Paul Cayard's AmericaOne suffered serious setbacks in winds up to 31 knots on the Hauraki Gulf today, damaging the mast so badly he retired from the race and injuring bowman Greg Prussia badly enough he had to be plucked from the boat and replaced before the start.

The upshot was a grueling loss to the Italian entry Prada, which sailed the course without problems to take a 2-1 lead in the best-of-nine America's Cup challenger finals. The winner goes on to race Team New Zealand for the Cup beginning Feb. 19.

It was a thoroughly dispiriting day for the Americans, who broke so much gear Cayard had a hard time listing it all. Among the casualties: one spinnaker split in two, a broken mainsail halyard, the mast, which will be replaced, and a headsail washed overboard by a wave.

The loss was doubly galling as AmericaOne showed good speed in the early going and led at the first turning mark by 14 seconds.

In winds over 20 knots and sea conditions so rough they pushed the limits for safe racing, Cayard doubled that lead to over three boat lengths on the second leg before the wheels came off.

As the two 75-footers raced along under straining spinnakers in winds building to 24 knots, Prada got back to almost even.

Cayard turned to cross his rival's bow and grab the favored left side of the course but lacked right of way. When the sleek silver and red Italian boat lifted on a wave as they converged, Cayard had to slam the wheel back over to avoid a collision.

Umpires flagged a penalty as Prada's spinnaker brushed the American boat. Worse, in his haste, Cayard failed to give his crew time to react. The big, neon-green AmericaOne spinnaker flew out of control and flailed loose in the sky as Prada scooted away.

By the downwind turning mark the Italian boat was 23 seconds ahead and Cayard was still obliged to do a 270-degree penalty turn before the end of the race. It was race over, assuming Prada could hold together, which it did.

But more mayhem loomed.

Cayard pushed to get back in striking range but the tactic backfired two legs later when he buried the bow in a wave and the boat slowed nearly to a stop. Solid green water whooshed down the foredeck where the jib lay ready for hoisting, washing the sail overboard. Simultaneously, the spinnaker shredded.

Cayard looked stunned at the helm as the crew scurried to gather the tatters of the spinnaker and a rubber chase boat collected the floating jib.

You'd have thought the misery was over, but the capper came a leg later when cracking noises in the mast convinced him it was in danger of toppling. The weary crew lowered the mainsail and took a tow home, beaten and humiliated. Then the tow rope parted as they forged through the waves, smacking jib trimmer Moose McClintock in the back.

"Cayard with the penalty had to push to try to get back in it," said Dee Smith, tactician on America True, the San Francisco boat that was eliminated in semifinals earlier this month.

"With that push came trouble. You're pushing hard and pumping hard and things break."

The blow was brutal for AmericaOne's crew, which had eagerly awaited strong winds as an equalizer after Prada showed a speed edge in light winds in the first two races.

Today's problems may have long-term consequences. Racing resumes Sunday and big winds are again forecast.

AmericaOne's mast will be replaced with the team's only spare tonight, and Cayard doubted the damaged No. 1 mast can be repaired in time for use again this series.

Moreover, he lost bowman Prussia for at least two days. He was badly bruised while at the top of the mast before the start trying to fix a broken mainsail halyard. Backup bowman Ralf Steitz flew by helicopter to Gulf Harbor near the race course and was rushed by rubber boat to the yacht.

Despite the troubles, Cayard said he had fun. "What we saw today was two years of preparation by Prada compared to not as much by us. They did an awesome job in difficult conditions.

"It was an awesome war out there. It was all on and I had a lot of fun.

"It was like the second leg of the Whitbread Race," said Cayard, recollecting his first voyage to the Southern Ocean two years ago when his boat, EF Language, suffered damage and destruction in big winds, but rallied later to win the round-the-world race by a big margin.