David Taylor set the luxury boat adrift while its owner Michael Hay and Taylor's partner, Hannah Brookes, were obliviously chatting on board.
He later told police in an interview he had looked into the vessel and seen Miss Brookes and Mr Hay engaging in a sex act, Chronicle Live reports.
The pair both denied this.
Taylor claimed he didn't deliberately cut the ropes and cables of the boat - which was tied on Newcastle's Quayside - but "accidentally loosened them".
"I didn't cut anything," he insisted.
But the prosecution accused him of being jealous and getting "in a strop" because he had seen Miss Brookes going on to Mr Hay's boat.
Taylor thought his girlfriend, Hannah Brookes, was romping with a millionaire on a £450,000 boat, the court heard
They also claimed the 54-year-old defendant cut free an unmanned smaller boat.
This also belonged to the retired car dealer and was sent floating in the water and bouncing along the side of the River Tyne, the court heard.
As Mr Hay frantically tried to get his 60ft vessel under control, he was forced to watch helplessly as his £100,000 Sealine 38 drifted past him towards Ouseburn, it was said.
Police, firefighters and officials from the Port of Tyne were called to the scene.
They eventually managed to secure the unmanned boat, but more than £11,000-worth of damage had been caused, prosecutors said.
Now, Taylor, who lives at The Barns, Northside Farm, Trimdon Grange, in Teesside, but was originally living on a boat at St Peter's Marina, in Newcastle, has pleaded guilty to two counts of criminal damage.
During a Newton Heating at the city's magistrates' court, Sarah O'Neill, prosecuting, said that Taylor had been out for his birthday with Miss Brookes, described as a "young lady", at the Pitcher & Piano, on Newcastle's Quayside, on November 29 last year.
Taylor set the luxury boat adrift while its owner Michael Hay, pictured, and Miss Brookes were obliviously chatting on board
She said the pair had argued and Miss Brookes had left the bar, but was later seen by Taylor getting on to Mr Hay's £450,000 Fairline Squadron 58 boat, called Coco, which was moored nearby.
The prosecutor said: "Hannah Brookes and Michael Hay were talking inside and, what happened was, the boat started moving away from its moorings."
Although the vessel had faulty steering, Mr Hay managed to bring it under control but watched in horror as his second, unmanned boat, The Vortex, also drifted out into the river, the court heard.
Unable to stop it, the second vessel floated under the Millennium Bridge and bounced all the way along the Quayside walls before it came to a rest near the Cycle Hub, in Ouseburn.
The court was told £1,500-worth of damage had been done to the cables and ropes of Coco and £11,490 to The Vortex.
Giving evidence during the Newton Hearing, Mr Hay, who denied having an affair with Miss Brookes, said she had visited him while upset after having an argument with Taylor that evening.
He said: "I saw David crouching down outside. I told Hannah not to turn around and look outside as I thought he was spying on her.
The court was told £1,500-worth of damage had been done to the cables and ropes of the vessel, Coco
"I didn't know what she wanted me to do. She said "I don't know, give me 30 seconds". Then she said "Mike, we're moving". I looked up and the boat was adrift from the pontoon."
When asked why he thought Taylor would cut the mooring ropes of his two boats, Mr Hay replied: "He believed I was having an affair with his ex-girlfriend."
The court was told Taylor left the scene and was arrested two days later while lying on a lounger by the side of the pool in The Hilton Hotel, in Gateshead.
He told police in an interview he had looked into the boat and seen Miss Brookes and Mr Hay engaging in a sex act, which they both denied, but claimed he hadn't deliberately cut the ropes and cables.
Taylor, who works as an electrician, told magistrates he had been "seeing Hannah for a couple of weeks" prior to the incident and "accidentally let one of the ropes loose" when he saw her get on board the vessel.
He said: "I didn't cut anything. I certainly didn't have a knife with me that night."
But Ms O'Neill accused Taylor of being jealous because he'd seen Miss Brookes getting on to Mr Hay's vessel.
She said: "You were jealous."
Taylor replied: "I certainly was not."
Mrs O'Neill added: "You did this because you were cross. You have got yourself in a strop over this and caused all this damage."
Taylor answered: "No."
Taylor claimed he had accidentally loosened one of the boat's ropes but that Mr Hay had snapped the others when he started the engine and tried to pull away.
However, magistrates found the prosecution's case proved and ruled that Taylor had deliberately cut the moorings on both vessels.
They also agreed that the total amount of damage caused was £13,000 and sent to the case to Newcastle Crown Court for sentence.
Taylor was released on conditional bail to next appear there on October 5.