Muscat // The Dubai International Boat Show, which ends on Friday, is the embodiment of luxury living.
From submarines to superyachts, playthings for the rich and famous are on offer for those in the high-end fast-lane. But superyachts of an altogether different nature were the order of the day in Oman’s capital Muscat last weekend.
The Louis Vuitton America’s Cup World Series regatta was in town and the logo of French luxury goods maker famed for its monogrammed leather bags and chic apparel was adorning everything from the racing yachts’ sails to the polo shirts the waiters wore in the hospitality section.
The arrival of the heats of the world’s most-watched sailing competition marked the Sultanate as the first Middle East country to host the event. Six teams from Britain, the United States, France, Japan, New Zealand and Sweden made up of the world’s top sailors were competing in the latest round of races in multimillion-dollar state-of-the-art, 45ft catamarans that “fly” on hydrofoils and can hit speeds of 50 knots. The Muscat event was one of a number of point scoring regattas held worldwide to determine the challenger in next year’s final against the current holders team Oracle USA.
The world of yacht racing has long been synonymous with wealth and the America’s Cup, which first took place in 1851, is the zenith of the sport. For Louis Vuitton, sponsoring the event is a natural fit. But it has not all been plain sailing.
The San Francisco leg of the 2013 World Series was described by The New York Times as “woefully short on competitors and interest”. The French company challenged the organisers, the Americas Cup Event Authority (ACEA), to up their game or risk it pulling the plug on what is now a 33-year relationship.
“We had told them that they would need to come back to us with a compelling story this time and a compelling proposal so we didn’t have to face those issues again,” says the Louis Vuitton chairman and chief executive Michael Burke.
With the series alone bringing in Louis Vuitton cash to the tune of a reported US$10 million dollars, it was a significant threat.
However, the final itself took some of the sting out of the French company’s rebuke.
The race between Emirates Team New Zealand and Oracle “was perhaps the most riveting in the history of the event”, as the The Times described it as Oracle rallied from a 1-8 deficit with eight straight victories to retain the trophy 9-8. The edge-of-the-seat racing captivated millions of TV viewers and hit headlines globally, providing the kind of exposure most companies can only dream about.
“The final kind of made up for all of it,” says Mr Burke. “That kind of repaired some of the frayed feelings with the public, and that gave the organisers a chance to come back with what was good about it.”
Indeed, feelings were so unfrayed that the firm last year decided to expand its role for the current competition, which ends with the finals in Bermuda next year. The move was a “significant boost for the venerable event, which has lost commercial and sporting momentum in recent months because of challenger withdrawals and hotly disputed rule and design changes,” the The Times said.
By last May, calm waters had replaced the choppy seas.
“Since 1983, Louis Vuitton has continued to play a major role in the America’s Cup, but this agreement is the widest-ranging yet,” Harvey Schiller, the commercial commissioner of the America’s Cup, said at the time. “Under this agreement, Louis Vuitton is extending its involvement throughout the entire event.”
The deal saw Louis Vuitton become title partner of the America’s Cup World Series, the America’s Cup Qualifiers and Challenger Playoffs. The finals, will now be called the “America’s Cup Match presented by Louis Vuitton”.
Today, the ACEA is busily adapting to the demands of modern sports fans, with major plans afoot to digitalise coverage of the event. While there is the AC+ app available, the company has bigger ambitions.
Sir Russell Coutts, the New Zealand-born former America’s Cup skipper who is now the chief executive of the ACEA, says the company aims to build on the wider audience the 2013 final garnered. “We want to provide a more inclusive offering to viewers and fans across all platforms,” he says.
“We may, for example, provide coverage that enables viewers to watch split-screen [on TV or online] – letting them take the lead while watching races real-time.
“For instance, if a race leader seems to be losing ground, you could switch to graphics overlaying the images of each boat showing stresses on parts of the boat relative to the other competitors. Then you could at the same time be having a conversation or debate with other fans online, saying ‘team such and such is gaining is because its producing less drag’ for instance, or you could follow each sailor and see how they are coping,” he says.
As well as the enormous cost involved in developing what are effectively the seaborne equivalents of Formula 1 racing cars, not to mention the expense of moving all the equipment and personnel needed to venues around the world, hosting the final is not for the fiscally faint-hearted either.
The total Bermuda government budget for America’s Cup related expenses during the 2016/17 fiscal year will be US$24 million, the finance minister Bob Richards says, adding that “it is anticipated that total additional spending will exceed the $1.7m original estimate”.
“Following the success of the Bermuda Louis Vuitton America’s Cup World Series event in October, attention is now focused on the 2017 AC Event Village at the Royal Naval Dockyard and associated site works for additional team bases on the South Basin dock,” he says, adding that the financing for the projected $39m reclamation cost has been provided by a local banking institution.
But the rewards are, in the eyes of the Bermuda government, well worth the outlay.
“Following Oracle Team USA and SoftBank Team Japan, Groupama Team France and team Land Rover BAR UK are scheduled to set up bases on the South Basin dock before the end of 2016,” says Mr Richards.
“Artemis, the Swedish Team, has nearly completed construction of their base and boat-building operation at Morgan’s Point. They employed over 70 local workers for the project.
He says since April 2015, Oracle, Artemis and Team Japan have established business operations in Bermuda with a cumulative spend of more than $10.2m to date for fiscal 2015/16.
Mr Richards says the property market is among the sectors to have directly benefited. “To date, two teams have accounted for more than 80 house and apartment rentals from local landlords
“In addition, some 390 workers were employed in America’s Cup related projects in the Royal Naval Dockyard valued at over $4.9m.”
Mr Richards hit back at media reports questioning the huge outlay when other more pressing issues need attention.
“In response to those asking why is government spending all this money on America’s Cup when there are so many other worthy things in Bermuda upon which we could spend, the answer can be summed up in three words: jobs; rents; and income.”
Why the 2017 Louis Vuitton America’s Cup final should be held on the sun-kissed high-end resort north of the Caribbean so beloved of the perma-tanned super-rich can also be summed up in three words: luxury, luxury, and luxury.
Follow The National’s Business section on Twitter