The America's Cup rip-off

Multibillionaire Larry Ellison captured the 33rd America's Cup -- but what's in it for SF if he brings the next race back home?

EDITORIAL Gigantic international sporting events tend to be great fun for the people who attend. They make great promotional videos for the host city. They can generate big revenue and profits for some private businesses.

But when the party's over and the bills come due, these extravaganzas aren't always a boon to the municipal treasury. And at a time when San Francisco can't afford to pay for teachers and nurses and recreation directors, the supervisors ought to be giving much greater scrutiny to the deal that could bring the America's Cup yacht races to the bay.

In 2009, as the city of Chicago was preparing an unsuccessful bid for the 2016 Olympics, the Chicago Tribune took a look at what the 1996 games had meant to another U.S. city, Atlanta. The Trib's conclusion: lots of private outfits and big institutions did well — the Atlanta Braves got a new baseball stadium and the Georgia Institute of Techology got a new swimming and diving center — but the city itself didn't get much money at all.

That's exactly the way the deal that Mayor Gavin Newsom negotiated with Larry Ellison, the multibillionaire database mogul and yachtsman, is shaping up. A shadowy new corporation controlled by Ellison would get control of more than 30 acres of prime waterfront land worth hundreds of millions of dollars. The city could lose $42 million, and possibly as much as $128 million.

We don't dispute the huge economic impact of holding an event that could attract more than 1 million visitors to the Bay Area. Those people will spend money in bars, restaurants, shops, and hotels. The waterfront improvements and increased tourism will create, according to economic reports, 8,840 jobs.

But as the Board of Supervisors budget analyst points out, those are not permanent, full-time jobs; much of the increased employment needs would be met by increased productivity (bartenders and waiters handling more customers than usual), overtime, and temporary jobs. And again: Most of the benefits will go to the private businesses in the tourist industry. The city's increased tax revenue won't be nearly enough to cover the expenses. Even if the America's Cup group raises $32 million -- and that's not guaranteed in the deal — the city would still be down $10 million.

So in effect, San Francisco is preparing to spend $42 million of taxpayer money (and to forego as much as $86 million more by giving away waterfront land that could be developed) to benefit the sixth-richest person in the world, a new company he's going to create and control, and the tourist-related businesses in town.

Oh, and to make it even juicier: the city is promising to seek state approval for Ellison to build condos or a hotel on the waterfront — something nobody else can legally do.

This doesn't strike us as a terribly good deal.

It looks worse when you consider how the negotiations proceeded: The mayor and other city officials insisted they were scrambling to give Ellison everything he wanted to make sure that San Francisco beat out two other competitors. But as Rebecca Bowe reports on page 12, there were no other formal bids; Ellison's team, based at the Golden Gate Yacht Club, was only negotiating with one city, San Francisco.

There are alternative proposals. The Telegraph Hill Dwellers Association wants to see the race complex moved from the Central Waterfront to the Northern Waterfront, and there may be ways of saving money. And Sup. Ross Mirkarimi points out that if Ellison wins the races in 2013 and comes back again the next time around, San Francisco could become what Newport, R.I., once was: a repeat host to an event that will bring more and more benefits as time goes on. That, however, involves a number of risks and variables that are far from certain at this point.


How do you propose to fix the piers slowly crumbling into the Bay? Got a better pla?

If so then please propose a better solution, while trying to write something intelligent.

Posted by Guest on Nov. 30, 2010 @ 8:15 pm

How about letting the piers rot and having a warm waterfront for people to enjoy, putting the "Beach" back in "South Beach?"

Oh, yeah, nobody would get stinking rich off of that, but hundreds of thousands would benefit, so government is not about to let that happen.


Posted by marcos on Dec. 02, 2010 @ 5:41 pm

the expectation of the AACC is based un the last event. 11 teams ! here the possibility of more than 4 is utopy. This means a challenger series of 2 weeks with 3teams?
It is not the long term event of last time with 10 challengers.
few teams will be there for one year not 4 as last time. so it is not comparable with the event before. the big lie of the cup!!

