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January 29, 2014

Coutts Venue Shopping

Oracle Team USA’s CEO, Russell Coutts told the Associated Press last Saturday that sailing officials are still in talks with other venues about hosting the 35th America’s Cup in August, 2017.

Will the America’s Cup return to San Francisco Bay?

© Latitude 38 Media, LLC

Coutts explained that San Francisco officials have not offered the same terms and conditions as they did in 2013 and although he won’t rule out the City as a venue, he didn’t sound very optimistic either, "They might have a change of heart. I don’t think they will but they might."

Other possible venues for AC35 include: San Diego, Newport, R.I., and Hawaii. Since Larry Ellison’s 2012 purchase of 98% of the Hawaiian island of Lanai, he’s made significant investments in two of its resorts and has plans to develop the island further — leading many to speculate that the Cup, or a portion of it will be held in Hawaii.

Such talk has been fueled in part by Ellison’s good working relationship with Hawaii’s Governor, Neil Abercrombie. "I can’t think of anything that I’ve been involved with in decades, on a magnitude of this nature, that has been more pleasant and productive and cooperative than the relationship that at least we in the state have had with Mr. Ellison and his people," said Abercrombie at a press conference last summer. And when Coutt’s was asked directly if Ellison had spoken to Abercrombie about the America’s Cup, he said, "Yes, I expect that Larry has had a discussion."

 "It’s safe to say I’m not happy," say’s Coutts. "It was a fantastic event in San Francisco. I don’t think anyone disputes that. The TV images were great. But we could go to another venue and have great racing. As we’ve gone into the process, it’s pretty evident there are some really strong venues. They might end up being better than San Francisco. Not by any means am I saying this is a bad result. This actually could turn out to be a good thing for the America’s Cup."

Hangin’ with Jimmy & Shannon in the BVI

What do winning America’s Cup racers do for fun? Take a well-deserved vacation in the British Virgin Islands, including some recreational kiteboarding — with foils, of course — and competing in a stand-up paddleboard race.

Spithill, Lenny (mom of pro SUPer Kai Lenny) and Falcone had just SUP’d 14 miles, but 11-month-old Cade Falcone stole the show after being put in charge of holding the team’s fourth-place prize money.

© 2014 Lynn Ringseis

The Soggy Dollar Bar on Jost van Dyke provided a festive finish line for the annual HIHO Painkiller Cup SUP race, with three-person relay teams paddling the 14-mile downwind course from Trellis Bay, Tortola. A new paddler subbed in every half hour. Shannon Falcone of Antigua, Paula Lenny of Hawaii and Aussie Jimmy Spithill, who now calls San Francisco home, were up against some pretty talented competition, as they were passed by a trio of Hawaiians, all 19 years old.

The winning tag-team SUPers super SUPers? were Noa Ginella (left) from Oahu, Lori Park and Kody Kerbox, both from Maui.

© 2014 Lynn Ringseis

Noa Ginella from Oahu and Kody Kerbox from Maui are both on the professional standup paddleboard circuit. Their good friend Lori Park filled in the obligatory one-female minimum requirement for the HIHO Painkiller Cup. From the smiles all around at the finish line, no one seemed to mind who came in first or last, but getting to compete in this ideal setting was a blast to professionals, novices and all in between.

For more information on the Painkiller Cup visit:

Is there ever a bad day at White Bay, Jost Van Dyke home of the Painkiller? Not in our experience. Winner Noa paddles to the finish.

© 2014 Lynn Ringseis

Last Thursday, Jimmy and Shannon were featured guests at the America’s Cup Gala at North Sound, Virgin Gorda’s Bitter End Yacht Club. Prior to hosting a question and answer session, they mingled with the crowd. This reporter asked Shannon how his training was going for the SUP race. He laughed and said, "We are starting our training program tomorrow!" The plan was to paddle from Richard Branson’s Necker Island to George Dog, a few miles away.

When the conversation turned to the course for Saturday’s Painkiller Cup, Shannon laughed and said he wasn’t quite sure where it went. Both he and Jimmy seemed extremely relaxed after spending a week cruising the BVI on —get this — a power cat! Shannon told me he and his buddies just wanted to have a laid-back vacation to coincide with the SUP race, which they clearly were not taking too seriously. Shannon said he is not at all good at SUPing although we suspect he was being modest.

Last Thursday Jimmy and Shannon entertained a crowd of admirers, with Bitter End Yacht Club manager Gordo Overing emceeing.

© 2014 Lynn Ringseis

Neither Shannon nor Jimmy could confirm specifics for AC 35, as a deal has yet to be worked out with the city of San Francisco. They admitted, however, that other venues were being considered.

During the Q & A, Jimmy mentioned that team backer Larry Ellison is determined to make the next Cup more affordable so more countries can participate. They patiently answered questions that they have undoubtedly been asked countless times before, while being insightful yet jovial. At one point Jimmy said practicing against the other Oracle Team USA boat was like "dancing with your sister — just not the same as racing against the competition."

There was no real scoop regarding the next AC, just a really good crowd who were clearly enamored with these sailing superstars who were obviously happy to be on a BVI vacation.

The Buchanan/Rafa Total Yacht Works Mess

The last thing the sailing world needs is another messy story out of Mexico, but it’s hard to ignore this one, as it involves a longtime respected marine business in Mazatlan, one mostly owned by a Canadian, who apparently decided that it was in his best interest to flee the country on his boat.

Bob Buchanan in better times.

