DOLLARS AND SAILS : America’s Cup Putting Wind in Windfall and Taking the Free Out of Fremantle

FREMANTLE, Australia —  Nobody has to guess when the sheep boats are loading in this muscular little working port on the Indian Ocean.

A hundred and eighty-nine thousand sheep being crammed aboard a single ship for a trip to the Arab states have a way of announcing their presence to the wind, and the wind quickly informs the rest of the harbor.

Organizers of the first non-American defense of the America’s Cup yacht races were worried that the sheep might cast a pall over the biggest event to hit the west coast of Australia since the discovery of gold in Kalgoorlie in 1893.

But the folks who live in the state of Western Australia need not worry. It seems somehow entirely proper that the competition for the Cup, yachting’s most cherished trophy, is being conducted amid the commercial bustle of a working port. After all, nearly everybody else is intent on making money. Why shouldn’t the sheepmen?

Fremantle, at the mouth of the Swan River and a dozen miles downstream from Perth, is almost exactly halfway around the world from Newport, R.I., the traditional site of the America’s Cup races.

In spirit, though, Fremantle and Perth are even farther away from those sheltered Newport waters where a rich-man’s club conducted the 12-meter races for the last 132 years.

The elitist New York Yacht Club successfully defended the 27-inch silver cup 26 times, a modern sports record for endurance. But three years ago, a brash Australian businessman, Alan Bond--Bondy to his egalitarian mates from Down Under--ripped the cup away from America’s Eastern Establishment and carried it home.

Now, six Australian 12-meter racing yachts and sleek racing hulls from six other nations have completed the first round in a five-month series of individual match races.

The non-Australian challengers, which include five U.S. boats--three from California--are competing for the Louis Vuitton Cup and the right to race against the winner of the Australian defender series in a best-of-seven series.

More than 500 races will be sailed in the choppy waters off Fremantle before the final series in February. The winning boat and crew will race between 43 and 50 times in some of the toughest waters on earth, according to race officials.

The Fremantle fishing boat harbor, normally home to hundreds of craft employed in the multimillion-dollar Australian lobster industry, has been converted to a yacht-basin housing more than $40-million worth of the most sophisticated racing hulls that man and computer have been able to devise.

The event is an enormous economic windfall for the isolated Western Australian coast, which is tied to the more populous eastern states by only a single highway, a single railway and commercial airline flights.

One government study estimated that the Cup defense could generate as much as $1.2 billion--an Australian dollar is worth about 64 cents in the United States--in new revenue for a region dependent on mining and fishing.

In fact, the America’s Cup, once the plaything of men who had already made their millions in big business, has become big business itself, not only for Australia but around the world.

The three boat basins housing the 12-meter yachts and their support teams are ablaze with colorful commercial banners. At times it seems that the corporate colors of team sponsors fly more prominently than the national colors of the 14 nations represented.

The most prominent signboard on the harbor is the blue and white Foster’s beer logo on the steel shed that houses the syndicate fielded by Perth businessman Kevin Parry. Foster’s is the leading brand of Carlton United Breweries, the second-largest beer producer in the country and the major sponsor of Parry’s Kookaburra racers.

The signboard, rumored to have been erected despite local ordinances, is a galling insult to Alan Bond, whose Australia II and Australia III are berthed just down Mews Road. Bond is plowing more than $12 million into promoting one of his many businesses, Swan Breweries, Australia’s leading beer producer.

Bond, who won the Cup in 1983 after three previous tries that cost him millions, is a controversial figure, both in the yachting world and in Perth. He is building a mammoth, five-star hotel on the beach north of Fremantle and recently managed to break a 33-story height limit on downtown Perth skyscrapers by pushing a 51-story project through the Perth Planning Council.

Bond’s aggressive business tactics are legendary in Western Australia. “He sails pretty close to the wind,” said one local official who admires Bond. “He’s the only man in Perth who ever got pinched for bald tires on his Rolls-Royce--that’s how close to broke he was.

“But he’s been doing very well recently, and he seems to be on a roll that no one can stop.”

That roll may or may not extend to racing as well as business. Before racing began, local odds makers and handicappers had installed Bond’s syndicate as the favorite to win the defender’s round of match races. In the first round, however, Parry’s Kookaburra boats were faster, and Bond had to admit that his 14-month-old Australia III was outdated.

