Dramatic change in the America's Cup deal


Mayor Ed Lee has announced dramatic changes in the deal for the America's Cup race, essentially eliminating the massive real-estate development contract with Oracle CEO Larry Ellison.

Under the new agreement, the city will work with Ellison to host the race -- but that's about the beginning and the end of it.

"There is no long-term development," Stepahnie Martin, spokesperson for the America's Cup Event Authority, told me.

The previous deal, set for a Board of Supervisors vote Feb. 28, has been scrapped, so there won't be any board action tomorrow, Judson True, an aide to Board President David Chiu, told me.

That deal would have given the world's sixth richest person a swath of valuable waterfront property, with 66-year leases and development agreements, in exchange for Ellison investing millions in renovating the aging piers.

But criticism over what some called a huge giveway of public land was diverting discussion of the yacht race and threatened to undermine the city's ability to serve as the venue host. Some supervisors were demanding more guarantees that the city wouldn't lose money on the deal, and Ellison's team was unwilling to budge.

In a Feb. 27 press release, Lee announced that the teams will be building a race village at Piers 27-29 and consolidating the boat launching facilities at Pier 80, on the southern waterfront. The race village will be temporary, and when the yachts leave, Ellison won't have title to that property.

He won't have title or development rights at Pier 80, either, and the plan to let him build on Piers 30-32, 26 and 28 as well as a lot across the Embarcadero appears to be dead.

So the America's Cup is moving back to what it should be -- a sporting event, a race on the Bay, and not some bloated development agreement that involves leases lasting more than half a century.

It's still not clear how this happened -- except that the numbers clearly weren't working out for either side. The scaled-back agreement prevents the city from losing a fortune if the race doesn't draw the anticipated crowds, and protects Ellison from losing money on waterfront development plans that regulators (including the Bay Conservation and Development Commission) might never have approved.

The city will still pay the ACEA about $16 million to fix a few things necessary to make the race work, and it's not clear where that money will come from,

Aaron Peskin, a leading critic of the old deal, told me he's cautiously optimistic. "It sounds promising, we're getting this event down to the proper size," Peskin said.

But he said that he hasn't seen a written agreement "so it's hard to tell what is and isn't still in the deal."

No mattter what the final agreement looks like, it's clear that Ellison's control of the future of the central waterfront has been radically reduced. And it's clear that the deal former Mayor Gavin Newsom cut with Ellison wasn't going to work for the city.

It also showed something that I've seen over and over again in these city deals with private parties: If the public refuses to go along, most of the time the Larry Ellisons of the world -- the same people who insist they won't move an inch and that the deal can't be changed -- will eventually back down.




Maybe they're gonna take up my Mulberry Harbor proposal.

Posted by Patrick Monk. RN on Feb. 27, 2012 @ 6:02 pm

And, if it ever gets redeveloped at all, it will be on the public dime, involving more debt, taxes and mediocrity.

So yes, a world class event will happen in a city that looks less and less like a world class city.

Posted by Anonymous on Feb. 27, 2012 @ 6:04 pm

Maybe you and Larry Ellison can afford a world class city.

Me, I'd just like the buses to run on time.

Posted by Orlando Chavez on Feb. 27, 2012 @ 11:09 pm

better than the private sector creating anything worthwhile in this town, right?

Posted by Anonymous on Feb. 27, 2012 @ 7:39 pm

Most of us don't work in construction. Try again.

Posted by Proggy Boy on Feb. 27, 2012 @ 11:08 pm

Who cares about jobs? Daddy Peskin tells me what to print and I obey!

Posted by Greg on Feb. 27, 2012 @ 9:45 pm

Who cares about SF? Daddy Ellison tells me what to print and I obey!

Posted by Troll on Feb. 27, 2012 @ 11:32 pm

Aaron Peskin: mensch.

Posted by Christopher McNeil on Feb. 27, 2012 @ 10:12 pm

What is this "we're" shit? He's not involved - he the chairman of the DCCC, not the mayor or a city official.

Posted by Guest on Feb. 27, 2012 @ 10:13 pm

Since his was the name behind the lawsuit which led to this news item, I think he's sufficiently involved in the process to merit the first person plural. Don't you?

Posted by Mod Man on Feb. 27, 2012 @ 11:11 pm

I didn't vote for the guy, but I have to say that he's demonstrating some capacity for acting independently. First the Olague appointment, now this... I'm sure he'll do some things that infuriate me along the way, but he's already turning out to be somewhat better than the bad old days of Brown-Newsom. Let's hope the trend continues.

Posted by Greg on Feb. 27, 2012 @ 10:52 pm

Peskin threatened a lawsuit and the Supes could do math.

Independence had nothing to do with it.

Posted by leanna on Feb. 27, 2012 @ 11:34 pm
Posted by Guest on Feb. 27, 2012 @ 11:54 pm

I heard Ellison was the one who backed out, actually. Caught us by surprise; we were about to go ahead with it.

Posted by Guest on Feb. 28, 2012 @ 12:08 am

He is not getting the racing team support or the donor support, much less city support.

Posted by Guest on Feb. 28, 2012 @ 7:32 am

I haven't been following this too closely. If Peskin's lawsuit was the primary cause of this good news, then major kudos to him. Still, I think if it were Gavin or Willie, they wouldn't have compromised that easy. I'm not saying that Ed's a progressive now, or that I've suddenly become a big fan. But I do sense at least a small change in the way this mayor responds to criticism and popular pressure.

