Sailing: Valencia prepares for fiesta as the bandwagon rolls in

Sailing's biggest prize will be fought off Mediterranean coastline as excited Spanish city prepares to enjoy economic boom

The America's Cup, that proud product of the Garrard silversmith's art, took its 27 inches plus plinth pride of place in the first aisle seat, with its junior partner, the Louis Vuitton Cup, in its custom-made case alongside. The travelling security guard had to sit across the aisle.

Big egos were ready to kill for the remaining tickets on the aircraft travelling from Geneva to the Cup's new battleground of Valencia on the Mediterranean coast of Spain, and the great and the good had to fight for their places. That included the man who likes to be styled Mr America's Cup, Dennis Conner, and even the president of Louis Vuitton, Yves Carcelle, whose company will be pouring millions into the event over the next three and a half years.

One of those who had managed to acquire a seat at the front was Michel Bonnefous, a life-long friend of Ernesto Bertarelli, the Swiss pharmaceuticals billionaire whose passion for sailing has brought the game's most adored and cursed trophy to his land-locked country after ripping it away from a humiliated Team New Zealand in Auckland at the end of February this year.

Bonnefous was in charge of management then and is now running America's Cup Management, the company they created to revolutionise and revamp the event on a ruthlessly commercial basis.

It is this company that had conferred on Valencia the right to spend hundreds of millions of pounds to stage the Swiss defence in 2007 - though it is ACM that will be totally in charge of all aspects of event management - and with that an accolade that will never be taken away: home of the America's Cup. This was a glitzy occasion, but there are tensions under the surface.

There is talk of considerable strain between ACM and the yacht club through which Bertarelli had chosen to challenge, as the system required, the Société Nautique de Genève. Anyway, it was always made clear there would be an Olympic-style bidding process for the ideal racing venue. But, for the moment at least, Bonnefous looked to be in control.

Then the aircraft landed. Up the steps went the mayor of Valencia, Rita Barbera and then the staged, but unrehearsed ceremony of Bonnefous and Barbera coming down the steps with the Cup for the assembled television cameras began. Not enough room for that, so Barbera took matters into her own hands and the Cup into her ample arms. Without a team, a boat or taking part in a single race, Valencia had won the prize.

The motorcade and police outriders swept downtown to the citadel which Barbera has just secured for a fourth, four-year term: the town hall. The travelling security man was replaced by rotating pairs of guards in red breeches and dark blue tail coats, ear-splitting thunderflash firecrackers drowned out the cheering crowds in the square beneath the balconies, and the partying went on until three in the morning.

Then things were a little more down to earth. The police outriders were back on duty, but not so the buses which were needed to show people round the city. There was a lack of prior briefing for those appointed to explain just how the new America's Cup village would operate and how the harbour developments - including cutting a new channel to the sea - would proceed. Still, that is mere detail and at the end of the morning there was the mayor, again centre stage, to answer all the questions. Well, to make a series of speeches.

As to the total budget required, how much would be paid by the EU, central Spanish government, regional government and the private sector, there was a five-minute waving of political flannel and not much else. Questions directed to others were often interrupted by the mayor's gravelly voiced view. The jury remained bemusedly out and few believed spending would be limited to the €500m (£350m) which Barbera was happy to be floated.

More will emerge before September next, when the first trial regatta will be held in the city, and that includes clearer indications of just how many 100-strong syndicates will be turning up to fill the team compounds and spend the millions which the city hopes will be pumped into the local economy. Britain's Peter Harrison, a man bedazzled by an event into which he pumped a personal £20m to put GBR Challenge back on the Auckland stage after an absence of 17 years, just cannot match the sort of money Bertarelli and the man he appointed to lead the challenger group, Larry Ellison of the Oracle software house, are stumping up, about $100m (£58m) apiece.

Conner has his customary complaints about the difficulty of raising that sort of cash for an event which would be live on US west coast television at 5.00am. More confident is ACM, which, with the power company Endesa, in addition to Louis Vuitton, has two of the five principle sponsors it is seeking and over 50 per cent of the budget.

And Bonnefous was back in control. ACM also has all the television and merchandising rights, total control of regattas which start next year, running on through 2005 and 2006 and including some fleet, rather than one-to-one, races as part of a seeding process. It is also pretty well in control of the rules regarding the boats.

Although saying it is trying to cut costs, the overseas tour will be hugely expensive, the increase from 16 to 17 in the crew will cost, according to Team New Zealand's Ross Blackman, a minimum of an extra £100,000 a year, and tightening of the design parameters will put a huge premium on research - always expensive - into chasing, like wing angles in Formula One, every slight performance edge.

At least the Valencian and visiting spectators, who will be able to watch the close-to-the-shore races from a public beach, should be kept on their toes. Shortened by a third to 90 minutes and using twin downwind turning marks which avoid the need for the trailing boat to be hammered by slipstreaming, they support the constant reminder from Harrison's design chief, Derek Clark, that money is not everything. "Never forget the people skills," he warns. "I have raced there and it was fantastic." And forget the stuffy old New York Yacht Club or the Royal Yacht Squadron.

This is fiesta time.