35th America’s Cup, the most
prestigious sporting event in the world of sailing. Our bid promised a
minimum investment of $52 million between now and 2017, a promise
predicated on the idea that injections of such magnitude on the input
will generate even greater economic impact on the output. Spend
money, make money. Right?
The answer is complicated, and it appears many Bermudians may not
be buying what Plautus is selling. A poll by Profiles of Bermuda found
little confidence that the event would benefit everyone, though that
sentiment has varied in subsequent polls asking similar questions. But for
many, playing host to the 162-year-old regatta is seen as little more than a
vanity-fuelled boondoggle, another unprofitable sporting event that will
be of little benefit to the majority, and of great benefit to the few.
While it’s easy to dismiss that lack of confidence as a product of
ignorance, there appears to be good reason for such cynicism. Events
of such magnitude are rarely, if ever, profitable for the host city, and in
recent years the America’s Cup has done little to distance itself from that
precedent. Despite hosting the event back-to-back in 2007 and 2010, the
America’s Cup in Valencia, Spain, generated just $1.7 billion in revenue
against $4.3 billion of costs, for a total loss of $2.6 billion. The 2013
America’s Cup in San Francisco—one of the most dramatic events in
sporting history, let alone the America’s Cup—wound up costing the city
$11.5 million in total, according to a 2014 economic impact report.
In that context, trepidation over hosting the event would appear to
be well founded. So why should Bermudians believe that the money
spent hosting the America’s Cup can be recouped?
For starters, San Francisco’s loss just might be Bermuda’s gain. Among
the traditions that make the America’s Cup such a unique event is that
the reigning champions get to choose the rules and venue for their title
defence. After Team Oracle USA won the trophy in 2010, Oracle boss,
and the world’s fifth-richest man, Larry Ellison, set an astounding goal for
the event in 2013: to make the America’s Cup financially viable.
In pursuing that goal though, Ellison may have set the bar higher
than others could reach. The cost of developing a 72-foot foiling
catamaran proved too much for the 15 teams poised to compete in
the event, leaving just three to duke it out for the win. That meant
San Francisco lost out on a great deal of the economic activity, as did
lucrative sponsors like Louis Vuitton, which was counting on six teams
or more competing. Compounding the pitfalls for San Francisco was
the organisers’ ability to deal with the city itself. Environmental groups
wasted no time filling lawsuits, while only half of the $32 million in donations that San Francisco thought would be needed to cover its direct
costs for putting on the race was raised. Needless to say, Ellison’s bid to
make the America’s Cup financially viable has been far from smooth
sailing—which is perhaps why Bermuda was such an attractive choice
for his title defence in 2017.
The idea behind having huge foiling catamarans was that it would up
the “wow factor” for a sport that has historically made for bad television, but also allow for stadium-like seating. Compared to the J-Class
THE LANDLUBBER’S GUIDE to the America’s Cup:
Betting on Bermuda
Can Bermuda’s investment in hosting the america’s Cup be recovered as a direct
result of staging the event? The answer is more complicated than you might think.
by w. c. stevenson