Billionaires’ Yacht Rivalry Spills Into Courtroom

http://www.nytimes.com/2008/08/31/business/31yacht.html

August 31, 2008
Billionaires’ Yacht Rivalry Spills Into Courtroom
By JONATHAN D. GLATER

Poised to skate across the waves off Anacortes, Wash., is a 90-foot, three-hulled wonder-yacht designed to crush its competitors in the next America’s Cup. With a price tag of more than $10 million, it was built for the racing team of Lawrence J. Ellison, the billionaire who runs the software company Oracle.

But Mr. Ellison’s yacht, which launched last week with the swing of a bottle of Moët & Chandon Champagne, may not get a shot at the prestigious trophy this time around.

A bruising yearlong legal battle has so far blocked his effort to challenge for the cup. Mr. Ellison’s nemesis at sea and in court is a fellow member of the billionaires’ club, Ernesto Bertarelli, the former head of a Swiss company whose team, Alinghi, won the last two cup races.

Of course, the America’s Cup has long attracted those with outsize egos, competitive streaks and fortunes big enough to splurge on expensive toys — like Craig McCaw, the cellphone entrepreneur, and Ted Turner, who as skipper of Courageous won the cup in 1977.

But preparations for the next race have been particularly contentious, as lawyers for the two sides squabble over the 1887 “deed of gift” that set up the race. The idea 120 years ago was for the America’s Cup to create “friendly competition between foreign countries,” but in this case, it has led to enough billable hours for lawyers to buy boats of their own. The outcome of their battle will decide whether Mr. Ellison’s yacht can compete.

The lawsuit by the club behind Mr. Ellison contends that, among other things, the rules to govern the next cup are unfair.

After a ruling for Mr. Ellison and a reversal, the case rests with New York State’s highest court, and the date of the next cup hinges on its decision.

“We’ve wasted a lot of time, a lot of money,” Mr. Bertarelli said in a phone interview last week. But “winning the America’s Cup, in my view, is not only about money and numbers.”

If it were, the cost might have deterred even him, said Mr. Bertarelli, whose net worth was estimated by Forbes magazine to exceed $7 billion. (Mr. Ellison was worth three times that amount, according to the magazine.)

“Unfortunately,” he said, “I’m addicted to the team and the sport and the cup, which inspires. You just get addicted to it.” But, he added, “the rational me” should have said this was nonsense.

The race has taken detours through the court system before. In the late 1980s, the New Zealand team filed a legal challenge against the San Diego Yacht Club, defender of the cup, for racing a catamaran against a single-hulled boat. San Diego won on the water and in court.

This dispute is different. “This is nastier,” said John Rousmaniere, who is writing a history of the New York Yacht Club. “There is an element of distrust here.”

Passion for sailing runs high on both sides of the Ellison-Bertarelli dispute.

Mr. Ellison, whose spokeswoman said he was not available to be interviewed, fought weather to win the Sydney Hobart race off the coast of Australia in 1998; six sailors on other boats died in the storm. He is strong-willed, so much so that the skipper for his team, BMW Oracle Racing, ordered him off his yacht in the run-up to the 2003 cup.

Mr. Bertarelli, often the navigator on the boat his team races, has sailed competitively since his 20s. He said he “basically learned to walk on a sailboat” with his father near the family’s summer house in Italy. (His father was chief of the biotech company Serono until the junior Mr. Bertarelli took over in 1996; Merck bought the company last year.)

To help win the cup in 2003, he hired Russell Coutts away from New Zealand’s team. Bodyguards were hired after the team received threats from angry New Zealanders during the cup finals.

Mr. Coutts was then hired away by Mr. Ellison’s team. He is now in Anacortes, training on the newly launched trimaran. “I would love to get back into the racing,” he said, lamenting the litigation. “This is obviously the last thing we wanted, but having said that, I think these are really important issues.”

Mr. Bertarelli says Mr. Ellison is trying to win in court what he has not been able to win, in two attempts so far, on the water.

“It’s like winning no matter what. It’s almost, ‘I don’t care how I win.’ And that I can’t respect,” Mr. Bertarelli said. “I can respect someone who works really hard on the water, who works really hard in getting there, but keeps the sense of what it’s all about. It’s about a good regatta. It’s a yacht race, for God’s sake.”