America's Cup loss means big spenders will leave

AUCKLAND, New Zealand — Oracle Chairman Larry Ellison paid as much as $39,000 a month to berth his 244-foot yacht, Katana, in Auckland during this year's America's Cup sailing race. He frequented a waterfront restaurant that charges about $1,600 for a bottle of Chateau Petrus 1988 Pomerol.

Ellison, Seattle billionaire Paul Allen and scores of other moneyed yachting enthusiasts — along with 35,000 other visitors — converged on Auckland for the event, flooding businesses from bars to boat builders with cash. They may not be back after New Zealand lost the cup 5-0 to landlocked Switzerland on Sunday, ending its eight-year reign. The next race will be in Europe.

Losing to Swiss challenger Alinghi will cost Auckland, the biggest city in the nation of 3.9 million, more than $400 million — the amount of spending the race has generated in the past five months, the city estimates. The cup is a key source of revenue for local businesses and the country's $68 billion economy.

"To replace that kind of money requires another major event," said John Ingram, general manager of the Hilton Auckland, where Ellison ate at the White restaurant and team sponsors such as Oracle and BMW spent about $1 million putting up clients. "They don't come around that often."

In an effort to bring back the big event, New Zealand's government said it will give the nation's yachting team $3.2 million to help it retain key crew members in a bid to regain the America's Cup. Competing in the next campaign, to be held in Europe in 2007, may cost New Zealand's team as much as $68 million.

Judith Tabron, owner of Auckland's waterfront Soul Bar & Bistro, said she stayed open all night most nights during the regatta, helping the 15-month-old business — a favorite with the Italian teams Prada Luna Rossa and Mascalzone Latino — get off the ground.

Stuck with a 12-year lease in the city's most expensive area for restaurant rentals, Tabron said she'll now need to watch costs more closely as America's Cup business dries up.

"I still think the business will be good, but it won't have the peaks that we've seen in this period."

Ellison, Allen and about 90 other owners of "super yachts" — the luxury boats team sponsors live on before and during the Cup — spent a combined $84.5 million in Auckland for this year's race, Mayor John Banks estimates. Most stayed in the city for about four months to prepare for the event.

Ellison's Katana boasts a basketball court and a duplex apartment. Allen's 302-foot Tatoosh, the biggest visiting yacht, has two helicopter landing pads, a swimming pool and 30 full-time crew members. It needed a special wharf because it was too big to fit in Viaduct Harbor with the other boats.

Super-yacht owners' expensive tastes helped double sales in the past four months at 37 South, a company that supplies boats with goods such as food, spare parts and fuel, said Alan Jouning, a company director.

"The yachts demand the best products and the best service," said Kate Webb, who helps arrange provisions for 37 South.

New Zealand's America's Cup defeat may cost the country more than spending by the rich sailing crowd. An estimated 35,000 foreign visitors converged on Auckland to watch the race, and 1,500 journalists from 40 countries provided free publicity for the city.

Some say equipment failures on the national team's boat — it filled with water in one race and broke a mast in another — may damage the country's reputation as a boat-building center.

"No one's going to want our boats now," said Team New Zealand supporter and Auckland kiwi-fruit grower Rob Craig, 50, as he watched the New Zealand boat limp into harbor with a broken mast after abandoning the fourth race in the best-of-nine event. "It's more like a funeral than a sporting event."

New Zealand's marine industry employs about 7,000 people and generates an estimated $387 million in annual sales, almost half from exports, according to Trade New Zealand, the government's trade office.

Since New Zealand won the America's Cup in 1995, the country's marine exports have risen about 25 percent each year, on average.

That growth may slow to 10 percent next year as New Zealand's defeat brings fewer super yachts to the country, said Mike Franklin, chairman of marine export group Marex and chief executive of Babcock New Zealand, which repairs and refurbishes the boats.

Baljit Singh Jaswall, a 35-year-old Auckland taxi driver, said the cup's departure means he can no longer look forward to the $110 in extra daily fares he's earned since racing began.

"It will be dead," Jaswall said. "We're going to be as poor as a church mouse."