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San Diego Sees Lots of Gold in America's Cup

September 15, 1987|CHRIS KRAUL | San Diego County Business Editor

SAN DIEGO — The America's Cup, which San Diego Yacht Club skipper Dennis Conner won in Australia in February and which the club will defend here in 1991, will be more than just a major sporting event. It may mean a $1-billion bonanza to San Diego's economy.

Barring a successful courtroom challenge by New Zealand yachtsman Michael Fay, whose suit filed earlier this month in New York Supreme Court would severely truncate the regatta's economic benefit by having it begin next summer, the racing event is expected to generate a two-year windfall for San Diego.

The 15 or more international racing syndicates that will field competing yachts are expected to spend at least $225 million during two-year campaigns beginning in 1989, at least half of which will be spent in the San Diego area, said Tom Ehman, executive vice president of Sail America Foundation. Sail America is responsible both for conducting the regatta and raising money to finance the San Diego Yacht Club's defense.

Peter Gilmour, a member of an Australian syndicate that will mount a challenge for the cup in 1991 and who is already scouting harbor-side facilities here, said last week that his group will spend $20 million to rent dock, warehouse and office space, as well as to house and feed 40 to 50 crew members and their spouses over a two-year period.

But the regatta will mean much more to San Diego's economy than money spent by competitors. Tens of thousands of tourists will visit the region during the regatta to experience a sport which its promoters insist has finally found a mass market, despite its elitist image. Those visitors will rent rooms, hire cabs and eat at local restaurants.

"You're talking five months of Super Bowl," said Greater San Diego Chamber of Commerce Chairman Bill Nelson, comparing the economic benefits of the cup's five-month elimination trials and match race with the Super Bowl, which San Diego will host in January, 1988.

Greater San Diego Chamber of Commerce officials are reluctant to make specific projections as to the number of tourists the cup defense will attract to the region or the amount of money that they will spend, saying a major study to determine those numbers by CIC Research Inc. of La Jolla will be out Oct. 1.

What they are sure of is that San Diego will reap a far greater windfall than the $636 million in economic benefits that accrued to Fremantle, the Western Australian city near Perth where the yachting race was held earlier this year. Despite Fremantle's remoteness, the regatta attracted 61,300 international visitors and 99,000 domestic visitors to the area, according to a study commissioned by its host state, Western Australia. The race also created 22,000 jobs, the study found.

Given San Diego's location in Southern California's population center and easy transportation access, officials expect San Diego to be a much stronger magnet for racing fans. The number of "day-tripper" spectator yachts, for example, will easily exceed the 1,500 that plied the waters off Fremantle during the race, officials said.

"This is going to be the single biggest event that ever happened to San Diego, not only in direct expenditures. The awareness that people will have of San Diego will be greatly increased," said Max Schetter, the chamber of commerce's vice president in charge of economic research.

Port's Contribution

Visions of big dollars are a big reason San Diego Mayor Maureen O'Connor and local business leaders campaigned so hard for the yacht club to defend the cup in home waters despite less than ideal sailing conditions. The economic incentive also explains why O'Connor enlisted the aid of New York City Mayor Edward Koch and the New York attorney general to fight Fay's still-unresolved legal challenge.

While O'Connor has pledged that the race will be financed with a minimum of tax dollars, she said last week that the San Diego port district can be counted on to pony up at least $40 million to pay for needed capital improvements to the San Diego harbor front to accommodate the racing syndicates and tourists. "They have $175 million sitting in the bank. They can afford it," O'Connor said.

Cautioning that port funds could be voted only by a majority of commissioners, port commissioner Dan Larsen said Monday that he is in favor of the port's financial support, saying that any investment it makes will generate a "tenfold" return in higher rents and revenue on port-owned land.

Ehman, 33, whom Sail America hired away last month from America II, the syndicate organized to finance New York Yacht Club's unsuccessful challenge for the 1986 cup, has perhaps the most critical fund-raising job of all. His task is to raise up to $80 million from 20 or more corporate sponsors paying $3 million to $4 million each to finance the up to four racing syndicates that will represent the San Diego Yacht Club. One of those syndicates will emerge through competition with the yacht club's defending yacht.

What will sponsors get in return for their millions? "The right to associate themselves with this wonderful event to which lots and lots of people will be paying attention," Ehman said.

Calling the America's Cup one of only three sporting events that attracts worldwide attention--the others being the World Cup soccer match and the Olympics--Ehman said sponsors will want to associate themselves with an event that is "not only a yacht race but a test of technology and organization and everything America stands for."

Ehman said he also envisions a two-year civic celebration leading up to the match race, including an arts festival patterned closely after the 1984 U.S. Olympics.

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