Billionaire death race: inside America's Cup and the world's most dangerous sailboat

Speed demon

At a relatively lightweight 13,000 pounds, with a sail that stretches 131 feet into the air, the AC72 is built for speed. "The goal was to make and design an exciting boat — something that looks like a fast and amazing machine," says Joseph Ozanne, who helped design the AC72 for Oracle. In 2007, America's Cup yachts had an average top speed of around 10 knots, or 11.5 mph. This year, the average is closer to 40 knots — about 46 mph.

Designers built the hulls for the 2013 competition out of a custom carbon fiber that makes the yachts stronger while still keeping them light. The power-to-weight ratio is 10 times higher in the AC72 than it was in the 2007 yachts, says Ian "Fresh" Burns, director of performance for Oracle. "Imagine taking your Camaro, and taking the 300-horsepower motor out and putting a 3,000-horsepower motor in the same car," Burns says. "That’s what these guys do every day."

At 43 knots, the catamaran can sail its entire 72-foot length in a single second — nearly four times faster than the 2007 class. The massive sail generates 7 tons of force, lifting the hull out of the water until the boat’s only connection to the water is a thin hydrofoil known as a daggerboard. Sailors on the Oracle crew say the experience of being on an AC72 as it flies up out of the water is exhilarating. "When you are racing, you are not worried about the safety," says Gilberto Nobili, a sailor for Oracle Team USA. Nobili says he feels about sailing the AC72 the way he did about skiing as a child — he focuses on the speed, and the sensation of flying, while putting any concerns out of his mind.

"These sailors, they’re adrenaline junkies," says Julian Guthrie, author of The Billionaire and the Mechanic, which chronicles Ellison's quest to win the America's Cup. "And they want it to be safe, but they want to get to the finish line the fastest. That’s the objective."

The chief adrenaline junkie is Ellison, who took a strong interest in sailing in the 1990s and mounted two unsuccessful America’s Cup campaigns before winning in 2010. Ellison has said he is drawn to sailing because it symbolizes freedom and self-reliance. To nobody’s surprise, he has proven to be as ruthless a competitor in the water as he has in business. "Someone once asked me if it’s worth $100 million to win the America’s Cup," Ellison says in the recent documentary The Wind Gods. "It’s certainly not worth $100 million to lose the America’s Cup." At a panel discussion on the film this spring, Ellison was even more direct, according to a report by All Things D: "The biggest lie told in professional sports is, ‘We’re just going out there to have fun.’"

Too much boat?

In the aftermath of Simpson's death, amid international criticism, organizers of the event announced they would make changes to the race in an effort to make it safer. Among other things, they lowered the top wind-speed limit at which they would cancel a race.

That hasn't stopped some critics from calling on America's Cup organizers to abandon plans to sail the AC72. C.W. Nevius, a columnist for the San Francisco Chronicle who has covered this year's races extensively, says the giant boats and windy bay have proven to be a terrible combination. "They've got too much boat for too much weather, and they're breaking," Nevius says. "They overreached with the boats, and refused to make any adjustments. It's killing the competition — and it's killing a 160-year-old tradition."

Safety isn't the only reason critics wish organizers would have chosen another boat class. (Nevius favors the AC45, a smaller catamaran that competitors sailed during earlier parts of this year’s America’s Cup competition.) The high cost of building the AC72 kept many other countries from competing in this year's America's Cup: a single yacht costs $8 million to $10 million, and most teams build two in case one is destroyed in the competition. As a result, an expected field of fifteen teams turned out to be a paltry four.

Meanwhile, earlier this month, Oracle Team USA was found to have been using illegal weights on board in an apparent effort to help control the unwieldy yacht. The head of the racing syndicate said Oracle's management was unaware of the weights — a statement considered plausible by approximately no one — and Oracle might have to forfeit some of its races as a result. (The finals consist of a best-of-17 series; Oracle would begin the finals at a disadvantage against the other team to make it.)

