Monday, February 8, 2010

Entrepreneurship Responds to a Feud on the Water

Copyright, The New York Times Company

Weather permitting, the America’s Cup Yacht Match will be sailed today. Said to be the oldest active international sporting competition, the nautical tradition is an interesting case of how lifestyles can adapt to changing technologies, amid controversy, without government or court intervention.

As it has in many areas of life, sailing technology is dramatically different today than it was 100 years ago, or even 30 years ago. Thanks to the development of lightweight materials and design innovations, multi-hulled sailboats exemplify some of that progress.

Unlike the more traditional mono-hulled sailboat that stays upright with its heavy keel pulling it down into the water, a multi-hull stays upright without a keel by having a wide platform (a “trampoline” in sailing jargon), with each edge supported by its own narrow hull. The multi-hulls sit on top of the water, and thereby have much less contact with the water to slow them down.

Although once considered dangerous (prone to capsize, especially when the wind blows too much for the width of the boat), multi-hulled sailboats are now highly popular rental boats among Caribbean and Mediterranean amateur sailors and vacationers.

Despite, or perhaps because of, their great speed, multi-hulled sailboats are still rejected by some of traditional sailboat racing associations. The 2010 race will be the first time in America’s Cup history that the match occurs between two multi-hulls.

Changing sailing technology has raised many disputes about what is “fair” in the sport, and the preparations for this year’s (and prior years’) America’s Cup race were plagued with those disputes.

The parties to the Cup relied on a New York court for partial resolution to their arguments, but, consistent with the theme of the Nobel laureate Elinor Ostrom’s conflict research, maybe entrepreneurship could have offered a better solution

There is little reason for the America’s Cup to have a monopoly on determining the fastest match-racing sailboat in the world. New Zealand, France and other sponsors might create their own matches with their own rules, and the market – that is voluntary participation by fans and racing teams – would determine the “best” set of rules in the sense of encouraging participation and successfully branding its winner as the fastest match-racing sailboat in the world.

Yesterday’s Super Bowl had a similar precedent: It began as a contest between rival American football leagues that disagreed about the “best” rules and style of American football play.

Two entrepreneurs in California have shown that economic competition among contests can work in sailing too.

A couple of years ago the mono- vs. multi-hull dispute arose in the annual Newport-to-Ensenada International Yacht Race. The organizers of that race said that one type of multi-hull was too dangerous, thereby raising the event’s insurance costs and potentially distracting fellow racers who might have to interrupt their ocean voyage to assist the crew of a capsized multi-hull competitor (organizers also had disputes as to the handicapping of some of the multi-hulls).

Many of the participants disagreed, insisting that fast boats are the best way to attract the next generation of sailboat racers, and that new satellite-tracking technology allows the crew of a capsized vessel to take care of themselves without halting other racers.

Last year, two of those participants, the businessman Bob Long and the multi-hull designer Randy Reynolds, started their own racing organization and “Border Run” race from Newport Beach to San Diego. The race welcomes all kinds of boats, implementing new safety and distress rules to manage both insurance costs and the variety of challenges that the diverse armada might encounter. The racing organization has a system for handicapping member boats, which include multi-hulls.

A bold idea is not the same as a successful product, but so far the Border Run has passed the market test: More than 100 raced in 2009 and organizers have already received 140 entries for the April 2010 race. So the mono- vs. multi-hull dispute was settled in Southern California without legislation, judge or jury.

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