America’s Cup Quest Becomes Big Business

From where Gary Thomson sits, the America’s Cup isn’t just a race for 12-meter yachts.

It’s a business.

Thomson, 43, is president of the Newport Harbor Yacht Club’s Eagle Challenge, one of the half a dozen U.S. syndicates that hope to recapture the America’s Cup from Australia, which took the trophy home to the Royal Perth Yacht Club after an upset win two years ago.

And when Thomson talks about what it takes to win, words like “budget” and “business plan,” “marketing” and “merchandising” are as prominent in his conversation as “keel” and “crew.”

“Winning the America’s Cup has moved from a $2-million effort to, in our case, an $8.5-million effort to--in some cases--a $15-million or $20-million effort,” says Thomson, a former lumber company executive. “When you spend $8.5 million, you have to operate like a business.”

Unprecedented Expenses

After 132 years as the personal dalliance of the rich, the America’s Cup has gone public. Faced with unprecedented expenses, U.S. yachtsmen have turned for the first time to Madison Avenue sages for marketing and to habitues of Wall Street for money.

So far, the effect of this unprecedented alliance has been chiefly internal--operating differences that are imperceptible to a public that didn’t know much about the America’s Cup until it was lost.

But in the nearly 18 months remaining before the final series of races takes place off Fremantle, Australia, the transformation of yachting’s most prestigious race will become inescapable.

“This is a whole new ball game,” says Tom Ehman, executive director of America II Challenge, the New York Yacht Club’s syndicate, which is based in Newport, R.I. “It’s a brave new world for the sport.”

Americans nationwide will receive slick fund-raising appeals for America II developed by Wyatt Stewart, a Washington fund-raising whiz who handled the direct-mail campaign to restore the Statue of Liberty, while residents of Orange County will encounter Boy Scouts at their doors selling $10 memberships to Newport’s “Crew Eagle.”

To see that consumer appetites for everything from trademark bumper stickers to blazers are whetted and satisfied, Sail America Foundation (the San Diego Yacht Club’s syndicate) has hired International Licensing Corp.--originator of the Hang 10 trademark--and Eagle Challenge has engaged Stiletto Ltd. of Los Angeles--the firm that merchandises Barry Manilow, Diana Ross and Rod Stewart.

Meanwhile, corporate sponsors who have contributed sums of $500,000 and more to the challengers of their choice are concocting their own ways to cash in on their connections. Carlson Travel Co.--the $1.5-billion parent of Ask Mr. Foster and other travel subsidiaries--will package Eagle Challenge tours, and Atlas Hotels will fly Sail America flags at its hotels.

The Cadillac division of General Motors will introduce a premium-priced limited-edition America II Eldorado in red, white and blue complete with the challenger’s logo, and Amway will offer America II merchandise.

If howls of dismay about commercialization are not audible, it is in small part because yachtsmen believe that 12-meter racing is now simply so expensive that economic realities demand it.

First Race in 1848

The 100-guinea, 27-inch silver cup originally was commissioned in 1848 by England’s Royal Yacht Squadron as a prize for the winner of a 53-mile race around the Isle of Wight. In the first contest, it was won by the schooner America, which took it home to the New York Yacht Club and fought off each triennial challenge for the next 132 years.

As a defender, an America’s Cup competitor could be launched with a couple million dollars. “You’d have five, six, maybe 10 guys who would each write a check, take the money, design and build a 12-meter and go race it,” explains Ehman of America II Challenge.

But with the 1984 victory of Alan Bond’s Australia II and its revolutionary winged keel, costs skyrocketed because of the rush to technology and because of the necessity to train and race off distant Australia instead of handy Newport, R.I.

“We need the financial support of corporations to win this thing back,” says Robert Haines, executive director of the U.S. Yacht Racing Union, the governing body of sailing in the United States. “There’s no way it can be done by an individual or a group of individuals.”

The fund-raising efforts have been intensified by competition. At least half a dozen U.S. yacht clubs hope to challenge the Australians, and the budgets of just the three top contenders--New York, San Diego and Newport Harbor--top $30 million, a staggering sum to raise for an event that until now never had a major corporate sponsor.

Nonetheless, business is biting.

‘America Versus the World’

Many sponsors, particularly those with few or no consumer goods to market in conjunction with the race, view the event as a national cause. “(The cup) has ceased to be a narrow sports competition and became a broad international event,” says Michael Dingman, president of Allied-Signal, a sponsor of Sail America Foundation’s Stars and Stripes. “It is America versus the world.”

Others perceive the event as an opportunity to enlarge their markets. “From a marketing standpoint, sponsorship of this magnitude offers Amway the ability to boost its corporate image, heighten product visibility and inspire dealer enthusiasm,” says Jack Wilke, a spokesman for the Ada, Mich.-based company, which plans to tie its sponsorship of America II to coming advertising and promotional activities.

Some are attracted to the sheer exposure that the event is expected to generate. “We see this as a major attention-getting event,” says Gary Gerard, a spokesman for Newsweek magazine, also an America II sponsor.

Still other sponsors like the demographics of sailing and its enthusiasts. “It’s got an upscale image,” says John Ueberroth, president of Van Nuys-based Carlson Travel, an Eagle Challenge sponsor.

Finally, there is a degree of local community boosterism involved. A Chapman College economic study for Eagle Challenge concluded that bringing the race back to Newport Beach would generate 4,380 jobs and produce $1.1 billion in 1990 and 1991 for the Southern California economy.