America’s Cup: In Pursuit of a 21st Century Sports Business

Published on March 11th, 2014

by Craig Leweck, Scuttlebutt
It’s not often when Larry Ellison discusses the America’s Cup. But when he does, he goes big, and this week he went huge as he laid out his vision for the 35th America’s Cup.

Considering the enormity of his statements, one could think he is still tinkering with the plan. Given the Protocol is due to be released this month, he could be near final. And that would be something.

The primary flaw of the 34th America’s Cup was the plan was too big for the time frame. There were sports professionals hired, but the troubled pursuit of the plan led to turnover, which then led to plan revisions. It was quite distracting, and it was hard for the event to gain support when the flow of manure was steady.

Thankfully, three things saved the 34th America’s Cup. The boats foiled, which made them fascinating. The teams learned how to maintain speed through the maneuvers, which allowed for legitimate match racing. And the comeback by Oracle Team USA gave us the storybook ending.

My hope for the 35th America’s Cup was incremental improvements. Small tweaks here and there to allow the event to live on its performance rather than bear the weight of its promises.

Apparently, Larry isn’t the kind of guy to make small refinements.

Larry and Co. are determined to commercialize the event. They want to generate revenues through sponsorship and media sales, and their plans appear to be a significant change of America’s Cup history.

“A lot needs to change,” Ellison explained. “We want to keep the best of the past and combine it with modern technology. We want to create a 21st century sports business that will support sailing professionals and their families. Businesses that don’t make money are not sustainable. Sports that don’t make money are just hobbies for rich guys.”

This plan has some interesting implications. A challenger may be eliminated a year in advance, following the AC45 elimination series in 2015-16, having never got to sail the AC60 (or whatever it will be) in 2017 that they should already be working on.

Will Oracle Team USA be racing in, and arguably impacting the results of, the AC45 challenger elimination series?

A challenger’s budget could be modest if they were to be eliminated, having only competed in AC45s for two years, but must be significantly greater to compete for an extra year and have the additional costs associated with the bigger boat.

For the challenger seeking sponsors, what can they promise? Before they could only promise to remain active through the initial challenger series and not the challenger finals, and certainly not the America’s Cup finals. Now the challenger might be gone a year in advance?

Once the rules are released, how long a time period will the teams have to enter? Even if the rules are released this month, the venue plan is apparently still months away. Do you enter not knowing where the racing will occur? Do you organize the 2015 global AC45 circuit without knowing the players?

And then there’s Larry’s longstanding dream of holding the America’s Cup in Hawaii. Pretty wild stuff.

“That’s the plan anyway,” Ellison said. “We have a lot of work to do. We have to make deals with all the cities where we want to hold races. It’s not going to be easy to pull this off.”

You could say that again…

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