America’s Clunk : The Cup That Was Expected to Make San Diego’s Economy Runneth Over Turns Out to Have Lots of Leaky Projections

The America’s Cup was supposed to be an easy sail on golden pond, complete with brass ring for the local economy to grab.

With Dennis Conner expected to make his first full-blown defense of the Cup on home water, race organizers predicted an economic windfall of as much as $1 billion for the San Diego area. It would be like having a couple of Super Bowls and a World Series rolled into one.

So much for projections.

So far, the Cup, which began its preliminary rounds in January, hasn’t completely laid an egg--but it hasn’t laid many golden ones, either.

The billion-dollar forecast prepared for the America’s Cup Organizing Committee last year will probably be about half right-- if the actual America’s Cup final draws strong crowds.

A couple of weeks ago, nervous Mayor Maureen O’Connor, working with an equally antsy ACOC, asked residents to “invite a friend” to town to watch the Cup races--and add to the local coffers.

“We could wait for the economy to turn around, or we could do something about it,” ACOC spokesman Parker Pike said in early April.

Depending on the speaker, descriptions of Cup-related business run from “nonexistent” to “it can’t hurt” to “quite nice.”

The thing everyone seems to agree on is that, moving into next week’s finals, there has been no major influx of sailing-starved tourists, and no easy money.

One company that was selling Cup-licensed materials in the Old Ferry Landing on Coronado--in the virtual shadow of the New Zealand Challenge compound--is already out of business.

Said the manager of a Cup-related business in the same building as the ACOC: “It’s been terrible . . . no tourists. I don’t think it will get any better. There’s been no tourists.”

Reint Reinders, president of the San Diego Convention and Visitors Bureau, said that although no tabulation of room bookings has been made yet: “We certainly haven’t seen the types of numbers we’d be happy with. It’s certainly substantially less than we expected. Some hotels reserved blocks of 200 or 300 (rooms) a night and have started to release more and more.”

Several dozen businesses in Coronado formed America’s Cup Services to try to promote Cup-related enterprise. So far the ACS hasn’t been a rousing financial success.

The manager of a beach and sports store in Coronado’s Old Ferry Landing said: “We keep waiting for that big influx (of business) we were promised.”

Said Stephen Hager, owner of an art gallery there: “I can attribute three sales for $500 directly to the America’s Cup. Otherwise, you can see (the mall) is dead. . . . I’ve talked to other businessmen here and at the America’s Cup center, and they all say it’s been slow.”

Said Jackie Kreisler, spokesman for the landing: “We’re just now beginning to see some business, maybe the last two weeks. We did not see the impact we expected or were promised. There seems to be much more interest as we approach the finals. We notice our America’s Cup merchandise moving at this point.”

Some aspects were beyond the ability of anyone to change--a recession bottoming out about the time the teams arrived to train, unusually rainy weather in February and March and unfortunate publicity prompted by the sewage spill off Point Loma coinciding with the start of the Cup races.

Still, the hoped-for financial bonanza was probably a miscalculation from the start. Planners who saw the tourist activity in Perth, Australia, in 1987, when Conner recaptured the Cup, might have failed to take into account the small-town atmosphere of Perth as opposed to the greater diversity--and general lack of interest in the Cup--in San Diego.

Robert Rauch, whose La Jolla consulting group prepared an economic forecast in September, forecast a dividend of about $500 million. The Super Bowl generates about $50 million for the host city, the World Series about half of that.

Last week, Rauch downgraded his projection slightly, estimating the final impact will be “$450 million maximum, down about $60 million based on a slight lack of demand. We knew it would be a fairly big event--in May. (But) there’s been surprisingly little enthusiasm locally.”

Businesses and civic leaders are still hoping the finals will create some excitement, especially with an attractive matchup.

“We’re praying for Dennis and the Kiwis in the finals,” said Randy Gantenbein, general manager of Loew’s Coronado Hotel.

Conner, of course, was eliminated from the finals Friday, probably dealing the Cup yet another negative economic blow.

There was speculation that thousands of New Zealanders would arrive if the Kiwis advanced to the finals.

Again, it didn’t happen. New Zealand was eliminated by Italy.

The ones who seem to have done well are the hotels and businesses that went out and solicited groups or contracts connected with the Cup, and didn’t wait for it to come to them. Those who have done especially well managed to align themselves with the Cup syndicates or their corporate sponsors.

Several sponsors have brought thousands of employees to San Diego through sales incentive programs. Electronics giant Motorola has brought about 1,000 here in groups that get four days and three nights, a chartered yacht to watch the races, their own day at Sea World, receptions and other perks. A spokesman estimated that Motorola will spend about $750,000.

Citizen watches, the Cup’s official timer and a major sponsor of Team Dennis Conner, has brought more than 1,000 who enjoy similar accommodations. A group of 250 top salesmen and their spouses will be here as guests of the company for the finals. Citizen officials estimate that their company will spend more than $1 million on the program, including 2,500 room nights at Loew’s Coronado hotel.

