How the Tail Wagged the Dog

As Defender of the America’s Cup, Oracle Team USA had a strong vision for the event. So strong, in fact that their Challenger of Record, the mechanism in the Deed of Gift to insure mutually satisfactory event conditions, quit for both the 2013 and 2017 editions.

More so, for Oracle to fulfill their vision, the team reached past one of the very basic tenets of the Deed of Gift to take full control of the America’s Cup. The tail was wagging the dog. Bruce Munro reports on how this occurred.

Oracle Team USA, the media, and most of the commentators have all referred to Oracle as the Defender of the Cup. Oracle has never been the Defender, although most people do not know that. Until very recently, the Defender has been the Golden Gate Yacht Club and now it is the Royal New Zealand Yacht Squadron.

Oracle has been the team sponsored by the GGYC, but not the Defender. Oracle and its leader, Larry Ellison, have completely marginalized the role of the defending yacht club ever since they won the Cup the first time. In all the media coverage, Oracle PR and pundit commentary, have you ever heard mention of the real Defender, the GGYC? If there has been any, I missed it.

The America’s Cup Deed of Gift expressly states that this shall be a competition between nations and yacht clubs.

Much has been written about how the nationality clause has been completely ignored to the point of the Defender not even sailing the last match in the waters of the country it supposedly represents. But few, if any, have focused on the lack of any mention of the defending yacht club. To me, this is as much of a disregard for the Deed of Gift as the lack of any nationality requirement for the teams.

None of this comes as a surprise to me. When Larry Ellison first decided to challenge for the America’s Cup in 2000, he told the St. Francis Yacht Club (where he had been a member for several years) that he wanted to sail under its burgee. I was then the Commodore of the club and had direct discussions with Larry and his chief lieutenant at the time, Bill Erkelens.

At first it looked like we could make a deal as we were told that Larry would do the challenge along much the same terms we had made with our 2000 challenger, AmericaOne. Under that agreement, responsibilities were shared between the yacht club and the team. We told them we would do the same deal with Oracle and at first they said yes.

We pursued that deal with them, but something happened on the way to the altar. We did not hear from them for several months and then in December 2000, they came back to us with a deal that was completely different from what we had been talking about.

Under this new deal from Oracle, Larry Ellison would call all the shots and the yacht club would have no say in anything related to the America’s Cup. To insure this result, Larry would put his people on our board of directors. Larry is a firm believer in the Golden Rule — he who has the gold rules.

We tried to negotiate some role for the yacht club and remove the part about putting his people on the board, which was impossible for us to accept. It was a no-go. It was Larry’s way or the highway. We chose the highway. Although we were sorry at the time that we could not make a deal, subsequent events have validated our decision.

After striking out with us, Larry went shopping, contacting several clubs before finding his mark a few hundred yards from StFYC – the Golden Gate Yacht Club.

GGYC was on the verge of bankruptcy at the time and Larry offered a financial rescue in return for the terms of a deal to his liking. The GGYC board was happy to oblige as they were in serious need of funding. They made that deal and Larry put his money where his mouth was. He rescued the club and even refurbished it to a level it had never seen before.

While this deal could never fly at the StFYC, it was a godsend to GGYC. But, it came at a price. The yacht club had no say in any America’s Cup decisions and when Larry wanted to move the event from San Francisco to Bermuda, the club had no power to stop him. They had made their deal and now they had to live with it.

So now, Larry is no longer in charge. It will be up to the recent winner of the 35th America’s Cup, the RNZYS and its winning team Emirates Team New Zealand, to right the America’s Cup ship. I wish them the best of luck in doing so.