The America’s Cup trophy has always been a magnet for powerful men, from J.P. Morgan and various Vanderbilts to Ted Turner—perhaps because there simply is no second place. The race revolves around a defending champion and challengers who must abide by quaint 157-year-old guidelines. In the 21st century, a couple of things have changed: First, the numbers. Turner spent $2.7 million on his boat and crew to win the Cup in 1977; competitor Larry Ellison says his unsuccessful 2007 attempt cost “a couple of hundred million dollars.” Second, the attitude. Where once sailing was an old-money pursuit, full of polite rules and conservative attire, the Cup has become a grudge match that includes name calling, accusations of unfair dealing, lawsuits and a pair of business titans who’ve become such enemies they’ll do anything to win.
Staring each other down are Ellison, software mogul and fourth-richest man in America (with assets valued at some $25 billion), and current Cup holder Ernesto Bertarelli, heir to a Swiss pharmaceutical fortune (with $10.5 billion in assets). When they met in 2002, while they were both preparing for their first attempts to win the Cup, both thought they had found a kindred spirit. “I thought he was charming, competitive and aggressive—all the things I expected to find,” Ellison says. They became friends, and even dined together on each other’s yachts. Now, they no longer speak. The bond they forged so readily had just as quickly pitted them against each other.
Ellison was not born into money or sailing. His mother was so poor she gave him up for adoption, and his adoptive father, a Russian immigrant who took his name from Ellis Island, frequently told him that he would not amount to anything. But growing up in a small apartment in Chicago’s South Side, Ellison was fascinated by the sailboats he saw gliding across Lake Michigan. A University of Illinois dropout, he moved to California in the early 1970s to pursue a career in computer software, and bought a 34-foot sloop he could barely afford to maintain.
In the 1990s, after Oracle, the company Ellison founded in 1977, had become the world’s No. 1 producer of business software, a next-door neighbor talked him into building a state-of-the-art, 80-foot-long racing yacht. Ellison hired a crew of sailors and began to enter, and then to win, races—including the grueling 628-mile Sydney-to-Hobart in 1995. Not above dabbling in pleasure craft, Ellison’s 192-foot boat Ronin, and even the 452-foot behemoth Rising Sun he co-owns with David Geffen, can sometimes be found anchored near his house on Carbon Beach, in Malibu, Calif. The 64-year-old with a wiry build and perpetually scruffy beard splits his time between there and Woodside (where he shares his custom-built 16th century-style Japanese palace with his fourth wife, Melanie Craft).
Bertarelli, on the other hand, has been sailing since early childhood. He was born in Milan, Italy, where his family held a controlling interest in Serono SA, a pioneer of several fertility drugs and the European market’s largest biotechnology company by revenue. The family moved to Switzerland in 1977 during the Red Brigade upheaval, and he spent summer days sailing on Lake Geneva. Bertarelli joined the family business while still an undergraduate. After he finished Harvard Business School, he succeeded his father as chief executive and, a decade later, sold the company for $13.5 billion. Now 42 years old, he lives on the shore of Lake Geneva with his wife Kirsty, a former model and Miss UK, and their three young children. He has a full head of brown hair, is in great shape, and has a youthful exuberance that seems more Italian than Swiss. His quiet and conservatively decorated office, dedicated to divesting his fortune, is at odds with his natty wardrobe. (During an interview for this story, he wore white slacks and a powder blue jacket that looked perfectly suited for a yacht club happy hour.)
The two came to be obsessed with the America’s Cup in different ways. For Ellison, it happened when he sailed the Sydney Hobart race again in 1998 and the fleet was battered by waves more than 80 feet tall and hurricane-force winds, resulting in five boats sinking and the death of six sailors. As Ellison’s boat began disintegrating, he swore that if he survived he’d never enter another ocean race. The America’s Cup, which takes place in sheltered waters, became his goal. “I decided to focus on a more technical and less life-threatening form of sailing,” he says. In 2000, he formed a Cup team called Oracle Racing with BMW as the primary sponsor.
The Cup bug bit Bertarelli after he witnessed Team New Zealand win the competition in Auckland in 2000, where the team introduced him to its hypercompetitive skipper, Russell Coutts. Bertarelli says he’d never thought of launching his own team until Coutts visited him in Switzerland a few months later and delivered the stunning news that he was thinking about abandoning the Kiwis and was looking for someone to sponsor a new team. Within a few weeks, Bertarelli had hired Coutts and five crew members, forming a team he dubbed Alinghi—the name of an imaginary childhood friend he created with his sister Donna. “It was completely out of the blue,” Bertarelli says, “but I decided I could not look at myself in the mirror if I passed up what looked like a great opportunity.” People were skeptical—a Cup bid from land-locked Switzerland seemed about as absurd as a Jamaican bobsledding team.