©2014 Latitude 38 Media, LLC

The background of the story doesn’t seem to be in dispute. In the year 2000, Canadian Bob Buchanan showed up in Mazatlan, which was just getting off the ground as a pleasure yacht center, with his then wife Leana aboard their Acapulco 40 Bolias Dream. Bob started doing engine repair and eventually entered into business with Rick Cummings, who still does marine work in Mazatlan. Rafael ‘Rafa’ Serrano Venegas, who had his own engine business, although not on boats, started working for Buchanan and Cummings when they had a business together, and alternatively for the two after they went their separate ways.

The Fonatur marina boat yard in Mazatlan, where for years Bob and Rafa worked together building an excellent reputation for Total Yacht Works.

© Latitude 38 Media, LLC

Five years ago, after working off and on for Buchanan for five years, Rafa says he was asked to become a 25% partner in a Mexican corporation Buchanan was starting. Buchanan would own 75%. Rafa tells us he wasn’t crazy about the idea, but agreed to it. Although he would receive a weekly paycheck, he’d have to pay his own health insurance. That lasted until about a year ago, at which point Rafa wanted to be an employee — as well as a 25% shareholder — so he wouldn’t have to pay health insurance premiums out of his pocket.

Starting last summer, the versions of what happened are likely to be in dispute.

According to Rafa, the 10-year relationship started to fall apart in September, when Rafa asked Buchanan for a loan against five year’s worth of profits he believed he was owed. He wanted a loan against the profits instead of the profits themselves, he says, because Mexican law meant it would have taken several weeks to go through the legal distribution process.

According to Rafa, Buchanan didn’t want to show him the books, and when he finally did, "it was all red" — meaning they showed there hadn’t been any profits. Rafa, who says he often worked 10 hours a day, couldn’t believe there weren’t lots of profits. Why any 25% owner in a business would wait five years for an accounting of the business or his share of the profits is beyond us, but Rafa explained it by saying Bob was the administrator.

In any event, by October 1 Bob and Rafa decided they would split the Total Yacht Works space at the Fonatur Singlar Marina, and start their own businesses under different names. But Rafa also contacted a lawyer, who demanded to see the books. When the lawyer eventually got to see them, he somehow came to the conclusion that there had been $600,000 U.S. profits over the five years Buchanan and Rafa had been in business together, and thus demanded $150,000 from Buchanan on behalf of his client. At some point Hacienda, the Mexican IRS, got involved, or it was threatened to be brought in. Rafa tells us had he gotten the $150,000 U.S. he believed he was owed, Hacienda would not have been a problem.

Rafa tells Latitude that his lawyers discovered that Buchanan had big bank accounts in the United States and Canada. It’s not clear to us how his lawyer could have discovered such accounts. Rafa says it was through "investigation." But Rafa admits that Buchanan did not live a wealthy lifestyle.

In any event, numerous sources in Mazatlan tell us that Buchanan and his girlfriend haven’t been seen since January 19, and his Acapulco 40 and her boat have been absent from their Isla Marina slips. It is widely believed that they have both fled Mexico, without having checked out with the port captain.

Rafa says that only one or two boats Buchanan and his team had been working on were left in limbo with work needing to be completed. As best we can tell, that’s where things now stand. Rafa says he may continue a suit, which he believes will eventually lead to Interpol looking for Buchanan.

We can only assume that Buchanan has a very different version of what happened and why. Others in Mazatlan give an entirely different picture of the one painted by Rafa. "Bob was the only class act in Mazatlan, the only one with a sense of honor and integrity," wrote one. The same reader said that "anti gringo sentiment is at an all-time high in Mazatlan," and that Buchanan and Bruce Raymaker, the yacht broker who worked out of his business, had been physically threatened by thugs, and had had equipment and materials stolen. It’s also been alleged that Rafa had become a big drag on Total Yacht Works business, and once he opened his own business, found out that he wasn’t able to attract enough business to pay the bills. Once again, these are unproven allegations, not facts.

Then there is the middle middle view, where the situation in Mazatlan was described as "the best it’s ever been in terms of marine industry business," until Bob and Rafa became "like two stubborn kindergarten kids who just couldn’t get along." The result is, currently at least, a very bad situation, where workers and suppliers are owed lots of money, and the once terrific reputation Mazatlan had as a place to get boat work done is at least temporarily tarnished.

A word about taxes in Mexico. Mexico is possibly one of the few countries where businesses and individuals pay less of the taxes owed than do the Greeks. "If anyone did pay the taxes they really owed," said one small businessman, who we believe is about as honest and altruistic as they come, "they’d really get screwed because all their competitors — who don’t pay taxes — would have such a big competitive advantage." The result is that any partner in a Mexican business almost always wields the nuclear option of telling Hacienda that the majority partner didn’t pay the taxes the company owed. As foreign boat owners know, you don’t need to be guilty of anything to end up in a world of trouble with Hacienda.

If you’re a foreigner thinking about starting a business in Mexico, alone or with a Mexican partner, our advice is to think very, very carefully before taking the plunge. Mexico has the 14th biggest economy in the world, just ahead of South Korea and just a little bit behind Spain. Yet the World Trade Organization — which among others ranks Mexicans as the hardest workers in the world — ranks Mexico a dismal 53rd for ease of doing business.

By the way, we wrote a pretty big story on Mazatlan for the February issue of Latitude that will be out this Friday, January 31. We hadn’t been in for about five years, and we were knocked out by how much better it seems now than it did then. We hope it’s able to quickly bounce back on its feet.

We’re not sure why it took so long, but in the January 27 issue, Reforma, the much respected ‘New York Times of Mexico,’ took SAT/AGACE, the Mexican IRS, to task over the impounding of 338 foreign-owned boats, almost all of which remain impounded after two months.