Danger equals ratings

While the AC72's safety record has drawn criticism, it has also drawn attention from the US media that the America's Cup often struggles with. NBC will televise the finals, becoming the first US network to broadcast the event in 20 years. According to Guthrie, the element of danger played a strong role in attracting the network's attention. "It’s getting faster and more dangerous, and that attracted the major networks," she says. "People going back to the Romans, they’re bloodthirsty. Why do you watch football? You want to see the pileups. You want to see these crashes."

"Of course," she adds, "you don’t want tragedies."

Burns says that several fail-safes are built into the AC72, helping to minimize the danger to its 11-man crew. Sensors onboard analyze 30,000 pieces of data every second, and can alert the crew to sudden changes in the environment that could put them at risk of capsizing. Also worth noting: America's Cup has had just five fatalities in its history, a safety record that compares favorably to professional auto racing.

Still, Burns acknowledges that the crew takes real risks every time they suit up. "The reality is that there’s a lot of danger in these boats, and going that fast on the water is pretty dangerous no matter what you’re on," he says. "Put that together with the ferocity of a race, and taking a few chances, probably more than you would ordinarily — it makes it dangerous. But on the other hand it also makes it incredibly thrilling. Just having these boats sail past you at 40 knots, or 50 mph, it’s a freakish and awesome experience even for someone doing it as long as I have."

And as fast as the boats are today, the crew of Oracle Team USA says research and development continues. When the 2013 race is over, it won't be long before preparations begin for the next America's Cup. Speed, as always, will be at the top of everyone's minds. "I still have a lot to improve and learn," says Orzonne, the Oracle designer, "and I'm sure the boats of the future will be even faster than this one."

In part, the growing success of eSports has been about the technology coming of age. “I can remember the early days, back in the 1990s, when tournaments were recorded on VHS tape, then converted to digital files and uploaded to the web as tiny thumbnail videos,” says Sundance DiGiovanni, founder of Major League Gaming. “It was a process that sometimes took days.”

When live streaming arrived it was expensive and unreliable. “The people hosting the tournaments were paying a fortune to stream the matches live,” recalls Breslau, who competed in competitive Quake matches for years. “But the video would always and lag and just looked like shit.”

The same was true for casual gamers looking to stream their games from home. “Even five or six years ago it was still a real pain in the ass to stream from home,” says Breslau. “You needed an expensive capture card, complex software, and the dedication to spend many hours setting everything up.”

Twitch has given tournament promoters the ability to cheaply and easily push live streams to millions of viewers with minimal lag. On the consumer side, it’s now possible for anyone with a PC to get in on the action. On average, more than 600,000 different players broadcast several millions hours of gameplay on Twitch each month. And the number of potential players is about to get much bigger. “With Twitch being integrated into the Xbox One and Playstation 4, anyone, even with no technical sophistication, can be playing a game, and with the press of a button, be broadcasting their action live,” says Breslau.

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Technology is one part of eSports recent boom, but shifting economics have also played a role. For decades, eSports leagues in the United States and Europe have come and gone, bankrupted by the lousy economics of running tournaments. In fact, it’s still not a great model. “Right now eSports, as a stand alone business, is not a profitable or self-sustaining venture for anyone involved,” says Blizzard’s David Ting.

So why are the industry’s biggest gaming studios pouring millions into promoting live events and international leagues? The answer involves a little history. During the 2000s, while eSports was largely still a hobby in the United State and Europe, a robust industry developed in Korea around the game of Starcraft, with professional teams, players earning six and seven figure salaries, endorsements from major brands, and games broadcast on national television. The best players from around the world where eventually pulled into the orbit of Korea’s thriving scene.

“It was definitely a wake up call to the big American game publishers,” says Michael Pachter, a video game analyst with WedBush securities. “They saw that it had become a thriving spectator sport, that people were making money off it, and that it wasn’t them.”

When StarCraft II debuted in 2010, it was embraced by a global community of rabid fans who had been playing its predecessor for more than a decade. Suddenly, eSports seemed like more than just a niche pastime for a few passionate players. It was a way to create and maintain a loyal fanbase, a community that helped to the advertise the game and drive major sales. “That was kind of the aha moment,” says Rod Breslau. “Major game developers now see eSports as a really lucrative way to market a title and extend the life of a franchise. Suddenly it’s the golden goose everyone is chasing.”

