San Francisco chosen to host America's Cup Oracle Racing's choice to host sailing's premier event means $1.2 billion economic windfall through 2013

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It's a new year and a new dawn for the sport of sailing in San Francisco.

The city was chosen Friday to host the next America's Cup in 2013, heralding a potential renaissance in competitive sailing and a boon of more than $1 billion to the local economy.

This "marks the beginning of an extraordinary new chapter for our city and for the sport of sailing," said Lt. Gov.-elect Gavin Newsom, who sought to secure the Cup as a capstone to his seven years as mayor. "We don't think there is any better showcase in the world for sailing than San Francisco Bay."

The city beat out Newport, R.I., and Italy to host sailing's premier regatta, an international sporting event whose projected economic benefit is eclipsed only by the Olympics and soccer's World Cup.

San Francisco had been the early front-runner to host the 34th Cup after billionaire Oracle CEO Larry Ellison's team captured the trophy in February off the coast of Valencia, Spain. The team, Oracle Racing, is sponsored by San Francisco's Golden Gate Yacht Club, and the winning syndicate selects where it will defend the Cup.

Part of the attraction for race organizers is San Francisco's unique position to grow the sport of sailing.

Rather than holding the races miles offshore, which was the case in Valencia, San Francisco Bay offers a natural amphitheater. Spectators in high-rises, along Crissy Field, on Angel Island and in the Marin Headlands will be able to view the action.

BMW Oracle Racing owner Larry Ellison poses kissing the America's Cup trophy after winning the 33rd edition of the sailing classic against Alinghi in Valencia, Spain, on Sunday, Feb. 14, 2010. BMW Oracle Racing owner Larry Ellison poses kissing the America's Cup trophy after winning the 33rd edition of the sailing classic against Alinghi in Valencia, Spain, on Sunday, Feb. 14, 2010. Photo: Alberto Saiz, AP Photo: Alberto Saiz, AP Image 1 of / 5 Caption Close San Francisco chosen to host America's Cup 1 / 5 Back to Gallery

Different class of boats

Race organizers have picked a new class of boats for the contest, swift 72-foot catamarans. Some enthusiasts are gushing at the thought of the crafts ripping around Alcatraz in consistent winds, cantilevered at an angle as sailors lean off the side, with the Golden Gate Bridge in the background.

It's a made-for-TV image that could easily appeal to sailing's largely untapped market in this country, and Ellison's group has said it wants to boost the sport's popularity, visibility and sponsorship potential by utilizing new media and having cameramen onboard the boats.

"We sought a venue that fulfills our promise - to showcase the best sailors in the world competing on the fastest boats," Richard Worth, a race official, said in a statement. "And hosting the America's Cup in San Francisco will realize that promise."

The next Cup will include qualifying matches and pre-event races around the world. San Francisco will see at least 43 days of racing spread over more than a year before culminating in a final match in September 2013.

The races are projected to infuse $1.2 billion into the city's economy while generating more than 8,000 jobs and renewing sections of the waterfront the city can't afford to fix.

Negotiating changes

San Francisco almost had the Cup slip through its fingers after months of negotiations when the city modified its proposal, shifting race facilities northward and changing the financial terms.

The move put the public viewing area between piers 19 and 29, the projected start and finish line, instead of south of the Bay Bridge.

It also saved both the city and race organizers up-front costs and won unanimous approval from the city's notoriously fractious Board of Supervisors. But it reduced the potential value of property that race organizers will get to develop to recoup an investment they estimate will approach $500 million when pre-Cup races are factored in.

That touched off race organizers' eleventh-hour courtship of Newport, where the Cup was held from 1930 to 1983. Officials there couldn't finalize their bid by a Friday deadline that race organizers had set to notify competitors of the location.

Newsom's administration tweaked its bid right up until Friday's announcement, but stood pat on the larger provisions.

Stephen Barclay, an official with the team and yacht club who warned last month that San Francisco was on the brink of losing the Cup, said the changes provided race organizers with greater financial assurances.

"In the end, the decision was relatively easy once we resolved the risks," Barclay said after San Francisco was named the winner.

Development details

The deal gives race organizers long-term development rights to up to three piers and another waterfront parcel in exchange for paying at least $55 million to shore up aging piers to house race facilities.

With a $55 million infrastructure investment, the team will receive development rights and a 66-year lease on piers 30-32, a single conjoined pier, and it commits the city to obtaining state approval to transfer title to Seawall Lot 330 across the Embarcadero.

The team will also have the option of paying at least $25 million more to shore up nearby piers 26 and 28 in exchange for 66-year leases on them. It will pay rent on the properties but be given credit for infrastructure work done. Major steps remain, including getting state environmental approvals and securing $270 million from corporate donors. The city will incur more than $31 million in direct costs from hosting the event, a figure that could be substantially lowered by fundraising efforts. Projections also show the event will be a net long-term moneymaker for city coffers when taxes and other revenue are factored in.

"It's going to mean a lot for San Francisco," said Marcus Young, commodore of the Golden Gate Yacht Club. "There is the economic component of this, but from a sailing perspective, it's basically going to galvanize San Francisco as a sailing destination. ... This will bring San Francisco back to its nautical roots."