Angus Phillips: America's Cup Litigation Hovers Over New Zealand Yachting Event

Swiss Alinghi, right, and Emirates Team Zealand faced off Friday in the finals of the Louis Vuitton Pacific Series off Auckland, New Zealand.
Swiss Alinghi, right, and Emirates Team Zealand faced off Friday in the finals of the Louis Vuitton Pacific Series off Auckland, New Zealand. (By Daniel Forster)

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By Angus Phillips
Sunday, February 15, 2009

AUCKLAND, New Zealand

The Louis Vuitton Pacific Series showed over the past two weeks how good an offseason event in America's Cup boats can be. Under the loom of volcanic Rangitoto Island, with the city skyline scraping the clouds, 10 teams of the world's best sailors traded tacks, jibes, barbs and laughs in a friendly competition in towering Cup boats that got better as it rolled along.

Kiwi arch rivals and onetime bosom buddies Russell Coutts of the U.S. entry BMW Oracle and Brad Butterworth on Swiss Alinghi wound up facing each other in challenger finals on windy Waitemata Harbor. Alinghi's 2-0 win sent them on to a best-of-five rerun of their successful 2007 Cup match against Emirates Team New Zealand. You couldn't write a better script.

Kiwi fans crowded the harbor; TV and radio crews beamed the action around the nation and the Internet sent it to the world. It was the sort of upbeat sailing spectacle that in normal times would start the ball rolling toward America's Cup 33.

But 1 1/2 years after 11 teams converged on Valencia, Spain, to compete for the world's oldest sporting trophy, nobody knows when, where or in what boats the next Cup will be. The confusion, coupled with global financial woes, leaves many teams struggling just to survive.

The Cup's future hangs in limbo in New York's highest court, where six justices strain to interpret the intent of a 121-year-old Deed of Gift. Litigants are a pair of bilious, warring billionaires.

On one side is Swiss Ernesto Bertarelli, whose Alinghi took the Cup from New Zealand in 2003 and defended it successfully in Valencia in 2007. Bertarelli inherited a pharmaceutical dynasty, is said to be worth about $9 billion and wants to run a Cup regatta with up to 18 challengers in Spain next year.

He'd get his way but for Larry Ellison, the even richer American founder of Oracle software who made his $20-odd billion the hard way, starting with nothing. Ellison thinks Bertarelli is trying to hijack the Cup and turn it into an event dominated by the defender, in contravention of the Deed of Gift.

Lawyers made final pitches Tuesday before the New York Court of Appeals in Albany. A decision is due in a month or so, with no further appeal. The justices must decide whether Cup donor George Schuyler, dead for more than a century, would rather see a fleet of modern America's Cup Class monohulls vie for the trophy in Spain or two modern titans bash away in huge multihulls on some undecided leg of the sea.

Bertarelli and Ellison were here last week, but their paths didn't cross. Any hope they might mend fences was squelched on arrival by Bertarelli, who said: "We've reached the end of the road. If we win [in court], we'll go about organizing a 2010 regatta for 18 teams," of which Ellison's BMW Oracle would not be one. "If we lose, we go to the dog match" in two massive multihulls. Coutts, Ellison's skipper and a three-time Cup winner, agreed there is no hope for compromise.

The legal battle turns on whether the Spanish Club Nautico EspaƱol de Vela (CNEV) qualifies as challenger of record. Bertarelli picked the fledgling CNEV as formal challenger after winning in 2007. The two then issued a protocol for the next event, giving Bertarelli's defense organization vastly expanded powers over rules and finances of the 33rd Cup, including the ability to exclude competitors without cause, change rules unilaterally and sail his defender boat in challenger trials, as never was done before.

Ellison howled. He sees CNEV as a puppet club created to do Bertarelli's will. The Deed of Gift, he noted, calls for the challenger to be an established yacht club having an annual regatta on the sea. The hastily assembled CNEV had never held a regatta, though it has held two since. The six New York justices must determine whether "having an annual regatta" means in the past or the future.

Ellison initially won in New York Supreme Court. His Golden Gate Yacht Club was adjudged the true challenger and CNEV was tossed. When Bertarelli appealed, that ruling was overturned, in a 3 to 2 decision, on grounds the annual regatta requirement was ambiguous.

Many Cup fans hoped the warring billionaires could reach accord early on, but their one powwow in San Francisco came to nothing and they haven't met since. Bertarelli eventually acknowledged some terms of the original protocol were excessive and had it amended, but Oracle rules expert Tom Ehman says the new version is almost as bad.

Meantime, Ellison has built a giant, 90-foot, carbon-fiber trimaran, the largest and fastest vessel allowed under terms of the antiquated Deed of Gift. Bertarelli built all the pieces for a similar-size catamaran to answer, if it comes to that, but won't assemble it until the court decision is final.

If the billionaires end up racing in the giant boats it would be quite a show, even if it excludes every other team in the world. BMW Oracle sailors say they're terrified of their massive craft, which is being tested in San Diego and can top 40 mph in modest winds. They wear helmets in practice and haven't yet taken the fragile rig to full speed. "It scares me," Coutts said.

Everyone else waits. Sir Keith Mills, head of the new British Origin team with three-time Olympic gold medalist Ben Ainslie at the helm, backs Bertarelli and calls the new, amended protocol fair. He says without an event to aim for, his whole operation could collapse for lack of support. "We need to get back on the water," he says.

Grant Dalton, head of Emirates Team New Zealand, says he signed on to the Alinghi protocol "as a matter of survival. A multi-challenger event in 2010, even if it's a little unfair, is still a good thing for us. Emotionally, I agree with Oracle, but we need to go sailing to stay alive."


© 2009 The Washington Post Company

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