Posted by Greg on Feb. 28, 2012 @ 1:15 am

I like the unobstructed views across the bay and would like to be on hand to watch the piers crumble into the bay when they do.

Posted by marcos on Feb. 28, 2012 @ 9:32 am

Who is this idiot Stephen Barclay? He was obviously whistling in the wind, and, in the end, despite all his posturing did not have the backing of Mr. Ellison. How soon until he is gone from the San Francisco America's Cup scene? Not soon enough! Larry, get out your big broom and clean house.

Posted by Guest on Feb. 28, 2012 @ 11:00 am

Who is this idiot Stephen Barclay? He was obviously whistling in the wind, and, in the end, despite all his posturing did not have the backing of Mr. Ellison. How soon until he is gone from the San Francisco America's Cup scene? Not soon enough! Larry, get out your big broom and clean house.

Posted by Guest on Feb. 28, 2012 @ 11:02 am

I'm with you marcos. Anyway, whatever construction jobs there were wouldn't likely have gone to anyone local. A huge job like rebuilding the piers would go to a huge contractor who would mostly import in their own crews. That's what I've seen around UC Med Ctr at Mission Bay, not to mention all the loft condos going in in Dogpatch.

Posted by Guest pete moss on Feb. 28, 2012 @ 11:10 am

Agreed. I floated the idea of local construction of Mulberry Harbors. If they were good enough for the liberation of Europe they're good enough for Ellison's little pissing in the wind match.

Posted by Patrick Monk. RN on Feb. 28, 2012 @ 11:28 am

How about putting the "beach" into "South Beach?" Imagine a San Francisco bayside beach that was sunny and warm most of the time?

Posted by marcos on Feb. 28, 2012 @ 11:46 am

The comment above that says the deal was mostly nixed by the Ellison team sounds the most reasonable based on earlier comments from the Port, mayor, and key BOS members who were trying hard to sell the 66 year land give away. The proposed deal was perfect SF irony - the Supes say they care about "the youth" of the city, and then turn around and attempt to sell their land off to a private developer/landlord for 66 years. Unbelievable.

It's appalling any government body can lease away the public's property for more than maybe 10 or 20 years. Almost always the government can do their own self-financing deals and get much more financial benefit for future generations. How many tens or hundreds of millions have been sucked out of the city by the Pier 39 "owners" that could have just as easily been self-developed by the city, providing millions of rent revenue and gross receipts fees to the city for decades? How many other millions are being lost because the port doesn't use its extensive billion dollar land value resources like a sharp businessperson, but instead is a patsy and shill for multi-millionaire, politically connected developers?

I'm glad Aaron Peskin is out there trying to do battle against the mayor, supervisors Kim and Chiu, and Port development czars Moyer and Bensen, none of whom I feel uses their extensive bargaining or political powers over land-use decisions for the good of the community rather than what's best for developers. The current city leadership - including the key executives who manage the $4 billion a year Port and Airport fiefdoms - is an extremely well-crafted Willie Brown team. It not only fields a daily all-star line-up, but has hundreds of bench players with extensive knowledge on how private developers and subsequent landlords can extract $10, 20 or even $50 million from city land-use decisions.

Let's not forget that the port land is California land first and foremost. After watching one big land scheme after another, this seems like a perfect time to excise large parts of port property from the quasi-private SF Port Authority and return it back to the people as open space like it was first found. It's silly to think the piers will ever be used to import products, which then have to get re-shipped over narrow bridges to get to customers. And there is plenty of current port piers that are more than adequate to handle all of the coffee, cocaine, condoms and dildos the city could ever use, so no problems there either.

If all the port can offer is high-priced work space, high-priced condos, and high-priced restaurants and retail shops, then for the vast majority of Californians the land and water is much better used as open space, which is the scarcest and most valuable land use possible for this breath-taking real estate. Some land is so valuable the government should not be putting price tags on it and renting it out for 60 years like they're pimping a cheap - or even pricey - (sex-worker). It's not theirs to sell to the highest paying john.

I agree with some of Willie Brown's recent comments about the current state of progressives on the BOS. Let's hope Peskin and his cohorts continue to grow and that other groups coalesce around building alternative teams to counter the passivity and ineffectiveness of the current "progressive" leadership inside city hall. Politically it sure feels more like 1995-1998 than post-2000. Effective, consistent and non-vitrolic outside pressure may be the only reasonable method progressives have to get anything positive accomplished, other than trying to win "The No Game" with Supervisiors Weiner and Farrell.


Posted by Guest on Feb. 28, 2012 @ 1:23 pm

Watching San Francisco become the city that doesn't know how, yes we have a beautiful bay, but it seems that most people just want to stand and admire while walking their dog, or from their home. When i lived in Australia, we had yachts, sail craft both large and small, we had gyms, pools, we had homes, apt towers and small studiums right next to Port Phillip Bay. Crusies ships would come in and we would stand in line to see these ships. We tried to get America's cup from New Zealand, it didn't happen, the state of Victoria and the cities around Melbourne and the itself was quite supportive, yes we had NIMBYism but all was worked out.

Posted by garrett on Mar. 07, 2012 @ 11:50 am

everything. If someone thinks of an idea, there is always someone who will claim it is politically incorrect, or oppose it out of envy or pettiness.

Only in SF can whining be a paid full-time job.

Posted by Guest on Mar. 07, 2012 @ 12:10 pm