Race for Cup Is Also Race for Big Bucks

Tom Vincent, general manager of the San Diego Princess Hotel, has an appropriately nautical response to the question of which local businesses are going to receive an economic boost from the upcoming America’s Cup sailboat race.

“When the tide rises, so do all of the boats,” said Vincent, who is also chairman of America’s Cup Services, the organization that is charged with marketing the race worldwide.

How high that economic tide will rise is debatable.

An initial study in 1988 suggested the Cup would generate $1 billion in direct and indirect spending. A more recent study suggested that $500 million is a more realistic estimate.

What isn’t open to debate is that the sailboat race should prompt the single largest wave of tourism spending in San Diego County’s history, dwarfing the $130 million in spending generated by Super Bowl XXIII in 1988.

Robert Rauch, the hotel industry consultant who authored the most recent study of the Cup’s economic impact, argues that the $1-billion estimate was a casualty of the Middle East war and the continuing economic slowdown.

Vincent, a past president of the San Diego County Hotel and Motel Assn., also cautions that Cup spending alone won’t single-handedly jump-start the county’s stalled tourism industry. Vincent instead urges San Diegans to view the incoming wave of Cup tourists as “a piece of the overall puzzle” during 1992.

The economic strength of that puzzle piece will in large part be determined by the success of America’s Cup Services, a “worldwide marketing agency” created by the ACOC.

ACOC at first hoped to net as much as $5 million from America’s Cup Services, which handles marketing and licensing and makes tour packages available to tourists. But ACS has contributed only about $1 million to the ACOC budget, largely because the recession has severely weakened financial support from local corporations and individuals.

America’s Cup Services has drawn criticism from members of San Diego’s tourism industry.

Chris Lee, president of California Leisure Consultants, readily acknowledges that the Cup will provide significant publicity that will further polish the city’s image as an international tourist destination.

But Lee, whose firm stages parties and events for corporations, described ACS’s marketing program as “too little, too late. . . . San Diego unfortunately missed the boat on the fervor of the America’s Cup.”

Lee questioned why Cup organizers have not unveiled final plans for events that will begin in January. “We were told this would be (run) very much like the (1988) Super Bowl,” Lee said. “Well, the advance planning for (the Super Bowl) was intense . . . and here we are, 100 days out, and people are still scrambling.”

On the other side of the ACS fence is Eric Lund, a spokesman for San Diego Harbor Excursions, who has chastised critics for holding unrealistic expectations.

“I don’t think the responsibility (of marketing San Diego) falls solely on ACS and ACOC,” Lund said. Membership in America’s Cup Organizing Committee and America’s Cup Services “is like being a member of the Chamber of Commerce,” Lund said. “You have to put in your time and work hard to realize benefits.”

Critics and defenders acknowledge that, once the racing begins, it will be the yachts, skippers and crews--not ACS or ACOC--that make or break the America’s Cup. “The race is really the simple part,” Vincent said. “You throw buoys in the water, you get some (crowd control) boats and the Coast Guard, and you’re done.”

So far, the economic impact of the Cup has been felt mainly at those businesses closest to San Diego Bay.

To be sure, inland businesses have benefited from Cup spending: Hundreds of crew members, who live in rented apartments and houses, are eating at local restaurants and shopping in local shops.

But the financial impact of the America’s Cup races has been--and will continue to be--most noticeable at San Diego’s waterfront businesses.

And, a good chunk of Cup spending will be done at businesses that were able to forge strong ties to U.S. and domestic syndicates that are competing for the world’s best-known sailing trophy.

A case in point is John Tarantino’s Restaurant on North Harbor Drive, just a short walk from the America3 racing compound. Tarantino’s is serving breakfast six or seven days each week to America3’s crew.

“America3 has been real good for us,” Tarantino said. “I think (America3) is happy with us, and we’re happy with them. . . . I think it’s a nice marriage.” Tarantino provides the crew with breakfast at a discount, and the sailing syndicate steers business his way. He also expects to reap economic benefits when America3’s corporate sponsors are in town and need a place to eat.

