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America’s Cup: Billionaires Play, Residents Pay

by Larry Bush on 06/21/2013

in Paper Trails

The America’s Cup slipped into town with its first events with little fanfare a week or more days ago, accompanied by the sound of ringing cash registers for Larry Ellison even while his event committee appears likely to leave San Francisco taxpayers to foot millions more in costs than originally promised.

Ellison will garner millions from free use of city-owned facilities that usually come with fees and rental charges, allowing his organization to flip the sites into venues that can cost more than $600,000 for a single private “chalet.”

At the same time, long-standing community-based organizations that draw thousands of participants for fundraising and youth sports have been turned away by the Recreation and Parks Commission in preference to the free use by Ellison.

While attention has focused on the looming deficit faced by the city in the likely event that the America’s Cup Organizing Committee fails to meet its fundraising commitments, virtually no attention has been paid to Ellison’s profit-making ventures that are fed by free use of city facilities.

Those arrangements ultimately approved by the Board of Supervisors and Mayor, had their genesis in arrangements between the Recreation and Parks Department whose commission is headed by Mark Buell and the America’s Cup Organizing Committee that is headed by Mark Buell. Concurring was the Parks Alliance, also known as the Parks Trust, a nonprofit whose board members include Mark Buell and Recreation and Parks Executive Director Phil Ginsburg and which receives hundreds of thousands in government grants.

City Hall’s negotiations were led by Kyri McClellan of the Mayor’s Office of Workforce Development. At an undisclosed point in time, McClellan was offered the position of Executive Director of the America’s Cup Organizing Committee, a move that required an ethics waiver to allow her to negotiate with her own former office. The city’s Ethics Commission quickly waived the post-employment restrictions and conflict of interest standards on the basis that the new job represented an important opportunity for McClellan.

The first revenues were generated by the America’s Cup concerts on Piers 27-29 with a sold-out performance holding 9,000 people at prices that began at $52. With concerts slated to go until September, it is expected that continued sell-out performances will bring a minimum of $8 million from the concerts alone. The site is provided at no cost to Ellison’s group, the America’s Cup Event Committee.

The same piers double during the daytime races as lounges and private “chalets” that run to $50,000 for a lounge to $600,000 for a private “chalet” for five days.

Ellison’s group even has arranged for use of the Pier 39 parking structure roof for viewing at $300 a person.

The largest number of participants will be on bleachers and grandstands that run most of the length of Crissy Field at prices that range up to $90 per person. The promotional materials note that one prime site called “The Deck” will not allow for a view of the finish line, which may instead be watched on large screens.

(All prices from the America’s Cup promotional materials at http://www.sportsmark.com/Client_email_blasts/americas_cup_san_francisco/34th_Americas_Cup_Club_Hospitality_Brochure.pdf)

To accommodate Ellison’s needs, the Recreation and Parks Department has refused permit requests from longtime users of Crissy Field. A youth soccer league that typically plays 80 games a month and pays a fee of $100,000 will be cut back to one game a month. Other events like the Liver Life Walk and a breast cancer walk that are major parts of the charities fundraising efforts have been cancelled and have to find alternate sites.

The priciest option is for berthing what the organizers call “Super Yachts” with an undisclosed cost revealed to yacht owners only after their application has been accepted. This falls into the “If you have to ask, you can’t afford it” category.

The America’s Cup Organizing Committee, set up to meet city costs for hosting the event, pledged to raise up to $32 million. After several reversals that saw declining participation and thus declining city costs, the Buell committee pledged to raise $22 million.

However, they have actually only raised $10 million with most of that in pledges, and obtained a $5 million loan from Ellison’s America’s Cup Event Committee, still leaving them $7 million short of the city’s expected costs.

Mayor Lee announced that he was holding regular breakfast meetings with potential major donors to close the gap but so far has not reported raising any funds either in public statements or in documents required to be filed by him at the Ethics Commission under a “behested payments” state law.

Former mayor and current Lt. Governor Gavin Newsom, named days after leaving city office to be an “America’s Cup Ambassador,” has not been identified as part of any effort to raise funds for the event he took credit for arranging.

Former Board President Aaron Peskin launched a web site aimed at telling “Larry Ellison to pay America’s Cup Debt” (http://www.causes.com/americascup) that so far has been signed by over 4,000 people.

While Ellison himself has an estimated worth of $43 billion, the other backers of yachts in this year’s race also are billionaires. Noted one professional associated with raising corporate sponsors for past America’s Cup contests, “Unless you are a billionaire, it is very difficult.” Each time has spent an estimated $65 million to $100 million on the yacht they will race, with expects saying that it will take $100 million if you expect to win.”

It’s hard not to see San Francisco’s waterfront this summer as anything but a billionaire’s playground while city residents struggle to meet the bills, unable to pay for a neighborhood park at Rincon Hill or to keep the Botanical Garden free rather than paying to see a tree.

Full access to the waterfront along Crissy Field will be denied for a further three months after the end of the America’s Cup events in order to restore the grounds and allow new grass to grow. Since the field was restricted for since April to prepare for this event, that amounts to nearly eight months when residents could not use this prime waterfront space.

Years from now, San Franciscans will still be reminded of the summer when the waterfront was auctioned off to pay for this event. Committee and Port officials have agreed to sell “naming rights” to unspecified locations on the waterfront in exchange for contributions to the America’s Event Organizing Committee. The first came from Kilroy realty company for $1 million, with Dignity Health paying $500,000.

Port officials currently are unable to state what will carry their names and logo, referring the issue to an upcoming July 9 Port Commission meeting where the details will be made public.

 

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