Gladwell's Line- The America's Cup turns the corner forever

The day the America’s Cup world changed, maybe forever - GGYC wins the 33rd America’s Cup Match James Spithill, Russell Coutts, Larry Ellison

In the gathering gloom of the early evening of 14 February 2010, the 115ft trimaran, USA-17, crossed finish line off the Valencian coast, to win the 33rd America’s Cup and lowered the curtain on a period of acrimony spanning almost three years.

Later that night, having just been presented with the oldest and most prestigious trophy in sailing, BMW Oracle Racing team founder, Larry Ellison, promised the world’s sailing media that the 34th America’s Cup would be quite different from its predecessors:

'One thing I would like to assure people about the 34th America’s Cup,' said Ellison. 'There be a completely independent jury, there will be a completely independent umpires. It will be an independent group which manages the next America’s Cup and there will be a level playing field for all competitors.'

Just over four months later, on Wednesday, 23 June 2010 Ellison delivered on that undertaking with the announcement, by Golden Gate Yacht Club, of the draft Protocol for the 34th America’s Cup.

When Ellison made his pronouncement at that final Media Conference, 'independent management' seemed like a rather glib line. No-one at the Media Conference really knew what he meant.

News was then just breaking of how an International Sailing Federation Race Officer had gone against the wishes of the Swiss appointed Race Committee in starting the second race of the 33rd America’s Cup.

How more independent could you get than that?

Hadn’t the 33rd America’s Cup just been overseen by a group of five on the International Jury, three of who doubled as an Expert Panel appointed by the New York Supreme Court, who had really straightened up a case that had been fishtailing its way around the New York judicial system?

Isn’t that what you mean by 'independent', Larry?

Larry Ellison at the media conference following the 33rd America’s Cup
Most left that conference, encouraged for a better America’s Cup world, but really none the wiser.

Last Wednesday the Defender and Challenger for the 34th America’s Cup, Club Nautico do Roma, showed the America’s Cup world they meant by 'independent'.

In Ellison’s World, independent means that everyone no matter what their position in the game is equally represented.

The old formula has gone of the Defender holding certain rights and the Challenger folding certain rights, and every detail being negotiated against the holder of the rights.

Essentially the 34th America’s Cup will be split in two, as previously, with the Event essentially the shore based, and non-racing activities being organised and funded by the Defender, Golden Gate Yacht Club. The Club also picks up any financial downside from the regatta and shares any upside with the Challengers. As happened in 2003 and 2007 with Societe Nautiqiue de Geneve.

So no change there, really from previous editions, particularly under SNG.

The big difference lies in the other side of the America’s Cup ledger with the appointment of a new body known as America’s Cup Race Management (ACRM), which is overseen by a Board of Directors. Instead of being controlled by the Defender, the Board consists of:

- a Regatta Director, appointed by the World Sailing Teams Association (the current organising body for the Louis Vuitton Trophy series).
- One person appointed by the Defender candidates
- One person appointed by the Challengers

So if there is more than one Defence group, then they and Golden Gate YC get to jointly select one person on the Board. The Challengers obviously have another, and the third is appointed by WSTA, the Luxembourg registered body, founded by Larry Ellison and a number of other preferential Challenger teams, who set up the capital base of the group, plus several other teams who have not contributed financially.

The WSTA appointee is also the Race Director and also Chief Executive Officer of ACRM.

Larry Ellison in flight mode during Practice Day, 2010 America’s Cup
Far from being in the majority in the America’s Cup power game, for those that see life in those terms, the Defender is in the minority. The reality is that the decisions will probably be unanimous and will be bound by the doctrine of neutral management, meaning that they cannot act in the interests of the Defender or Challenger, or any one team.

Riding shotgun on the New Deal is the five member Jury, to be appointed by the International Sailing Federation, in conjunction with the Defender and Challenger of Record, from a list of names submitted by the latter two parties.

Significantly, this selection will be made within the next three months, 30 September 2010 – two months before the window for Challenges is opened. No chance now for the competitors to indulge in various power-plays ahead of the International Jury or Arbitration Panel appointment. The stable door has been firmly shut before the horses bolt.

Further, if the Race Director is not appointed before 30 September 2010, then the Jury will step in and immediately make that appointment from the list of candidates drawn up by the Challenger of Record and Defender.

The powers of the Jury are wide, and cover around a dozen points prescribed in the Protocol, including a catch-all clause.

From there the 56 page document sets out the details of the organisation framework of the 34th America’s Cup – most of which will be subject to consultation a determination by the Competitors and not prescribed or negotiated in the previous 50/50 manner of the previous 31 America’s Cups which have been conducted under Mutual Consent.

The real point of significance of the Protocol of the 34th America’s Cup is that it pushed the event beyond the point of no return.

It will be very difficult for any future organiser/Defender of an America’s Cup to take for themselves the rights that have been accorded under the 19th century Deed of Gift – split into what is owned by the Defender and what is owned by the Challenger(s).

From here on those two bags of marbles will be combined into one, of which the teams all have an equal share. Well, as equal as is practical in the America’s Cup.

Any deviation from the transparency of this style of organisation, will automatically call into question the motives of the Defender, and their compliant Challenger, which can be only be for their own self-serving advantage.

The reality is that there can be no step back from the New Deal in future America’s Cups.

What will be interesting will be to see if the changes are enshrined in changes to the Deed of Gift, given the will of the Defender and Challenger of Record.

Given the shenanigans of the last three years which have bought the America’s Cup to its knees, one would have to expect that legally binding changes are required.

That action will seal for posterity, the New Deal, announced on Wednesday.