San Francisco may lose America's Cup bid

Organizers of the next America's Cup said Saturday that the financial terms of San Francisco's current bid to host the regatta are unacceptable, and they will award the event to another city if a new plan isn't delivered by Friday.

The announcement took Mayor Gavin Newsom's administration by surprise after last-minute negotiations with race organizers last week, and comes as the Board of Supervisors was preparing a final vote on the proposal Tuesday.

"If you want a headline, it's 'San Francisco snatched defeat from the jaws of victory,' " said Stephen Barclay, an official for race organizers, from his home in New Zealand on Saturday. "San Francisco had it in their hands, and they have progressively let it go."

The city was the clear front-runner after billionaire Oracle CEO Larry Ellison's BMW Oracle Racing team, sponsored by San Francisco's Golden Gate Yacht Club, won the Cup in February in races off the coast of Valencia, Spain. The victorious syndicate gets to choose the venue for the next Cup, which is set for 2013.

Newsom, to be sworn in as lieutenant governor in a matter of weeks, hoped to cap his seven-year term as mayor by securing the series of yacht races, an international sporting event eclipsed only by the Olympics and soccer's World Cup in terms of economic impact. The Cup and qualifying matches, envisioned as at least 43 days of racing, is projected to inject at least $1.2 billion into the local economy while generating nearly 9,000 jobs.

San Francisco's effort began unraveling last week after the mayor's office modified a proposal already hashed out with the team that would have located most of the race facilities on piers along the city's central waterfront south of the Bay Bridge.

The core of the city's bid always had been development rights of up to 75 years for city-owned waterfront parcels in exchange for race organizers paying to shore up dilapidated piers the city can't afford to fix and which other developers have rejected as too costly to build on.

Modified proposal

A modified proposal shifting the public facilities to the northern waterfront between Piers 19 and 29 was submitted to the board's budget committee on Wednesday after negotiations with the winning syndicate's business arm, known as the event authority.

That proposal lowered up-front costs for the event authority as well as the cash-strapped city, but also reduced the amount of city property race organizers would get development rights to. Newsom's administration thought that race organizers were on board with the deal.

But Barclay said the event authority never agreed to the modified deal and wants one with better long-term development prospects for race organizers to recoup an investment they project will be north of $300 million.

He sent a letter on Golden Gate Yacht Club letterhead dated Friday to Newsom and the budget committee outlining those concerns and giving a Dec. 17 deadline for the city to present a signed agreement. The team has committed to notifying challengers of the site for the next Cup by Dec. 31.

The idea to alter the proposal took the team by surprise, Barclay said in an interview Saturday.

"The major issue for us is we spent four months negotiating with all members of the city ... and we came to an agreement that both sides seemed they could live with. Literally, we awoke one morning to an e-mail in our inboxes saying here's a new agreement, but it bore no resemblance to what we negotiated."

Before the modified plan was presented to the budget committee, Barclay met with Newsom and other city officials, according to an e-mail and interviews.

Tony Winnicker, a spokesman for Newsom, said the city would not comment on private negotiations with race organizers.

Offer still considered