It's official. There will be a two-boat race for the America's Cup next summer, though no one knows exactly when and Cupholder Dennis Conner's forces won't say where, or what his boat may look like.

Conner's defense organization, Sail America Foundation, announced in San Diego yesterday that, against its will, it will honor a court order and meet New Zealand banker Michael Fay's challenge in a series of three races for yachting's crown jewel.

Unless there's a delay, which Sail America won't seek, racing begins in late August.

But Sail America executive vice president Tom Ehman said the site could be anywhere in the world and won't be announced until 90 days before the first race.

He said to compete against the huge, 90-foot-waterline sloop Fay is building, Conner may build several potential defenders in a variety of radical styles including hydrofoils and multihulls, and he said Conner won't name his racing boat until the day competition begins.

Ehman also said Sail America will race only against New Zealand, permitting none of the other seven challengers from four countries who want to race to participate.

The announcements sparked an immediate, irate response from Fay in Auckland. He said Sail America is trying to "jimmy the rules" to ensure a win.

"We have an expectation as the challenger and the world has one, too, that San Diego Yacht Club representing the United States will contest this match fair and square," said Fay.

"Sail America doesn't have to nominate its boat until some mutually agreed-on time before the first race," Fay went on. "We agree on that. But that boat will be the same class of boat that the challenger has nominated for the event, and not a Windsurfer, hydrofoil or a hot-air balloon."

Moreover, said Fay, under his understanding of the rules, the defending club must pick a course on its home waters.

"To change the venue to anything else requires the mutual consent" of the challenger, he said.

Fay's boat is tailored to the light airs off San Diego. If Sail America decided instead to race off stormy Hawaii or someplace similar, Fay's chances would shrivel.

Under the challenge, which follows the antiquated wording of the 100-year-old Cup Deed of Gift, New Zealand is committed to bringing a sloop 90 feet long on the waterline, the size boat Vanderbilts and Liptons used to race for the Cup back in the early 1900s. What might Conner counter with?

"That's a good question," said his design coordinator, John Marshall, who hurriedly began work this week. "It sure won't be anything like New Zealand's.

"They've told us what they're bringing. Now it's up to us to come up with something better, and there are very few rules.

"That's the fun part."

Marshall said Sail America could decide on a twin-hulled catamaran or a small, superlight planing hull to race away from New Zealand's heavier, traditional keel design. Ehman said several designs may be built, from oversized Windsurfers to hydrofoil-assisted keel boats to trimarans or bluff-bowed, flat-bottomed scows.

Said Marshall, throwing down the gauntlet, "We enjoyed whipping them last time {in February, off Fremantle, Australia, when Conner beat New Zealand, 4-1, in challenger finals and went on to win the Cup}, and we're going to enjoy whipping them again."

Sail America was backed into a corner by a New York State Supreme Court judge's finding last week that Fay's unexpected July 15 challenge was valid. Judge Carmen Ciparick, whose court has overseen the Deed of Gift for a century, ordered San Diego Yacht Club either to meet the challenge or forfeit the Cup.

Sail America had intended to stage a multinational Cup regatta in 1991 off San Diego with up to 21 challengers sailing 12-meters, the Cup yacht of choice for the last 30 years.

But banker Fay, after rereading the Deed of Gift with his attorney while waiting for San Diego to make its intentions known, came to the conclusion it was a challenger's right to demand a race any time, as long as he named a boat no bigger than 90 feet on the waterline and gave 10 months' notice.

Fay did just that, San Diego ignored him, Fay went to court and Ciparick's ruling last week vindicated him.

San Diego's City Council, reeling at the possibility of losing an event worth an estimated $1.2 billion to the city, vowed Tuesday to appeal the ruling. But Ehman said Sail America and the San Diego Yacht Club, while appreciative of the council efforts, want no further litigation.

"We don't want any more legal work. We're tired of the court stuff," he said. "We're sorry it got dragged into court.

"We've got a challenge. I like things you can sink your teeth into," said Ehman.

"We want a proper race for everyone that's interested in 1991, not just one for beer barons and investment bankers. That's what we want, but first we have to settle this other challenge."

Ehman said San Diego will try to amend the Deed of Gift over the next several months so a surprise challenge of the sort Fay raised can't happen again. Meantime, he has a yacht race to win, and he doesn't expect it to be easy.

"New Zealand has the advantage of surprise and they have a head start," said Ehman, noting Fay's boat is already under construction in Auckland and due for completion March 27.

"We have the advantage of choosing our weapon and the place."