Tuesday, April 13, 1999

Hawaii State Seal

Regatta may cost
state $3 million

Senate panel supports
a budget with funds for an
America's Cup entry

By Ben DiPietro
Associated Press


The state may end up spending $3 million to sponsor an island entry in the America's Cup yacht race.

A draft budget approved by the Senate Ways and Means Committee includes $1 million in general fund money, but says the Hawaii Tourism Authority must match it with $2 million from tourism special funds or corporate contributions, or both.

The full Senate votes on its budget this week.

The version of the budget approved by the House only included $500,000 in funding for the two yachts being built by Aloha Racing Foundation at a warehouse in Ko Olina along the Leeward Oahu coast. That funding is tied to the tourism authority providing money from special funds.

House Speaker Calvin Say said yesterday he supports funding the America's Cup effort, but said it may be hard to persuade lawmakers to spend that much money on a pair of racing yachts at a time when members are having to turn down aid requests for various community programs.

"I would be awfully cautious about it, primarily because we don't have the general fund resources available," said Say (D, Palolo Valley-Kaimuki). "We've had some comments that we should not be (budgeting) these kinds of measures. That may be part of the deliberations in conference."

Tourism authority member Mark Rolfing said a recommendation will be made tomorrow on whether to back the funding proposal submitted by Aloha Racing, with a final vote to be taken next week.

Rolfing wouldn't say what the decision would be, only adding it would be a difficult decision given the amount of money involved.

"I do see a problem. It will not be an easy decision, believe me," Rolfing said from Maui. "It's a lot of money. I certainly think there's going to have to be a lot of value there to rationalize that much money."

Rep. Dennis Arakaki, chairman of the House Human Services and Housing Committee, believes it's an unwise gamble.

"From my perspective, when there's so many other needs in health and human services, I don't think it speaks well of how the state sees its priorities," he said.

Arakaki (D, Kamehameha Heights-Kalihi Valley) last year sharply criticized the state's $3.3 million appropriation to attract the Miss Universe Pageant, which tourism officials estimate was worth $24 million in media exposure for the state.

"I'm still not convinced we got all that much for the Miss Universe Pageant," Arakaki said. "I'd rather invest in human capital."

D.J. Cathcart of Aloha Racing said the state will get back at least $10 million in promotional time for its sponsorship, including a logo on the yacht's main sail if it kicks in $3 million.

The state will benefit from its sponsorship, whether the boat is successful in winning the cup or not, she said.

The racing team will spend $3.5 million in Hawaii before it leaves for the October challenger races in New Zealand, which is more than the state will contribute, Cathcart said.

There also are benefits to workers learning new skills building the boats and promotions with the supercomputer center on Maui that will showcase Hawaii as a place for high-tech industry, Cathcart said.

"There may be questions about the efficacy of putting state funds toward an activity like this, but it's very important people realize the benefits we are proposing do not require a win," she said.

The state could reap tremendous benefits if it wins the America's Cup race set for next year in New Zealand, since it then would be the host for the next cup defense, an event that could generate more than $2 billion.

San Diego reported more than $900 million in revenues from its 1990 defense of the cup, and New Zealand officials estimate they will take in more than $1.8 billion from the upcoming race, she said.

"When you look at the numbers and recognize that Hawaii is a much more accessible location than Auckland, there is a strong potential that we can top $2 billion," Cathcart said.

The first of the two isle boats will be unveiled in June, Cathcart said. The boats will leave for New Zealand in late August.

Aloha Racing said it's still trying to raise the $18 million it needs to compete in the race.

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