Posted by Guest jens on Dec. 01, 2010 @ 10:59 pm

I don't go to SF anymore. No happy meal toys. Just the latest in your nanny city laws. Next you won't be able to buy a dog?
SF has a horrible image around the world.
America's Cup would give a chance to show the world what you have. Then people like me might return.

Posted by Guest on Dec. 02, 2010 @ 6:30 am

and if it does... you can 1. stop hollering at my home town via its airport code, and 2. retract your tentacles back to the happy meal land you came from cuz neither sf nor the city of roses needs more forces of homogenization-corporation in them. there's cool stuff going on besides mega event culture and fake meat, guesty. and for the love of pete, get your dog from a shelter.

Posted by caitlin on Dec. 02, 2010 @ 7:38 pm

Give Ellison the entire waterfront. Maybe then he can stop it from rotting into the bay. "Progressives" have stalled renewal of the waterfront for years, threatening endless lawsuits to "save" the waterfront. From what?

The waterfront is a disaster. There was a great proposal to develop a recreation complex on the piers but that, of course, was torpedoed.

Until SF voters rid themselves of "progressive" obstructionists, the decay will continue.

Posted by Scott on Dec. 02, 2010 @ 11:42 am

I always love talking to my wife about these things. She's pretty liberal, but not involved in the minutiae of local politics, so she always has an outside-the-box way of thinking about political issues. When I read her this column, she asked a very interesting question:
"If Larry Ellison is wants to bring this yacht race to San Francisco because he likes yacht racing, then why is the city paying him to do it?"

Um... yeah. Great question. This is basically Larry Ellison's hobby. It's something that he wants to do anyway, because it's fun for him. Why should the city pay for a rich guy's hobby?

But see, that's the difference between the way progressives think, and the way conservative tools of the business elite think.

If I were mayor, and Larry Ellison came to me and said, "I want to bring the America's Cup to San Francisco," I would say, "Great! How much are you willing to pay us to cover our city's costs in police overtime, traffic, litter and cleanup?"

On the other hand, when he came to Mayor Newsom and said "I want to bring the America's Cup to San Francisco," Mayor Newsom said, "Great! How much do you want from the city treasury to help you do it?"

My wife said that Newsom probably added "and how much will you pay me?" But of course it's not that simple. We're no banana republic. Here in America, corruption has been elevated to an art form. No money is exchanged up front, but Newsom knows that as he climbs higher and seeks more power, he will now have another wealthy backer. Help Big Biz, and in return they help you accumulate power through campaign contributions when you run for higher office. And if you lose, there's a nice plush job making millions for coming to a few meetings a year, sitting on some corporate board somewhere, in return for your service.

When someone like Ed Jew does it wrong, they go to jail. That's small stuff, and soooo old school. But do it the Newsom way, play the corporate corruption game by the rules, and you're rewarded with a lifetime of wealth and power and respect.

That's the way the game is played in America... all for the rich and screw the rest of us. Anything good and low-cost that brings joy for hundreds of thousands of people, like B2B, Halloween in the Castro, and Love Parade -they kill it. But some rich guy wants the city to indulge him in his hobby -sure! No Problem!

Posted by Greg on Dec. 02, 2010 @ 12:50 pm

It should be called Rich Americans Cup... let them pay for it and leave the poor people of San Francisco alone. Token donations to the poor won't change the karma of those robbing our city for their own gain.

Posted by Guest on Dec. 05, 2010 @ 8:24 am

For a minute there I thought it was an article about Santa Clara and the Niners. Why is it that billionaires who have a staff of millionaires need so much help from government to play their games?

Posted by Guest on Dec. 08, 2010 @ 4:22 pm

Also from this author

  • Arguments against minimum wage increase are out of touch

  • Housing ballot measures would weaken city policy

    With market-rate housing construction booming, Kim abandons effort to balance it with more affordability 

  • Appealing to San Francisco values