Entries for the 34th Americas Cup Race close on March 31, 2011.
It seems especially appropriate to ponder the contribution that modern technology and modern leadership have made to open-ocean sailing.
BMW Oracle Racing’s USA, winner of the 33rd America’s Cup Race in 2010, was the fastest, most technologically advanced trimaran the world has ever seen. Its unique wing sail propelled the giant craft at jaw-dropping 3X the speed of the wind. Bravo!
US challenger BMW Oracle Racing (L) giant trimaran and Swiss defender Alinghi huge catamaran during the opening race of the 33rd America's Cup.
The 33rd America’s Cup Race in 2010 amply demonstrated the powers of computer technology in the design of an open-ocean sailing vessel. Alas it made a less effective testimonial for modern leadership.
From the earliest planning stages, the 33rd America’s Cup Race was dominated by its two most ruthless competitors, tech titan Larry Ellison of Oracle and Swiss pharmaceutical heir Ernesto Bertarelli. The dueling billionaires stopped at nothing to win. Literally nothing.
A vitriolic multi-year court battle over the rules of the race perplexed officials, disgusted fellow sailors, strangled competition, shrank the audience and scared away sponsors.
For example, after the Golden Gate Yacht Club filed its eight lawsuit filed within a two-year period, lead counsel for the Société Nautique de Genève, Barry Ostrager of Simpson Thacher & Bartlett accused ORACLE Racing of trying to win in the courtroom rather than on the water:
“The complaint is an affront to the America’s Cup, to the UAE, to our country’s relationship with an important ally, and to the judicial process. It is just a PR stunt. There is nothing in the complaint that hasn’t been the subject of prior or pending legal proceedings. Basically, GGYC doesn’t want to race SNG on the water after it disenfranchised 19 other clubs from competing in an elimination series and dislocated hundreds of sailors and participants in the sailing industry.”
As Ellison and Bertarelli focused all their business and legal acumen on accusing each other of bending the rules and using the courtroom to delay the race until new designs could be tested, the America’s Cup grew more and more tarnished.
The results, according to the New York Post:
- Officials of the America’s Cup cancelled a 19-team qualifying race
- Big-name sponsors like Banco Santander, UBS, Nestlé and Allianz withdrew their support
The results, according to the blog, It’s All About Sports:
- Sponsorship money shrank from more than $200 million in 2007 to $11 million in 2010. (That’s not a typo. That’s a 94.5% drop.)
- The organizing budget reduced from a record € 230 million to just € 8 million in 2010.
- Overall, the 32nd America’s Cup Race in 2007 was the third-largest sporting event in terms of gross economic impact after the football World Cup and the Olympics. The overall economic impact of the 2010 race was probably about one tenth of the $7 billion (€5B; £4.4B) figure for 2007.
Why the catastrophic decline? “Both business tycoons have prioritized their own ambition over the sport of sailing,” according to sports-marketing consultant, Jan-Kees Mons, editor of It’s All About Sports.
In his analysis, a personal grudge-match between the top dogs appears to have ruined the ecosystem of sponsors and supporters.
- The Challenger Series, which had attracted 11 challengers from nine countries in 2007, was cancelled, along with major sponsorship opportunities.
- Tourist events drove almost €4 billion net economic benefit for host city Valencia in 2007. In 2010, Valencian residents and visitors paid more attention to Mardi Gras than they did to the America’s Cup, which passed almost unnoticed.
So how well did the modern leadership style of ruthless competition pay off for Bertarelli and Ellison? The billionaires succeeded in devaluing the oldest sporting trophy in America, shrinking the pie for yacht racing fans, killing the ecosystem for sponsors, enriching lawyers, generating bad press, and losing a few friends.
At the end of December 2010, it was announced that BMW was bringing to a close its longstanding partnership with ORACLE Racing and thereby ending its involvement in the America’s Cup. “This was by mutual agreement of both partners,” notes the Wikipedia entry for ORACLE Racing.
The bottom line? For Ernesto Bertarelli, it was a rout on all fronts.
The 33rd America’s Cup did nothing to improve Oracle’s business reputation. But at least Larry Ellison could say that his boat won. And next time the Oracle logo will appear alone.
Fortunately, Larry Ellison has also won the chance to revive the ecosystem he helped to destroy.
So what is the lesson from the fastest boat in open-ocean racing?
Everyone, including Larry Ellison and Oracle Corporation and the victorious yacht USA, exists in an interdependent web of existence.
For the benefit of the ruthlessly competitive, let me put this in pugilistic terms:
“The right to swing my fist ends where the other man’s nose begins.”
- Oliver Wendell Holmes
The Golden Gate Yacht Club in San Francisco will host the 34th America’s Cup in 2013. The challenging is Club Nautico di Roma. “Mascalzone Latino” owned by world champion sailor Vincenzo Onorato will be Larry Ellison’s chief competitor in the race. Onorato will also be Ellison’s chief collaborator in restoring the America’s Cup to the luster it had before Ellison and Bertarelli got so personally involved.
According to sports marketing consultant, Jan-Kees Mons, editor of It’s All About Sports, there are three essential elements for making up the lost ground:
- The Americas Cup should be a multi-challenger event again
- There should be upfront agreement on rules and regulations
- It should be easier to enter the event
Jan-Kees Mons credits Larry Ellison with “encouraging” comments regarding the necessity for a level playing field for all competitors to bring sponsors and fans back to sailing’s pinnacle event in 2013.
Thanks for the information, @JanKeesMons. Keep us posted on happens next in the world of yacht racing.
In a future post I will offer some leadership lessons from another group of open ocean sailors, not racers but navigators.
Mean looking boats, don't you think?
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[...] In the quest for financial results, some leaders have forgotten their moral responsibility to customers and partners. Oracle Corporation’s actions last week with respect to its Itanium customers are a particularly egregious example of this. As are Larry Ellison’s and Ernesto Bertarelli’s conduct during to the 33rd America’s Cup Race. [...]
For me, naming rights are despicable. I go out of my way to not patronize companies that are corporate johns. Granted, it’s not like I decide whether or not to buy Oracle stuff (and yes, last week’s Itanium announcement by Oracle do not engender them to me) but I do my best in my personal life to not buy things like tostitos stuff (or any other of the college bowl game johns). Same with the stadium johns.
I have never understood the marketing concept behind being a corporate john. I don’t buy stuff because you are the john for a sailboat race or a football bowl game. I decide what to buy based on what’s a good product. And negative advertising does sway me so that it will seem like I am cutting off my nose to spite my face. Advertising and sponsorship stuff is just too much in-your-face (and has been for over 10 years), so it’s become very difficult to even see what the actual product is (for example, all the tv screen pop-ups and other text that are displayed during a show).
Bottom line: tone down the ads and blatant corporate shilling and maybe we’ll actually like to watch a boat race or a bicycle race.
[...] believe that uber-Pirate Black Bart and legendary celestial navigator Mau Piailug would advise Larry Ellison the same way regarding the Golden Gate Yacht Club’s leadership in the next America’s [...]
[...] believe that uber-Pirate Black Bart and legendary celestial navigator Mau Piailug would advise Larry Ellison the same way regarding the Golden Gate Yacht Club’s leadership in the next America’s [...]