DURING THE competition for the America's Cup last winter, it seemed to us that the truly exciting thing in sailboat racing was not the sight of sails maneuvering at sub-bicycle speeds on the far horizon, but rather the vivid writing that brought it close and gave it a bit of sound and fury. But that was before we'd been made aware of how much excitement a good bout of knockdown, drag-out litigation could add to the sport. Now, thanks to a successful courtroom maneuver by a New Zealand banker, we may have the most exciting America's Cup competition ever. A stirring judicio-nautical spectacle looms: swelling seas of affidavits, lawyers climbing the rigging with subpoenas clutched in their teeth, boarding parties of the first, second and third parts and the decks running black with ink.

Until recently, none of this would have been conceivable. Dennis Conner had retrieved the America's Cup from Australia last winter in a multinational competition among the 12-meter yachts that have become the accepted class of boat for these races. His sponsors, the San Diego Yacht Club and the Sail America Foundation, were preparing for an orderly defense of the cup in 1991. But while they did so, a New Zealand banker, Michael Fay, was studying the 100-year-old document that sets the terms of the America's Cup competition. He determined that, strictly constructed, it allowed him to challenge for the cup this coming summer, and also to dictate the size of the boats. He said he wanted much larger ones than the 12 meters -- 90 feet long at the waterline.

To the consternation of many, an American judge ruled in favor of Mr. Fay. Mr. Conner's sponsors announced this week that they would go along with the judge's ruling and race this summer, but then added that they: 1) would allow no challengers other than Mr. Fay, 2) might just field some surface-skimming craft that could easily outrun Mr. Fay's traditional boat and 3) would consider choosing rough waters far from San Diego for the competition, which would put Mr. Fay at a further disadvantage.

To all of this Mr. Fay cried foul and threatened still more litigation, as did the city of San Diego, which stands to lose much money and many potential jobs the way things are going. The job situation would be somewhat alleviated, however, if Mr. Fay got his way and the race were held among a number of 90-foot yachts. That's because each of the big boats would require a crew of about 40 -- not counting law clerks and stenographers.