America's Cup sponsor could sink millions into contract dispute

The America's Cup has received a lot of attention over the last several months. Larry Ellison, leader of the software company Oracle, has made serious efforts to popularize this boat-racing series. Now, however, one of the racing team's primary sponsors is being sued by another business entity for breach of contract.

According to the filing, Gameday Merchandising International is trying to recover $4.2 million from the Golden Gate Yacht Club, sponsor of Ellison's team, because the company was forbidden from producing promotional materials. Observers note that this claim could become very complicated.

What is the major issue with this particular instance of business litigation? Gameday Merchandising is seeking compensation from the yacht club because they sponsor Ellison's team. Larry Ellison also happens to be behind the efforts to promote and expand the America's Cup. Not only does Ellison have a stake in the event as a whole, but he also owns one of the competing teams. This dynamic business relationship complicates legal matters.

Officials from the yacht club say that the America's Cup Event Authority, which is part of Ellison's racing business, is the responsible party in this case. However, the business entity may fold depending on the outcome of the next racing event.

Already, the event authority says that the lawsuit should be dropped because the merchandising company broke their end of the contract. Apparently, Gameday started producing goods and selling them at unapproved retailers, which is why their contract was dropped.

Clearly, there are a number of complex legal issues that must be sorted out before the case is resolved. Business owners have a right to defend their interests and make sure contracts are enforced according to the agreed-upon terms. A trustworthy business attorney can help work through important details and help ensure that situation is handled appropriately.

Source: SFGate.com, "Contract dispute adds to America's Cup troubles," John Cote, Aug. 29, 2013