“Your Majesty, there is no second.”

Those words, spoken to Queen Victoria in 1851 as she peered in vain from the deck of the Royal Yacht for signs of a British rival to the upstart Yankee schooner America, still have a ring of truth. In terms of status, nothing comes close to winning the America’s Cup.

After all, for the next 132 years, the cup never left home, in spite of an international lineup of challengers who were willing to spend inconceivable sums to compete. And plenty still do. By the time this year’s contest is settled, the current cup-holder, Switzerland’s Team Alinghi, and the other top four challengers will easily have spent an estimated $100 million apiece on everything from crews to boats to training.

The event started out as a one-on-one competition organized for the Industrial World’s Fair, which took place in London in 1851. The Royal Yacht Squadron invited the United States to enter a boat in the race, and the New York Yacht Club handily beat 14 British competitors. The Hundred Pound Cup immediately became known as the America’s Cup.

In the ensuing decades, America’s Cup boats evolved from wooden schooners modeled on fishing vessels to 24-meter-long carbon-fiber sailing machines built to exacting specifications. Crews of 17 (with one “spectator” seat for financial backers and high-profile guests) sail in short, intense races; the boats are equipped with computers and other electronics that help skippers and tacticians calculate how far they can push the thing without breaking it.

Though it was once a nationalist spectacle like the Olympics, in which countries are pitted against each other, the America’s Cup has gradually done away with any requirements concerning the provenance of sailors, backers, or designers. Now it is a pure business play, a blue-blooded N.A.S.C.A.R. in which sponsor decals are screened onto Kevlar sails (at an estimated $300,000 per yacht) that may be used half a dozen times. The race brings together C.E.O.’s, engineering wizards, and professional yachtsmen, the best of whom pull down N.B.A.-level salaries. There is intrigue, espionage, and brutal legal chicanery. Not for nothing are the teams referred to as syndicates.

This rich tradition of mixing business with yachting is currently on display in the event’s latest round, taking place in Valencia, Spain, a site chosen by 2003 Cup winner Team Alinghi. According to the rules, the previous winner has the right to decide when and where the next races will be held.

The schedule: Leading up to the actual races, a string of competitions is held to decide who the challenger will be. This time, Team Alinghi added three years of exhibition-style race series; by April, when the real racing began, only four or five teams had enough money left to compete. (The rest—including a brave South African team that had been blessed by Archbishop Desmond Tutu and the first-ever Chinese team—took on the challenge just for the experience.) In the Louis Vuitton semifinal series, running through May 24, Emirates New Zealand currently leads Desafio Español, while Larry Ellison’s BMW Oracle was upset by Prada’s Luna Rossa. The winners will meet in the challenger finals, known as the Louis Vuitton Cup (June 1-12). The winner of that race then faces off against Team Alinghi in the America’s Cup, which begins June 23 and could run until July 7, depending on weather delays.

The scene: This America’s Cup is the first to be held in Europe since 1851, and will likely showcase the European genius for mixing business and sport. Think Monaco’s Grand Prix, Wimbledon, or a British Open at St. Andrews: Half the fun is being around so many people who present themselves as upper-class, even if all they own is the Prada on their backs. The other half of the fun? Real royalty mingles here, and they know their sailing (Spain’s King Juan Carlos, for example, is a longtime competitor). In Spain’s giddy night-owl culture, that means you stand a chance of rubbing shoulders with Prince Albert of Monaco or Princess Michael of Kent.

The yachts: America’s Cup-class yachts bear 33-meter masts and carry 80 percent of their weight in underwater “bulb” keels. These are fast, delicate creatures, capable of inflicting mortal injury or sinking in a flash, should their carbon-fiber hulls shatter—in which case, millions go down the drain. The boats can only be powered by wind and human muscle (applied to the winches). In other words, damn cool.

When to go: The semifinal races between Emirates New Zealand and Desafio Español have yet to be decided, but with the New Zealanders ahead and heavily favored, it makes more sense to catch the Louis Vuitton Cup. Or wait until June 23 for the America’s Cup to begin. The Vuitton Cup should feature great racing and social events. But, of course, it’s not the cup itself. For that, you want to arrive a day before the first race, on June 23, and then stay for the entire best-of-nine series.

Whom to root for: Larry Ellison, of BMW Oracle, was the oddsmakers’ favorite to win the Vuitton Cup and beat Team Alinghi for the top prize. Instead, Ellison’s estimated $270 million, four-year effort was unceremoniously derailed by the Italian yacht Luna Rossa, which is backed by Prada. With Ellison gone, and with him the prospect of the cup’s being held in San Francisco Bay, the obvious people’s choice is the Italian team. They’re underdogs, they’ve sailed marvelously, and if they can beat the Kiwis and the Swiss, they could create a perfect storm of sailing, fashion, and la dolce vita. If the Kiwis win, the cup will end up back in Auckland, a familiar spot after two previous wins and a long flight from anywhere.

How to watch: Choose a nice hotel (near the Turia Garden, if you can) and reserve a spot on one of the official spectator boats (60 to 145 euros per day per person). These large party yachts provide food, drink, and live commentary. Individuals and small groups can make reservations through the official cup travel agency, El Corte Ingles. For all-access, V.I.P. packages, try Bluefish Concierge. To book a slip for your yacht, contact Valencia’s Harbour Office Port.

Culture codes: Europeans dress up for sporting events, so men should pack a couple of blazers and women should pull out all the stops. Bring boating shoes or flats with soft soles and pack a bit of Louis Vuitton. If you’re prone to seasickness, stock up on Bonine before leaving the States. To demonstrate your sly wit, remark that “The Auld Mug is the only competition that handicaps the underdogs.” If someone asks what you mean, smile and say, “They don’t call them syndicates for nothing.”

–Don Wallace covered his first America’s Cup in 1983. Wallace is the executive editor of Yachting magazine. He has written for Harper’s, Fast Company, and the New York Times, and is the author of two books.