America's Cup Closing In On Lucrative Sponsorship Deals
The America's Cup has seen more than its fair share of rough waters in its quest to bring the world's most prestigious yacht race to the San Francisco Bay.
The event's organizers have been hit with a number of embarrassing, high-profile setbacks such as a potentially lucrative land deal with the Port of San Francisco being significantly scaled back after a series of acrimonious negotiations, a lawsuit filed by a local political heavyweight aimed at stopping the event completely and far fewer teams registering for the race than was initially anticipated.
But now, it looks like everything may be coming up Ellison as talk has emerged that the event is on the verge of landing a number of major sponsorship deals.
The Cup is close to finalizing sponsorship deals with an auto maker, investment firm and medical/insurance company in coming weeks--the kind of deals that have so far been slow to materialize.
These sponsorship deals are crucial to the event's ultimate success because the city effectively loaned the America's Cup Organizing Committee $32 million to cover essential services like an environmental impact report, police to provide increased security during the event and seriously hopped-up public transportation to move the massive influx of spectators around the city. The group was supposed to go out and raise enough money in donations to cover all of the city's expenses; however, its haul seemed about to come up short when the first deadline hit in February.
The world "effectively" is important here because, while the agreement between San Francisco and the Organizing Committee says that the latter group has to "endeavor to meet its fundraising target," its not legally required to actually do so. The city, therefore, could end up having to pick up the tab.
"Given the ACOC's expenses and fundraising payout schedules, significant fundraising beyond those achieved to date will be required to honor the $32 million fundraising goals outlined in the Host Agreement over the coming three years," City Controller Ben Rosenfeld wrote in a report issued in February.
The Organizing Committee only managed to meet their goal of $9.6 million in pledged donations by funneling in $8 million from its sister organization, the Americas Cup Event Authority. The Authority, controlled by Oracle billionaire Larry Ellison, has entered into a revenue sharing agreement with Organizing Committee and will use funds generated from sponsorship deals, like the ones it's apparently on the verge of securing, to pay back the city.
"To those people who expected it all to be straight philanthropy, that may have been our expectation on Jan. 1, 2011, the day after the agreement was signed," Organizing Committee CEO Kyri McClellan explained to the San Francisco Chronicle. "But as soon as we got into the marketplace, we realized we needed to create an alignment of interest with the Event Authority."
If the city wants to get reimbursed, and Ellison doesn't feel obligated to do so out of his own pocket, securing sponsorship deals are an important part of the process.
NBC agreed to televise the event to a national audience, the first time that's happened in a decade. However, unlike most TV deals with major sporting events, the broadcast giant won't be giving the America's Cup a single penny for the privilege. Instead, the organizers are allowing NBC to broadcast the race for free as a way to grow the visibility of its brand within the United States.
Broadcasters, on the other hand, will be paying to screen the event internationally.
In addition to the rumored sponsorships, the Cup has named a handful of powerful sports entertainment bigwigs to its advisory board, including former New York Jets President L. Jay Cross, ESPN exec Geoffrey Mason, former YankeeNets Chairman Harvey Schiller and sports marketing guru Casey Wasserman. The most intriguing addition is Peter Uberroth, who not only ran the 1984 Olympic Games in Los Angeles but also served as commissioner of Major League Baseball during much of the 1980s.
"The caliber of the individual board members and collective experience represents a huge asset to the America’s Cup," Ellison told the Business Times.
The organization has seen a series of management shakeups over the past year, with Event Authority CEO Craig Thompson stepping down last November and a quarter of its staff getting the axe earlier this year.
The first round of America's Cup races hit San Francisco Bay waters this August.
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