AmericaOne, right, led most of the way in a tightly sailed race.

The San Francisco-based boat lost Race 4 of the America's Cup challenger finals Sunday when it was penalized, as it held a small lead about a minute from the end, for blocking Prada of Italy.

AmericaOne crossed the finish line a half boat length ahead of Prada but had to make a 270-degree penalty turn. That gave Prada a 2-minute, 32-second victory and a 3-1 lead in the best-of-9 series.

Prada raised a protest flag and umpires in a nearby boat agreed that AmericaOne, the windward boat, prevented Prada, the leeward boat, from sailing the proper course to the mark as AmericaOne was required by the rules to do. But Cayard said Prada already was off its proper course.

"They've done an awesome job," Cayard said of the umpires. "Today we disagreed with the call. It was a quick call for a big-money race and it shuffled the deck big time. That's all right. We don't mind 3-1."

There is no appeal process for calls made on the water.

"He was trying to sail below and squeeze us to the mark and we just stayed on course," Prada tactician Torben Grael said.

Cayard must win four of a possible five races to advance to the best-of-9 America's Cup final starting Feb. 19 against defending champion New Zealand. Race 5 is scheduled for Tuesday.

"Each of us is going to win some races that we didn't expect to win and each of us is going to lose some races that we didn't expect to lose," he said. "That probably happened a little bit on both boats today."

AmericaOne had come back from serious boat damage that forced it to withdraw from Saturday's third race. It led all the way Sunday until the penalty turn.

AmericaOne led by 41 seconds going into the final 3 1/8-mile leg of the six-leg, 18½-mile race in varying conditions -- strong winds approaching 25 knots, sunny skies, and a brief downpour that limited visibility.

Then Prada skipper Francesco de Angelis started closing in as he positioned his boat behind Cayard's to block the wind, coming from behind, from Cayard's sails.

With the finish line about 60 seconds away, Prada, sailing on the left, headed toward AmericaOne, which was coming at an angle from the right. Their spinnakers, sails at the front of the boat used on downwind legs, seemed to touch and the Italians immediately raised a protest flag.

Cayard made a poor gybe and the boats separated as both sailed straight ahead toward the finish line. AmericaOne's bow crossed first, but the umpires in a nearby boat upheld Prada's protest.

The American boat, plagued by equipment problems Saturday, was done in by human error Sunday.

"We did a much better job today and were looking good for a while," Cayard said.

For most of the race, it appeared Cayard's sailing skill would overcome the latest mishap -- its eighth lost spinnaker in 44 races throughout the trials and second in two days.

A cool Cayard sailed an aggressive and masterful second leg after the lime-green sail broke loose from its pole.

Cayard won Race 2 despite having a spinnaker rip across the bottom. The spinnaker damage in Race 3 on Saturday was more costly as the sail snapped in two horizontally on the fourth leg.

The boat's rigging also suffered substantial damage in the strong winds and high waves and Cayard, fearing his mast would break, withdrew on the fifth leg. For Sunday's race, he had substituted the mast from his backup boat.

"Yesterday (Saturday) we just had a lot of things go against us," Cayard said. "We hadn't raced in 30 knots before. The Italians had" because they had been in New Zealand longer than AmericaOne.

The winds were strong again, although not reaching the 30 knots of Saturday. Cayard led by four seconds at the start and eight seconds after the first leg, going into the wind.

Then the Hauraki Gulf turned into the scene of furious combat as both boats had sail problems and raised protest flags that were disallowed by the umpires.

About halfway up the three-mile downwind run, AmericaOne's spinnaker came loose and remained attached only at the top.

A luffing duel ensued in which the leading boat maneuvers in attempt to keep its opponent's sail from filling properly. It worked for Cayard as he tacked several times and stretched his lead even though he had no spinnaker.

"They were very lucky that their spinnaker broke again," Grael said, "because then it was easier for them to luff."