San Diego finished second to Bermuda in a high-stakes race to host the 2017 America’s Cup, according to an Associated Press report.

The decision on the site will be announced Dec. 2 in New York, but the report quoted an anonymous source “with knowledge of the situation” saying the defending Oracle USA team backed by billionaire Larry Ellison selected Bermuda to host the event in the summer of 2017.

Bob Nelson, chairman of the Port of San Diego’s port commission who has been involved in the bidding process for the Cup, said he was unable to comment on the news because of a binding non-disclosure agreement.

If the report is true, this would be the first time a U.S. defending team sails outside the nation’s borders in an America’s Cup challenge. Bermuda is 640 miles from North Carolina.

San Diego had put together a bid this summer that provided certain undisclosed breaks on the lease of port properties, and many local yachting insiders considered the city’s selection a good bet. That was based on its past experience hosting three previous America’s Cups, the excellent sailing conditions on San Diego Bay, and an abundance of top-notch accommodations and all the ancillary benefits that go with a major U.S. city.

However, all those plusses apparently were trumped by the fact that Bermuda has no taxes, meaning winning teams would garner a much larger pay day.

In addition to the advantageous tax laws, Bermuda has a better location for televising to the sport’s many fans in Europe. But most reports said the sailing conditions off the coast of the island nation are not conducive to professional yachting competition, and the accommodations and infrastructure for teams are not as attractive as would be in San Diego.