Oracle Team USA’s quarter-billion euro budget in the 34th America’s Cup

Posted on 15 October 2013 by Valencia Sailing

If the figures mentioned in the article that appeared on Eurosport France last week are true, not only would they confirm our information and analysis we provided in our editorial, they would also, once again, validate what is common knowledge. As long as Larry Ellison is willing to spend such mind-boggling amounts, it will be nearly impossible for a challenger to beat him and, consequently, it becomes impossible for a commercially-funded challenger to get the corporate funding required to even have a decent chance in being competitive.

Bruno Troublé wasn’t, obviously, overflowing with enthusiasm this summer in San Francisco, as this edition of the Louis Vuitton Cup, his brainchild, saw just three challengers, the smallest number ever in the 30-year history of the event. “If you take out the tycoons, one of which was Ellison, that funded the four participating boats, a project isn’t viable,” claimed Troublé, adding that “we have to reduce the budgets and find a way to participate with €20 million.”

I don’t know whether budgets of just €20 million will ever be possible, feasible or even desirable but one thing is for sure, the 34th America’s Cup saw an escalation of costs. The budgets of the four teams, as mentioned in the article, are phenomenal! According to Bruno Troublé, Oracle Team USA spent €250 million to successfully defend the America’s Cup. Artemis Racing had a budget of €160 million (!!!), presumably entirely funded by Swedish billionaire Torbjörn Törnqvist while Luna Rossa had at its disposal €100 million euros. According to Prada Group filings with the Hong Kong Stock Exchange, the luxury group provided nearly €50 million euros, so it is fair to assume that the remaining €50 million came from Patrizio Bertelli.

Last but certainly not least, Emirates Team New Zealand had a total budget of (just…) €80 million, always according to Bruno Troublé. If these figures are real, this probably made the Kiwi challenger as the best return on investment for any sponsor and Artemis Racing the biggest failure! Larry Ellison and Russell Coutts, frequently pointed out that what the Louis Vuitton Cup lacked in quantity had in quality. However, that isn’t fully true either, because neither Luna Rossa nor Artemis Racing were competitive at all against Emirates Team New Zealand.

Larry Ellison and the Oracle Team USA celebrate a victory that cost, according to Bruno Troublé, a quarter-billion euros… San Francisco, 25 September 2013. Photo copyright Gilles Martin-Raget

The question again is whether the America’s Cup should be accessible to teams with budgets of just €20 million. The America’s Cup is what it is and I don’t think it would ever be possible to impose budget or salary caps, as Troublé would like. The America’s Cup is the only major sports competition where the winner has the liberty to rewrite the rules as it pleases. We have already gone through this and it’s useless to repeat it.

However, as Sébastien Col pointed out, “Ellison has shown he was ready to win at all costs. Which investor will still dare to confront him, knowing that the chances to beat him are almost zero?” It is more than clear that it will be exceptionally hard, if not impossible, for a commercially-funded challenger to enter the 35th America’s Cup. Again, nothing wrong with that, but the facts fly in the face of the claims to make the America’s Cup commercially viable.

The rumor mill wants Louis Vuitton to be replaced by Red Bull as the naming sponsor of the next Challenger Selection Series, most likely to be held in the summer of 2017. Will the Red Bull Cup have more than three participants? Does Red Bull’s image fit to an event with a handful of participants, backed by billionaires willing to spend at least €100 million to face Ellison? They must know better than we do.

4 Comments For This Post

  1. Norberto Marcher Mühle Says:

    “The question again is whether the America’s Cup should be accessible to teams with budgets of just €20 million. The America’s Cup is what it is and I don’t think it would ever be possible to impose budget or salary caps, as Troublé would like.”

    Here I agree completely with you.

    “The America’s Cup is the only major sports competition where the winner has the liberty to rewrite the rules as it pleases.”

    But here, not so much.

    The winner can only change the rules within the limits set by the Deed of Gift – see Ernesto’s fiasco in AC 33.

  2. WetHog Says:

    It was reported shortly after AC32 in Valencia that Uncle Larry spent around 200 mil to challenge. How did that work out for him and his team?

    Spending a lot of money is one thing, but spending it wisely is the key to winning the AC. ETNZ was 1 win a way and spent the least amount. Is that some magical feet only possible for Kiwis to pull off? Hardly.

    The AC is a design contest first and foremost. That takes money and a smart team to spend it wisely. If Touble and friends want to be competitive for only 20 mil then sign up for the VOR.

  3. Norberto Marcher Mühle Says:

    agreed wethog.

  4. Phil Says:

    I only agree with you that the projected costs per team need to be lowered to get more competition.

    I’ve never ever been in a race where the financial capabilities of all teams are equal. This is just false logic. It is part of the sport.

    AC34 was the closest competition EVER for AC and probably in any sport. If you want proof that money doesn’t guarantee success, AC34 was it. It was edge of your seat nail biting competition!

    If you want to look at expensive, take a look at Formula 1 where companies like Honda spent $350M/year on engines in the 90s alone.

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