Both men’s teams entered the Cup for the first time in 2003 in Auckland and, after defeating Oracle in an elimination regatta, Coutts and Alinghi went on to shut out New Zealand by winning five straight races. Bertarelli brought the trophy to Europe for the first time since a yacht called America won the first competition in 1851. He became a national hero.
The rivalry remained friendly through the next competition—in Valencia, Spain, in 2007—where Oracle was again knocked out early and Alinghi successfully defended the Cup. But the good feelings came to an end immediately after when Bertarelli excercised what might be the most valuable winner’s perk. He announced the ground rules, or protocol, for the 2009 America’s Cup race, as was his right by tradition—but pushed the advantages further than anyone had before.
The Deed of Gift that governs the competition requires that the defender designate another team’s yacht club as the Challenger of Record and that the two teams negotiate the protocol. Bertarelli didn’t just shop for an agreeable club—he had created one for the purpose, a Spanish entity with no clubhouse or history, named Club Náutico Español de Vela. The protocol he negotiated granted him the right to reject or eject competitors and also to select the umpires who would judge races.
“When I first read the protocol, I thought it was a joke,” Ellison says. “They could disqualify us at any point in time, for any reason—and the umpires would work for them. I mean, I could be the leading scorer in the NBA if I could get the referees to work for me.” Bertarelli has dismissed the notion that he manipulated the negotiation to improve his chances of winning, saying, “I think the argument that the protocol was biased is thin.”
A few days later, Ellison convened a press conference in Valencia to protest. The protocol was “unreasonable and unfair,” he told reporters. He went on to propose that his team’s club, Golden Gate Yacht Club of San Francisco, should be the Challenger of Record in 2009. After Bertarelli ignored the complaints, Ellison sued him in New York’s Supreme Court, where the Deed of Gift is registered. The suit asserted that Bertarelli’s club was a sham and demanded that it be replaced as challenger.
Bertarelli fired back at another press conference. “It is a shame that having failed to win the America’s Cup on the water, he now wants to win in a court of law,” Bertarelli said. He later told a Swiss newspaper that Ellison was “a loser” and taunted that he would have no more success in the courts. “It is not possible that we will lose,” Bertarelli declared. “We have the best lawyers.”
“You have to either get angry or laugh,” Ellison says in response to Bertarelli’s jibes. “But if I’m a loser, why won’t he come out and sail against us with fair rules? You don’t look good making statements like that. It makes him sound like a frustrated child.” He adds, “I think it says a lot more about him than it says about me.”
Bertarelli says Ellison’s legal actions were an overreaction that jeopardize the next competition and may drive away Alinghi’s biggest sponsor, Swiss banking giant UBS. (A UBS spokesman says it has not yet made a decision regarding its sponsorship. Oracle’s major sponsor, BMW, says it is staying on board, but the bulk of that team’s funding has always come from Ellison.)
Professional sailors everywhere are still appalled by the legal battle, but most of the ire is directed toward Bertarelli. “The Cup was effectively brought before the court by Alinghi with its ignominiously unsporting protocol,” says Vincenzo Onorato, the owner of Mascalzone Latino, the Italian Cup team. “This event has been profoundly damaged by Alinghi.”
Last November, after months of legal arguments, Ellison appeared to have prevailed when Judge Herman Cahn ruled that Bertarelli’s yacht club was indeed bogus. “The Deed expressly requires one specific attribute, namely, that the club have an annual regatta,” he wrote, noting that Bertarelli’s Club Náutico had not staged even one regatta until after Ellison’s suit was filed. The judge ruled that Ellison’s yacht club was the rightful Challenger of Record. Bertarelli was ordered to agree on a protocol with Ellison or the next Cup races would be run in line with default provisions created for such scenarios when negotiations between defenders and challengers deadlock.
Agreement was unlikely, in part because of rumors, and a subsequent announcement from Oracle, that Ellison had hired Coutts, Bertarelli’s Cup-winning skipper. Ellison didn’t exactly steal him away from Alinghi: According to Bertarelli, the pair had a bitter falling out after the Alinghi win in 2003, partly because of Coutts’s unwillingness to sail with his boss in non-Cup races. “I paid him millions,” he fumes, “but he had other projects that he thought were more important.” After Coutts left the team, Bertarelli retaliated with a rule change that barred Coutts from sailing for any other team until after 2007.