While the economics of running tournaments has improved with new technology and bigger audiences, the independent leagues still wouldn’t thrive on their own. “The publishers are offsetting the costs for the leagues, because they depend on the leagues to maintain the community and grow the next generation of players, in the same way the NBA and NFL depend on the NCAA,” explains Breslau.

With the support of the publishers, the industry has been exploding. In 2000, there was a little over $300,000 in prize money handed out on the eSports circuit. Last year prize money topped $10 million, and is on pace to grow to more than $14 million in 2013. The more than one million people who tuned in live to watch the Valve’s recent tournament actually tops the average viewership for ESPN, which on a given day pulls in 750,000 concurrent viewers.

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Twitch has an unusual creation myth. It actually began its life as one of many channels on Justin.TV, a startup founded in 2007 which initially consisted of a 24/7 live stream of founder Justin Kan’s daily life. From there Justin.TV expanded into a platform that allowed users to broadcast their own streams. Twitch, known then as Twitch.TV, was simply the channel dedicated to video gaming.

By 2010, however, it was clear that Twitch was growing far faster than the rest of Justin.TV channels, and in fact was beginning to rival its parent site in terms of size. So Emmet Shear, Justin.TV’s CTO and an avid Starcraft player, helped to spin off Twitch into a standalone company, keeping the basic concept of a broadcasting platform, but working to build out a feature set geared towards gamers.

This focus set Twitch apart from other streaming platforms. “The industry has largely adopted Twitch because they have the best infrastructure, features and by far the biggest and most passionate community of gamers,” says Kim Phan, the senior manager of eSports at Blizzard.

But while Twitch has a central role in the eSports ecosystem, its future is far from certain. There are a number of very large and well-funded competitors to Twitch eager to get into the market. Ustream, which has raised a total of $60 million dollars, is also integrated into the new Playstation 4 and has created a gaming channel dedicated to streaming players. The 800-pound gorilla in the room is YouTube, of course, which has been expanding its live platform to a wider audience in recent months and curating a gaming channel as well.

And while Twitch has forged major partnerships, not everyone thinks that can last. “A lot of times Twitch is compared to ESPN, and I think that’s fair,” says Rick Heitzmann, a general partner at FirstMark Capital and investor in Riot, which develops the world’s most popular eSports title, League of Legends. “But if the major leagues could go back in time and see what ESPN would become, they would never have licensed them all their games.” Right now, Twitch is the platform of choice for all the biggest developers to broadcast their tournaments, but Heitzman isn’t convinced that will last. “What is to stop them from creating their own streaming technology and just cutting out the middleman?”

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If Twitch were to lose its position as the number one portal for eSports, it has another, stranger business budding on its platform. “It’s always weird when I try and explain to people what I do for a living,” says Tim Mines, known on Twitch as Spamfish. “I sit around all day playing video games and talking rubbish and people pay to follow along.”

The average user spends more than one and half hours per day watching Twitch, and the company now runs advertising against that audience. Mines is one of the more than 6,000 “partners” on Twitch, gamers who have built up a substantial following and can get a cut of the advertising revenue generated by their viewership. Fans can also “donate” directly to their favorite gamers in exchange for ad-free viewing and digital goodies. “It’s a bit surreal,” says Mines. “I’ve quit my day job, I’m gaming 8 hours a day, doing what I love, and making a living.”

Will the audience for watching other people play videogames really develop into a meaningful business to rival television? During the Sunday of Valve’s Dota tournament, Twitch recorded 4.5 million unique viewers, each of whom watched an average of more than two hours. “Right now eSports has a relatively small viewership, something along the lines of the America’s Cup,” says video game analyst Michael Pachter. “But if it keeps growing at this rate, it will be the size of NASCAR pretty soon, and while that’s still a niche audience, it’s definitely nothing to sneeze at.”