Parry’s Kookaburra syndicate has invested more than $16 million--that’s $10 million U.S.--in three racing hulls and a crew of more than 70.

Such investments seem staggering, but they probably make good sense in marketing terms. One published marketing study said that a 10% shift in the Western Australia beer market would be worth $10 million to either Foster’s or Swan. That’s to say nothing of the international market. Both breweries are aggressively seeking to crack the U.S. and British markets, which could be worth billions.

But the Australians are not the only syndicates whose boats are pushing products of one sort or another. Virtually every one of the racing syndicates has a raft of commercial sponsors seeking national or international exposure through association with a winning 12-meter yacht.

The leading French boat is called French Kiss, a play on the name of its leading sponsor, KIS, a European photo-processing conglomerate. The boat’s naming raised a stir, even in the laissez faire atmosphere of Perth, but was finally approved.

One of the leading U.S. boats, flying the colors of the exclusive New York Yacht Club, is sponsored by a large group of commercial firms, including Newsweek magazine and the Amway Corporation, neither of which is noted for its exclusive clientele.

Stars & Stripes, the San Diego Yacht Club entry skippered by Dennis Conner, has followed the Australian example by picking up major backing from Anheuser-Busch, which dominates the American beer market.

But Conner’s campaign, which has attracted enormous attention in the Australian press because he is the skipper who lost the Cup in 1983, is also part of a more subtle merchandising contest, one that seems to involve communities.

Stars & Stripes is backed by a powerful and wealthy group of San Diego and Southern California interests, including Malin Burnham, president of the John F. Burnham Insurance Co. and First National Bank of San Diego.

The other Southern California entry, Eagle, is sponsored by the Newport Harbor Yacht Club. Its honorary chairman is baseball Commissioner Peter Ueberroth, chief organizer of the 1984 Olympic Games in Los Angeles. But Eagle’s major contributions have come from the likes of Donald Bren, president of the Irvine Company.

The fund-raising activities of the two Southern California syndicates have been a bit more genteel than those of the Australians, but there is an unmistakable commerciality to their campaigns.

The Newport Beach syndicate in particular has put on a hard sell. Its fund-raisers have worked all summer, speaking to groups of as few as a dozen Orange Country small businessmen, ballyhooing the $1.2-billion dollar benefits of an America’s Cup defense three years down the road and citing the Australian estimates of dollar return as proof.

The commercial atmosphere so evident in Fremantle harbor is no surprise to yacht racing regulars. It seems to have been building for the last decade and the Australian win in 1983 simply accelerated the process.

Gerry Driscoll, before being asked to resign this week as manager of the Newport Harbor Yacht Club’s Eagle Syndicate, compared the situation to auto racing and tennis, where commercial sponsorship is routine.

“This isn’t an individual sport; hasn’t been for some time,” said Driscoll, a veteran of America’s Cup and Olympic racing. “You simply can’t play this game unless you are equipped with more money than individuals can provide.”

Driscoll said the trend toward treating boat racing as a professional endeavor does run the risk of turning it into a “circus.” But, he added, the entrepreneurial spirit of people like Bond has had the effect of enlivening and popularizing yacht racing.

International hopes of commercial success remain to be fulfilled. Only the next few months will tell for sure whether the $80 million in government-sponsored improvements in Perth and Fremantle, and the untold millions more in private investment in the Cup Defense, will pay off.

Indications are that the Australian defense of the Cup will draw more international attention than did previous U.S. defenses.

Ten large cruise ships, including the Achille Lauro and the Norwegian Vistafjord, have already reserved pier space and will begin arriving Christmas Eve for the final six weeks of racing. More than 7,500 people are expected to pay premium rates for space aboard the cruise liners, which will be anchored daily at crucial parts of the race course during the final best-of-seven series.

There are some signs that the event has been oversold. As with Los Angeles during the 1984 Summer Games, some Australians who expected to collect exorbitant profits by renting their homes to spectators are being disappointed. An early prediction of 363,000 American’s Cup visitors has been scaled back to 304,000.

But the Australians involved with staging the first non-American defense of the America’s Cup are characteristically bearish about the prospects of turning a profit in the next five months, betting on the new growth industry of Cup defense.

“After all, Bondy proved that the New York Yacht Club didn’t have an inalienable right to the Cup,” said Peter Newman, a local government official in Perth. “You Yanks shouldn’t be surprised that everyone else in the world is lining up for their turn.”

And for a shot at the brass ring as well.