A
new era of America’s Cup racing (14/09/03) (source
: Forbes)
For most of its history,
the America's Cup has been anything but a profit center.
Snooty traditionalists banned most forms of advertising
until 1988.
Since then a variety of sponsors have poured millions
of dollars into the event only to walk away, frustrated
by disorganization, erratic television coverage and
the constant threat that the boat they back won't
even survive.
This time it will be different. As a sponsorship vehicle,
Cup racing already has big advantages over many sports:
Companies can use the boats as floating billboards--technology
and teamwork are the main messages--but they can also
take customers and employees out for spins.
The prestige and drama of the event make for good
television, especially with new digital aids that
help viewers understand what the sailors are doing.
When the next Cup match is held, races will be no
more than two hours long, the better to appeal to
attention-challenged television viewers. The venue
will be a European city chosen for steady winds so
TV coverage can be promoted without fear of canceled
races. On shore, tourists will be drawn to a yachting
center styled after an Olympic Village, with sponsors
and the host government paying most of the bills.
Most important, all the details, from television contracts
to license fees for America's Cup logo T shirts, will
be handled by AC Management, a company Bertarelli
formed to manage the Cup.
The man overseeing this sea change is Michel Bonnefous,
a school chum of Bertarelli's who still climbs mountains
with the billionaire and skims across Lake Geneva
on his powerful 12-meter catamaran.
Bertarelli assigned Bonnefous to study a complete
overhaul of the America's Cup last year--long before
anybody knew Team Alinghi would emerge as the winner.
Bertarelli has also rammed through sweeping rules
changes designed to make it easier for teams to buy
boats, recruit crews and sell sponsorships to finance
campaigns that can cost $100 million or more.
"There have been enough changes to produce massive,
positive results," says Russell Coutts. "The returns
are getting better for sponsors."
The key difference this time is an unprecedented agreement
between Bertarelli, chief executive of Serono S.A.,
the Geneva-based biotechnology company, and fellow
billionaire Larry Ellison, whose Team Oracle is the
so-called Challenger of Record.
Since either man can write a check for the $100 million
or so it can take to float an America's Cup campaign,
neither of them has to run the event to fund their
own program.
The result, ironically, will be more money for everybody.
With AC Management handling the sale of combined TV
rights this time--and the live television audience
much bigger than in remote New Zealand--the price
could double the $10 million the race has garnered
in the past. Promoting the event will be easier with
shorter races and fewer weather delays.
And by moving the event to Europe and playing host
cities off against one another, Bertarelli and Bonnefous
have virtually guaranteed that the syndicates will
have fancier digs for entertaining sponsors and more
chances to raise money for their campaigns.
"New Zealand is a wonderful place, but it's 4 million
people and it's 12 hours away from any major market,"
says Nicholas Masson, the former head of global marketing
and sales at RJ Reynolds International who is marketing
Team Alinghi to sponsors. "Now 320 million people
will be within a two-and-a-half-hour flight. It's
a massive opportunity."
Organizers plan to stoke audience and sponsor interest
with a series of races in the off-years, starting
in September 2004.
Bertarelli and Ellison also agreed to liberalize the
rules to make it easier for challengers to get into
the game. They threw out restrictions on crew-member
nationalities and a rule that prohibited campaigns
from selling engineering and performance data along
with their old hulls. All this reduces the advantage
Ellison and Bertarelli have over the challengers,
but the billionaires want to encourage their friends
to come out and play.
Sponsors so far seem happy with the changes. Alinghi
is negotiating to renew its sponsorship agreements,
which expire in December, including the one with UBS,
estimated to be in the tens of millions of dollars.
BMW appears committed to staying with Oracle, which
projects the same sort of high-tech, high-competitiveness
image of the affluent males who buy its cars.
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