Capitalizing on the Auld Mug - Page 2

Lawsuit alleges America's Cup organizers unfairly rejected African American sailing team and breached trustee duties by self-dealing

This scenic sailing image graces the cover of the America's Cup Environmental Impact Report

"We can really create inspired minds," Kithcart said, enthusiastically describing field trips through church youth groups or Boys & Girls Clubs that would educate kids about the history of black mariners and offer the empowering experience of learning to helm a ship. "Our future is the youth." Moreover, a yacht-building team would be a job-creation engine in tough economic times, he asserted.

The once-debt-plagued GGYC — which rocketed to sailing stardom after billionaire Oracle CEO Larry Ellison joined up, installed his crew members on the board, and clinched the 33rd America's Cup with his Team Oracle Racing off the coast of Valencia, Spain in 2010 — has approved competitors from France, Spain, Italy, New Zealand, Sweden, China, and Korea for the 34th America's Cup. The main event, a one-on-one match following all preliminary rounds, is to be held in San Francisco in the summer of 2013.

The foreign teams are known as challengers, but ADM applied to sail as a defender candidate — a U.S. team that would race against Team Oracle in a Defender Series in a bid to represent the U.S. in the 34th America's Cup.

Under the race protocol drafted by the winners of the 33rd America's Cup and an Italian team that has since withdrawn as the challenger of record, GGYC stated that it would consider applications from defender candidates. However, it would only accept "those it is satisfied have the necessary resources ... and experience to have a reasonable chance of winning the America's Cup Defender Series."

Had GGYC accepted ADM's application to compete, Kithcart's African American led team would have sailed against Ellison's Team Oracle crew — a spectacle Kithcart imagines would make fine fodder for national television broadcasts. He remains optimistic that it can happen. "We're definitely going to get into the America's Cup," he told the Guardian in a recent telephone conversation.

That same confidence is conveyed in ADM's lawsuit. "Indeed, ADM's application showed that its proposed team quite obviously could beat Team Oracle Racing," the complaint claims, "and certainly stood a 'reasonable chance' of doing so."

The lawsuit alleges that GGYC ignored Kithcart's repeated requests to be considered for entry into the competition almost until the deadline last spring, then rejected ADM on an arbitrary and unequal basis compared with its treatment of other competitors.

Three other teams that were accepted as competitors — including Club Nautico di Roma, the challenger of record — have since withdrawn, citing financial problems. The suit suggests these economically troubled teams were accepted as competitors without question even while ADM was rejected, and charges that GGYC made no attempt to determine the status of ADM's team or fundraising plan.

What it all adds up to, according to ADM's claim, is breach of contract and a failure to deal in good faith as a trustee. Nor is ADM shy about making demands. The lawsuit asks the court to compel GGYC to accept ADM's application, reschedule all the planned races in order to hold a Defender Series, cancel the development rights afforded to the Event Authority, and pay ADM in excess of $1 million to compensate for the delay in building its yacht.



John Rousmaniere, an America's Cup historian who has authored several books about the sailing competition, regarded ADM's case with skepticism. He seemed doubtful that GGYC could be forced to accept an application from a U.S. team.

"Golden Gate could invite other U.S. yacht clubs to compete for the right to defend, but it has chosen not to do that. Instead, it's developing its own boat and crew. This is their right under the Deed of Gift," he said. "The Deed of Gift is very clear — there is no obligation for another American boat to sail."