Blaming Coutts for Ellison’s decision to sue, Bertarelli says, “Russell Coutts wins by destroying,” and cites his defections from both Team New Zealand and Alinghi. “He destroyed Team New Zealand and he tried to destroy Alinghi. And now he is destroying the America’s Cup. He is destroying the game that gave him everything.” Coutts says all of Bertarelli’s accusations are “in conflict with the record,” but he refuses to join the mudslinging or admit to any personal bitterness. “Your mind has to be clear of that,” he says.
“Whenever I’ve taken my eye off the ball because of those kind of distractions, I have increased my chances of losing.”
Ellison believes that Coutts being free of Bertarelli’s 2007 rule was what set off the whole debacle. “I decided the thing he found unbearable was losing the cup to Russell Coutts,” he says. “I think that’s what drove him to come up with such a one-sided protocol.”
A few weeks after the court decision, Bertarelli and Ellison had one last conversation. Bertarelli was dining at Harry’s New York Bar with his wife when Ellison returned his call. Stepping outside the restaurant with his cellphone, Bertarelli says he told Ellison, “You have clearly won the first round, but are you sure about where you want to go?” He then told Ellison about how he would like to make the Cup more appealing to spectators and sponsors by increasing the frequency of the contests and putting caps on expenses. Ellison said he liked Bertarelli’s ideas but that the delay they would cause was unacceptable. “It would be wonderful if we could do the things you’re talking about,” Ellison says he told Bertarelli. “But that can’t distract us from what’s going on.”
The men have not spoken since. “I have called him several times,” Bertarelli says, “but he hasn’t called back.” Ellison says he shouldn’t hold his breath: “He’s made so many public statements that are not helpful that I don’t think there’s a lot left to talk about.”
When Ellison and Bertarelli stopped negotiating, the Deed called for a best-of-three series between the Cup holder and the Challenger of Record and stipulated the maximum boat size for the series to be 90 feet long with a width of 90 feet wide. Making the most of those dimensions, the same as a baseball diamond, clearly called for high-tech multi-hulled boats, catamarans with two hulls or even trimarans, which have three.
Ellison began developing plans for a massive multi-hull since he sued Bertarelli, long before it was clear whether that suit would prevail. Construction began late last year, and Ellison has said that the boat will be a trimaran. Bertarelli says he did not begin building his boat for the challenge until May and refuses to reveal details. (In the only other Cup regatta in which a multi-hull competed, Dennis Connor led the 1988 American team on a 60-foot catamaran and won over a much slower, single-hull boat.) Coutts, who says the Oracle boat will be completed this month, expects both teams’ boats will be capable of reaching speeds of more than 40 knots, perhaps surpassing the sail power record of 47 knots, or 54 miles per hour. “Even 50 knots is possible,” he says.
This could be dangerous. The trick to reaching optimal speeds on a catamaran or trimaran is “flying a hull,” which means the boat and sails are aligned with the wind in such a way that only one hull remains in the water. The rest of the boat flies above the surface. The rush of speed increases chances of capsizing; if a person were on the “high side,” it would be like being flung off a nine-story building. Both Alinghi and Oracle have flipped relatively small catamarans during training, landing crew members, including Coutts, in the hospital. In previous Cup matches most sailors didn’t wear life preservers, but the multi-hulls will require the kind of helmets and padding used in downhill skiing and motocross competitions. “If either side makes a major mistake,” says Coutts, “it’s going to be catastrophic.”
Enormous firepower may still be for nought: In late July, the Appellate Division of the New York Supreme Court, surprised everyone when it overturned the previous decision and reinstated Club Náutico as the Challenger of Record, basing its decision on an interpretation of the Deed that credited planned regattas. This created another chance for Bertarelli to devise a protocol to his liking, potentially toss out the current boat specs, and even block Ellison from entering the race at all. Because the panel split three to two, Ellison was automatically entitled to appeal. He filed within 24 hours.
Training goes on despite the legal uncertainty, with both men spending about a week of every month sailing with their teams. Neither of them have told their families of the potential perils. They agree on one thing though: They are not going to let the risks get in the way of their participation. “If you don’t do things because you are afraid, you will miss the moments in life that define you,” says Ellison. “There are certain things I am afraid to miss. I think that’s the way I lead my life.”
“We are doing everything we can to make sure that Larry doesn’t win,” says Bertarelli, who continues to blame the Cup’s problems on Ellison. He offers up a telling lesson from his own experience. In the early 1990s, when he began racing high-tech catamarans on Lake Geneva, his money afforded him the fastest boats and the best crews—the advantages of every serious sailor’s dreams. He won almost every race. “I killed the competition,” he says. “But I learned that money can be a detriment to fun.”