“We’ve seen a lot of activity from sponsors,” said Jennifer Parrish, executive meeting manager of the Marina Marriott. “Our May dates are sold out and we’ve turned away a lot of business.

“We’re a convention network hotel, so we hadn’t relied on (America’s Cup) to fill us. Most (sponsors’) programs are upscale incentives for their top-level people. It’s kept me very busy, from 10 rooms a night anywhere to 100 rooms for six nights.”

Parrish said the Marriott, with a choice location next to the San Diego Convention Center and within walking distance of Conner’s Stars & Stripes compound, solicited the business.

“Unfortunately, (the Cup) was promoted like an Olympic-type event and it doesn’t have that kind of draw,” she said. “It does in New Zealand, but here it’s more of an elitist-type sporting event than general appeal. Maybe (San Diego) didn’t market it very well.”

Said Michael Fischer, director of marketing for the Le Meridien Hotel in Coronado: “We knew America’s Cup would provide us with interest in the city, but we went out and booked it. There was interest out there.”

As an example, Fischer said the French syndicate and boosters took 1,500 rooms in March. May is already sold out, he said, but the hotel didn’t set aside rooms specifically for America’s Cup traffic.

“We did prepayment, so we were not relying (on the Cup),” he said.

Gantenbein, of Loew’s Coronado, said business has been boosted by several sponsors.

“We went out and solicited groups as we normally would,” he said. “We have very strong group business right now, but it’s hard to say if it’s directly related. There has not been a significant influx of (visitors) wanting to come in and view America’s Cup.”

The land-locked Red Lion Inn in Mission Valley has done well as a sponsor of the America 3syndicate. “We set aside rooms for sponsors and have done off-premises stuff for Bill Koch and America 3 ,” a spokeswoman said. “We’ve experienced a great amount of business.”

And John Roberts, managing director of the U.S. Grant Hotel downtown, said: “We’ve sold out most days in May by groups. I’m sure it’s because America’s Cup is going on.”

Although the U.S. Grant is not on the water, it was the base for the Nippon Challenge syndicate. Still, Roberts never counted on America’s Cup to fill.

“Being a seasoned hotel man, I was very conservative,” he said. “I had not planned on it at all.”

Some other businesses have done well, also.

Conner’s gift shop at the Stars & Stripes compound has been doing steady tourist business, selling everything from trinkets and clothing to signed art works.

Sue Harris, who opened the first store dealing with America’s Cup licensed goods, said her “S.S. Coronado” across from the Hotel del Coronado, “is doing great.”

Among the things Harris did were to cut a licensing deal for some Stars & Stripes material, and to put out a catalogue.

“I worked very hard at marketing my stuff, developing what I had,” she said. “I didn’t sit back and wait for the ACS to do it for me. It took a little long in coming, but the last two weeks have been extremely strong in my store.

“My husband and I were in Perth, and it’s not like that here. People from Australia say, ‘You’ve yet to see the bulk.’ I’ve been real pleased--under the circumstances of the economy--the response I’ve gotten. People are starting to get into it. It’s funny how I see a trend in what they buy, depending on who’s winning.”

Another enterprising businessman, Peter Trabuco, said the Cup had bolstered his business at the Crystal Pier Souvenir Shack in Pacific Beach.

“I say, ‘Thank God for the Cup,’ ” he said. “It’s been a slow year economically and we’ve sold a lot of Cup merchandise since January.

“April has always been slow in San Diego for souvenirs. Our sales have been up about 30% over what they normally would’ve been. I think businesses that looked like they were into it, put up flags, put out a lot of stuff, have done well. If they didn’t make a statement, dip their toe in, they didn’t do well.”

Many involved say the best thing San Diego will come away with is good will.

Said Rauch, the consultant: “It’s been . . . beyond (expectations) in public relations impact. The real impact is not that much to do with sports per se, but public relations. It is an incalculable amount of international impact. Taking in advertising time as it’s sold by the hour, it’s (worth) another quarter-billion dollars in PR value.”

Said Kreisler of the Old Ferry Landing: “I feel there’s some long-term benefits, seeing the media and the city working together. We haven’t seen it in our pockets, but I feel there will be long-term benefits.”

Said Toni Gaylord, spokeswoman for the Coronado Chamber of Commerce: “The (media) spotlight in New Zealand is on Coronado every day. I think the outfall is going to be felt in a couple years.”

Several business people noted the high profile of America’s Cup clientele--particularly those representing sponsors, suggesting that if San Diego makes a good impression, quality will win out over quantity.

Said art dealer Hager, “The one thing I notice is the high percentage of qualified customers who walk in. It’s a high-profile type of clientele. It can’t hurt the city, having them here.”