Volvo Ocean Race CEO Knut Frostad talks Time and Money (Part II)
by Rob Kothe and the Sail-World team on 22 Aug 2014
Sail-World interviewed the CEO of the Volvo Ocean Race Knut Frostad late last week, after the dust had settled from the final and seventh boat entry team Vestas Wind.
Volvo Ocean 65’s at the start of the Sevenstar Round Britain and Ireland Race Volvo Ocean Race http://www.volvooceanrace.com
Sail-World started by commenting- Many observers are saying that if this one design element hadn’t come in, this race wouldn’t have happened?
Frostad responded - ’They could very well be right about that. When we made the decision about one design we had several options on the table and none of the options we had were to continue we were.
‘We would never have continued with the Volvo Open 70. I think if we had just continued with the same rules, same boats and same set up for sure we would not have had another race.
‘When people talk about one design they quite don’t realize the biggest benefit of one design is time.
‘When we made our decision we knew that if we wanted to do a high performance racing that is 67 feet in the waterline, if you want to do that big high performance carbon racing boat it is never going to be a cheap boat.
‘What we realised is that we could buy an enormous amount of time for the teams to get their funding together.
‘If you ask a bank analyst about the financial situation of European companies in 2012 we all knew it would be very difficult to find main sponsors in 2012 and we didn’t even know if the Volvo was going to look any better in 2013. It hardly did.
‘With a one off boat you would have to start designing your boat in early 2013 at the latest to have a boat ready for this race and no one will have that money at that time so the one design allowed everyone just to have one more year, a full more year in getting their projects together.
‘Obviously it involved us taking some financial risk but that is the absolutely biggest change you can make.
‘We have seen every time there has been a one design class - for example the AC45s when Russel Coutts and the guys launched those and they had more teams joining very late and getting a 45 and suddenly they had boats and were training.
‘They would never have joined if they had to build and design their own catamaran because they wouldn’t be there.
‘Time is so critical and also the fact that the last entry is much closer to the first entry when it comes to the platform you start with and with a one off boat if you are the last one out you are doomed from the beginning. You are never going to be competitive. You are never going to have a shot at it. It’s a bit like entering an America’s Cup project at the last minute. You are dead already when the competitors are so far ahead.
‘Our One Design rule is very simple. It is a very, very tight rule.
‘Some of the sailors have been extremely frustrated with us. Ian Walker said to me the other day that this is probably the most one design boat ever created in the one design world of sailing.
‘He reckons it is more one design than the Laser which I take pride in and sometimes that becomes complicated. We have a very interesting set up. We have a set up where that the basic rule is you cannot change anything so if you ask about changing something the answer is no.
It doesn’t matter what it is. You cannot change anything. If a team thinks that something is wrong with the boat, for example we had a situation with a lot of small little details that we needed to adjust.
‘An example is the galley. It was not practical. There was an issue and the boat was keeled over and it didn’t work very well.
‘The team then proposes can we make an adjustment to the galley and here is our proposed adjustment and then all the teams, this started when we had more than three teams, all the teams vote so they have an online system.
‘They are online with the system every day and they all watch it every day.
‘They propose this change and if all the teams agree to the change and we also agree to the change, we also have a vote, then we make the change and then all the boats make the change.
‘That’s how we do it on every single small detail. It could be as small as a little webbing loop inside the boat and if there is anything that is cost driving we normally stop it.
‘If there is anything that someone proposes for instance why we don’t take another bow sprit on the boat we will say no because that costs money and that has enabled us to make small changes to the boat, improvements, and it is done across the whole fleet.
‘We also do that not only on the boat but also how we run the boat for example with one team there has been a discussion about the spare sail as they have very few sails to play with. They basically have the one they start with then they have four extra sails they can have during the race.
‘We didn’t want them to spend much money on shipping these sails around the world like they did in the past when they were flying an enormous amount of sails in every stopover in case they needed them.
‘We had a while thing with the teams when these sails will be deployed and then they would all have them deployed at the same time and then they share the air freight container between them instead of having one each and then they save an enormous amount of cost and they vote on this and we have a vote and then we say yes and some things we say no.
‘It is a very tightly controlled class and it seems to work really well. The great thing is that it is also transparent. There are no teams that have any secrets or have a secret discussion with me or the race management about things they can do to their boats. It is 100% transparent.
‘That leads into the whole concept of the boatyard, enormous saving on spares.
‘It is an enormous saving on spares but also on man hours. We shall watch the performance of the Boatyard before we get going, but I am very optimist about how it is going to work and I think we have a very good team together managing the boat.
‘What we see is that when last race several teams will fly a specialist hydraulic engineer to all the stopovers to service the keel system on the boats and that person would fly to Abu Dhabi work two days on Team Camper and fly back.
‘Then there was another guy flying in for Team Telefonica. Now obviously we are going to have two guys and they are going to service the whole fleet and they are going to share their accommodation costs, share their travel costs.
‘It is transparent between them how many hours are spent on each boat and they are paid the same fee and then we look at how it pans out on each boat. It is a lot more efficient way of using people.
‘There is no doubt in the Volvo Ocean Race that in the past every team had huge shore crews and they had them in case. They had to have them in case it was needed and typically they would get closer to the finish of the race, in particular they get to the US stopover and the last European port the boats are at their best.
‘They are very well serviced, they have been through the worst part of the race and you still have this 30 man shore crew sitting there and there is nothing to do and they are still there and they are still being paid.
‘We know out of seven teams we know all the details of six of the budgets. There is only one team that we don’t know 100% the details of. The last race the budgets for the teams were varying between 20 and 35 million euros and this race they are varying between nine and 16.
‘Some teams are bigger and have more experienced people and maybe a larger programme overall and some have less but in general you can say the budgets have much halved from the last race and this race and that includes the teams have bought the boats and fully paid for them and quite a few of the teams are now looking at doing the next race and we are going to keep the same boats so obviously you get an even bigger cost saving in the next edition and it also depends on how you deal with accounting. It is a very big saving.’
In Part III Frostad takes about the V65 One Design fleet racing in the Sydney Hobart or a Fastnet Click here to read part one.
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