The $5m (£3.3m), 75-foot yacht went down in 1,200 feet of water, battling against seas whipped up by winds gusting to 20 knots. It is the pounding which is thought to have brought on the sinking.
There were no reported injuries and the precise cause of the catastrophe, with the yacht going down in less than three minutes, is unknown. Crew were taken off by their support boats and their opponents, Team New Zealand, also stopped racing to go to their aid.
"For it to sink that quickly, it must have been really catastrophic," Marcus Hutchinson, the America's Cup spokesman, said. "The last time we saw it, it was bouncing around like crazy. It was really, really choppy, the worst conditions we have seen so far."
The dismasting of Marc Pajot's yacht came as they were leading the Spanish and knew that their great rivals, Nippon Challenge had unexpectedly lost to Syd Fischer's Sydney '95.
CITIZEN CUP Round Robin 4, Day 3: Pact '95 bt Stars & Stripes, 1min 3sec.
LOUIS VUITTON CUP Round Robin 4; Race Three: Bayona-Valencia bt Sydney '95, 1min. 15secs; Nippon Challenge bt France 3, 3min 38sec; Team New Zealand bt Tag Heuer, 2min 35sec. Race Four: Sydney 95 bt Nippon Challenge 1min 22sec; Bayona-Valencia bt France 3 (did not finish); Team New Zealand v oneAustralia (race abandoned).Reuse content