What the America’s Cup tells you about globalization

What the America’s Cup tells you about globalization

I was watching some of the America’s Cup World Series races going on out in San Francisco, and it occurred to me that the evolution of the Cup is a perfect illustration of globalization at work.

Back in the day, the America’s Cup was both a nationalistic and gentlemanly endeavor. The New York Yacht Club controlled the Deed of Gift that governed the competition, and it entertained periodic challengers. For decades the challengers were all from Britain until the Australians got into the act (and eventually won it). The competition took place in several formats, including big J boats and classic 12 meters. A certain mercantilism prevailed, insofar as the rules stipulated that challengers had to be built and equipped entirely in the country from which the challenge originated.

As in any competitive sport, there was gradual but steady progress in yacht design and technique, with occasional breakthroughs, like Intrepid‘s trim tab design in 1967 and Australia II‘s revolutionary winged keel in 1983. But it was still a pretty sedate and mostly amateur affair up to the late 1980s.

What has happened since then? Here’s where the America’s Cup becomes a symptom of globalization. First off, it’s no longer really the "America’s Cup" in any literal sense, and it isn’t being conducted according to some fixed and traditional set of rules. The America’s Cup has instead become a brand name for a series of global yachting competitions, with lots of different competitors and formats.

Second, as competition has intensified, the pace of technological change has accelerated dramatically. Today, the winner is likely to be the team that spent the most on a radical design or came up with a clever innovation that gave them a distinct advantage over the others. And that costs money. It used to be said that if you had to ask how much it cost to own a racing yacht, you couldn’t afford it, and that much hasn’t really changed. The Cup is still a hobby for mega-wealthy people like Oracle’s Larry Ellison, but it’s also become a big corporate endeavor. All of the boats now have corporate sponsors and their sails and hulls are plastered with more logos than a NASCAR automobile.

Third, it’s not really a national endeavor anymore. Like an iPhone, the component parts of the different boats come from all over the world. And like any modern multinational corporation, so do the crews and skippers. Some of the teams still sport "national" names, but they all try to recruit the best talent from all over the world. Like other professional sports, in short, it’s a globalized market where "labor" mobility is extremely high.

Fourth, let’s not forget the rule of law. Globalization depends on a lot of things, including the emergence of at least a rudimentary system of rules to govern trade investment and other global transactions. Similarly, the America’s Cup has been beset with litigation ever since New Zealander Michael Fay sued the San Diego Yacht Club over the terms of competition in 1988. So in addition to hiring clever designers and talented crews, a successful Cup competitor may need a talented legal team that can take advantage of legal technicalities. And just as corporations have become adept at moving quickly to countries where production costs are lower, so have America’s Cup competitors. When Oracle’s Larry Ellison couldn’t get the St. Francis Yacht Club in San Francisco to run the competition the way he wanted, he joined the neighboring Golden Gate Yacht Club and used it as the sponsoring body instead.

Is this a good trend or not? The traditionalist in me mourns to passing of the 12 meter era, in much the same way that I feel nostalgic for the touch game that characterized the wooden racket era in tennis. But the new formats, which now feature large, very fast, unstable and fragile catamarans, have undoubtedly increased the audience appeal of the event. The ways things are going, the next step will be to equip the boats with rams and replay the battle of Lepanto. I’ll bet even more people would watch.

In any case, trying to halt the march of "progress" is probably impossible, which is probably true of globalization too. Sail ho!