Two teams have retired from the Sydney-Hobart Yacht Race as one is down by engine failure and the other a broken gooseneck while traversing the rough seas on the first day of the race.

The team on board the Accenture Yeah Baby led by Marc Ryckmans suffered gear failure and is now headed back to Sydney. Earlier, the Celestial crew led by Sam Haynes had a broken gooseneck and also discontinued competing with the rest of the 86 teams.

The Sydney-Hobart race, which this year was sponsored by Rolex watches, caps the Christmas holidays in Sydney every year and has been considered the ultimate sea adventure comparative to the trek to the peaks of Mt. Everest of the Himalayas. Teamwork and individual performance of the ship's crew are fundamentals as they try to make use of the heavy winds and the waves to their favor.

The fleet of 88 yachts took off at the Sydney port yesterday beginning four-day race which commences at the Hobart Port.

Leading the fleet as of 1 PM (AEST) is the three-peat champion, Wild Oats XI led by Mark Richards, which is only 1 nautical mile ahead of rival Investec Loyal both gauging the waters South and Southeast off Gabo Island, respectively.

At third is Peter Millard's Lahana and Alex Thomson's Hugo Boss team.

In an interview with Sydney Morning Herald as of this morning, said conditions overnight were pretty heavy.

The fleet had to contend with ugly seas whipped up by southerlies of up to 30 knots and swell generated by ex-tropical cyclone Fina, reports said.