San Diego Harbor Excursion, which contributed $50,000 to become an official host of the America’s Cup, plans to import two 700-passenger boats from Los Angeles to carry the wave of tourists and locals who will want to view the races.

Coronado boatyard owner John Sawicki, whose facility is being rented by the New Zealand sailing syndicate, hopes to net a profit at a hospitality village that is open to the public.

“We made a decision early on to do this (village) regardless of what the ACOC did,” Sawicki said. “The public is showing keen interest. . . . But will we make money on the village? Even at this date, I don’t know.”

There is also uncertainty within the corporate world about the Cup’s viability as a marketing tool.

Despite its wealthy heritage as a sailboat race, the Cup remains “a very unstructured event” when it comes to being a marketing tool, said Jerry La Dow, executive director of Team Dennis Conner, one of two U.S. sailing syndicates hoping to defend the Cup.

“Nobody really knows how good it is from an investment standpoint,” La Dow said. “It was great in (Perth, Australia in 1986-87) . . . but conversely, the 1988 event was unpleasant (and) unproductive for everybody.”

Unfortunately, America’s Cup racing is now so expensive that it’s almost impossible to field an entry without significant backing from deep-pocket corporate sponsors. But the soured economy--along with stiff competition from other events--has made it difficult to attract corporate donations.

And, sailboat racing is still dogged by its reputation as a rich man’s sport, a perception that is reinforced by the fact that a single America’s Cup sailboat can cost more than $3 million to build.

That’s not to say corporate America is ignoring the Cup entirely.

Chevrolet’s Corvette division, for example, is using its ties with Florida industrialist Bill Koch’s America3 syndicate to reach “the very upscale person who’s into other pleasures in life, like golf, tennis, boating (and) airplanes,” said Lew Eads, an advertising executive with Chevrolet’s Corvette Division.

The America’s Cup is giving Chevrolet access to “people who are very affluent . . . who want to look good in a car of choice,” Eads said.

America3 also has garnered major support from Coors Light, Digital Equipment Corp. and the Red Lion Hotel chain. Hometown favorite Dennis Conner’s syndicate has attracted three major sponsors--Cadillac, Pepsi and American Airlines--and about 50 lesser sponsors.

But it’s been a hard sell, syndicate spokesmen acknowledged.

Jim Andrews, editorial director of Chicago-based International Events Group, which tracks corporate sponsorships of events around the world, suggested that the Cup is too narrow an event to compete with broader attractions such as the Olympics.

“You can do great commercials about (young Olympians) getting up at 5 a.m. to go diving, and you can say we’re contributing to him and wave the flag around,” Andrews said. “But these (racing syndicates) aren’t poor teen-age athletes who need training funds. . . . They’re rich old men, for the most part, and their toys.”

Executives at various syndicate sponsors, including the Cadillac and Corvette divisions of General Motors, Hewlett-Packard, Red Lion and Coors Light, say the upcoming event will be well worth the millions of dollars corporations already have invested.

Corporations will advertise their Cup affiliations heavily when the races are shown on worldwide television. And, in a boost for the local economy, most corporate sponsors will host lavish parties in San Diego that will be used to reward top dealers and woo important customers.

However, “beyond that inner circle” of corporations that are directly involved with racing syndicates or the ACOC, corporate America has largely ignored the Cup, said Fabienne Hanks, owner of the Meeting Manager, a San Diego firm that stages parties and events for corporations.

But, according to consultant Rauch, the bottom line remains clear: visitors and locals alike will “certainly drop dollars. . . . The fiscal woes of ACOC have created some internal bad feelings in San Diego. But even that should not affect the Cup in general unless that problem is exacerbated.”

“There will be enough hoopla, we will all pull together and have a class event,” Rauch said.