San Francisco Killed the Golden Goose

When Larry Ellison's BMW Oracle Racing Team won the America's Cup yacht race in 2010, Ellison won the right to choose the location of the America's Cup Finals in 2013, and he chose to bring the race to San Francisco.

Unfortunately, portions of San Francisco's waterfront are in a state of crumbling disrepair, unable to safely bear the weight of the new infrastructure necessary to accommodate staging and the millions of viewers expected to visit the waterfront to enjoy the race. As part of the negotiations with San Francisco officials, Larry Ellison offered to spend $150 million of his own money to renovate Piers 30-32 (pictured above) in return for long term development rights.

But the devil is in the details, and as the deal neared its final approval, the San Francisco Board of Supervisors kept asking for more and more concessions. It wasn't enough that Ellison was going to spend his own money to fix something that San Franciscans couldn't figure out how to fix themselves, the Supervisors had to wring every last drop from him. He's rich, he can afford it. Soak him, where's he gonna go?

He went John Galt. Ellison has walked away from his offer to spend his own money to fix San Francisco's rotting piers. He will confine the race infrastructure to a different portion of the waterfront, and Piers 30-32 will be left to fall into the San Francisco Bay.

In my 2010 post San Francisco's Great America's Cup Swindle, I predicted a similar outcome:

Try to do anything on the waterfront, and you'll be faced with decades of opposition from environmentalists who find an endangered snail on a piling, residents who don't want the view from their houses altered, native tribes who throw an arrowhead in the water and claim the area as sacred ground, and community organizers (aided and abetted by the San Francisco Board of Supervisors) who demand massive set-asides for San Francisco's vocal oppressed people, including a guarantee of racing team jobs for low-income minorities.

If you think I'm kidding, you don't know this town. The promise of future development rights on the San Francisco waterfront is a promise of decades of misery, expense, and litigation. If the America's Cup race organizers are smart, they'll decline the opportunity to leave their hearts, minds, and wallets in San Francisco.

Even my grim prediction proved too optimistic; I thought the Board of Supervisors would at least wait until after the race to screw Larry Ellison.

In an unusual move, NBC will be broadcasting the America's Cup Finals from San Francisco. The broadcasts will likely feature shots of well-dressed worthies sipping champagne by the Bay, followed by shots of the crumbling piers. I predict that NBC will be unable to resist spinning the visual narrative into an argument for redistribution, a story of Two San Franciscos: one prosperous and glittering, one starved of capital (specifically, other people's capital, preferably taxpayers' capital) and allowed to decay.

And NBC will be almost right. The contrast between the muscular materialism of a yacht race and the decrepitude of San Francisco's piers will be instructive, as a lesson in the wealth that can be created when people are free to spend their own money vs. the decay that results from relying on the redistribution of wealth to solve your problems.

San Francisco killed the Golden Goose. I'm proud of Larry Ellison for walking away.