America's Cup - Russell Green on Protocol's return to Cup traditions

by Richard Gladwell, Sail-World.com/nz on 5 Oct 2017 In a second interview after the main media conference, last Friday Sail-World spoke to Russell Green - Team New Zealand's long-time rules and legal adviser and a key figure in the Protocol negotiation for the 36th Match for the America's Cup, to be held in Auckland or Italy.

While the Protocol has been signed off by the Commodores of the Royal New Zealand Yacht Squadron and Circolo della Vela Sicilia, there are still some key announcements to come.

'Next step is the boat,' Green explains. 'The Class Rule has to be published on March 31 - not in the Protocol, but what we are saying is that we will produce the concept for prospective competitors and media to look at by the end of November.'

(All that is said in the Protocol is that the boat will be known as the AC75 – a reference to the name of the class and a probable indicator of overall length.)

Over the past two America's Cups, a bone of contention has been the way the rules governing the Class and Regatta have been changed. Team New Zealand has generally been on the receiving end of that process, with Luna Rossa being another whipping boy.

Now those two teams are at the wheel of the 36th America's Cup - what will change?

'The Protocol can be amended by agreement between the Challenger of Record and the Defender', says Green. 'We only want to deal with the Challenger of Record. So when there are further competitors, it will be up to them as to how they organise themselves into making a decision. The Challenger of Record is the representative of the Challengers.'

'It is possible that even if the majority of competitors wanted a change and Luna Rossa did not, that they could use their power of veto [i.e. withhold their approval/support for a change]. But the way Luna Rossa have always acted I think that is highly unlikely', he adds.

Green thinks it is unlikely that they will go head to head with Luna Rossa. The two have worked closely over the last two America's Cups and were in the same position they are now in for the 2000 America's Cup in New Zealand.

'I think LR share our philosophy. You will see in the Protocol that there is some specific wording on the Class Rule and there is a three-month period after March 31, when the class rule can be changed by the Challenger of Record and Defender alone - that is to allow for any obvious mistakes we have made.

'After that, it can only be changed by the unanimous consent of the competitors. That includes not only changes to the Class Rule but also the change of class.

'So what happened in the last Cup [changing from the AC62 to the AC50 nine months after entries opened and the class had been announced on a majority vote] could not happen unless there was unanimous consent.'

Challenger Selection Series Sponsor switch
The replacement of long-time Challenger Selection Series sponsor Louis Vuitton, with their commercial competitor, Prada who is also the sponsor of the Challenger of Record Luna Rossa raised some eyebrows when the change was leaked a couple of weeks ago in the Italian media.

Some feel that the relationship has the potential for a conflict of interest with the team principal of Luna Rossa, Patrizio Bertelli also being co-CEO (with his wife) of Prada.

But on the other hand, there were similar relationships within Oracle Corporation, Oracle Team USA and the event in the last two America's Cups without there being any issues.

The way Green explains it, there is some formal separation between the parties.

'There are three entities. The first is Prada, the event sponsor, and Prada the company will be responsible for that sponsorship. Then there is Luna Rossa the sailing team who will be run by Max Sirena. The third one will be the Challenger of Record - there will be a person yet to be appointed running that side of the organisation.'

'The Challenger of Record is responsible for running all the pre-regattas and the Challenger Selection Series.

'On top of that, there is a joint group between the Defender and the Challenger of Record, which will also involve Prada as the title sponsor, for organising joint sponsorship deals.

'The most important aspect will be the broadcasting - which will be a joint approach.'

As yet (and maybe not until the venue is finally resolved) there is no decision as to how the Match itself will be run.

'That will be made in the next year. Until then we will just run as we are.

'Once the final host city agreement is in place with Auckland, and we are moving forward then we anticipate having a separate entity running the commercial side of Defence (outside of the sailing team).'

This is a similar arrangement that Team New Zealand had in place in 2000 and 2003 when the commercial arm helped fund the sailing team.

TV revenue to be shared
One issue that is still to be resolved between the Challenger and Defender is the split in costs and revenues on the TV/video broadcast. Under the model being used, the Challenger Selection Series (owned by the Challengers) soaks up a lot of cost, due to its long duration. But the Match itself (the property of the Defender) attracts higher Rights revenue for less cost - so it is inherently more profitable.

Also to be taken into consideration are the costs of various digital apps which are not usually revenue generating but which pull huge audience numbers.

'TV and Digital are not yet finally negotiated,' says Green. 'But if you look at the Protocol you will see there is already a precedent for the splitting of entry fees. That is a percentage. That won't apply to the TV rights. Those will be by agreement.'

Arbitration Panel, Jury and Measurement Committee remain
Another vexed issue with the last America's Cup was the secrecy governing the Arbitration Panel and its decisions.

'All I can say is that we will have an Arbitration Panel and its decisions will be published,' says Green.

'The Arbitration Panel will write their own Rules of Procedure. The framework we will give them is that we will expect the decisions to be published and open to the public, and all competitors and the actual hearings will be similar to the way the Jury did it in the past, in San Francisco.'

'I seem to recall that the proceedings were private, but the decision was public. I would quite like to see us go back to that, without becoming a complete circus. But maybe we could have a media representative able to attend the hearings and brief other media afterwards.' [As was done for Arbitration Panel Hearings in Auckland in 2003.]

'One of the big things we need to be is transparent,' he adds.

'I expect the Jury will be the same as in Bermuda - where it was drawn from the Umpires. That is their skill - on the water issues and racing rules. There are judges in the World Sailing system who are highly competent legal people. The Arbitration Panel is obviously more legalistic and covers commercial and off the water issues. The Jury deals with anything that happens on the water.'

The Measurement Committee works in a similar mode to that in Bermuda – which was generally very successful. While their decisions are final, if a competitor believes they have exceeded their authority, or are in effect making a new rule with a decision, then they can be taken to the Arbitration Panel.

Which way to get Nationality?
While much of the discussion before the Protocol announcement focussed on whether the crew would have a 50%, 60%, 75% or 80% nationality clause.

Effectively there is a 100% nationality clause – with the crew complying as residents of the country of the club they represent by one of two systems.

Either they are full nationals of the country (not really defined but any contentious cases are to be agreed by the Challenger of Record and Defender, and if they can’t agree then it goes to the Arbitration Panel). A minimum of 20% of the crew must fit this category meaning a minimum of two or three crew of the expected 10-12 man crew

Or they can be nationals by residency – and have to have lived in the country of club for approximately half of a specified two year period and pass some basic residency tests.

The practical effect of the nationality rule is that it will be a lot easier for America’s Cup Challengers to draw sailing crew from their own Olympic and other sailing teams, than it will be to count residency days for a hired gun – although for some the pain will be worth the gain.

The two big benefits of the nationality rule are that teams will have a stronger identity as National teams, which improves the fan interest and following and in turn lifts the size of the TV audiences and value for team sponsors. It also reduces the options for professional sailors to start a bidding war for their services – as they will be limited to sailing for their own country, or making a hefty commitment to residence in a foreign country.

(Under the previous Cup's nationality clause only one of the sailing crew was required to a hold a passport of the country of their club, the rest could just rock up and race, regardless of where they came from and when they arrived/joined the team.)

Dalton Clauses flushed out of new deal
Overall the Protocol is a very lean document in that it focuses on the framework for the event.

Gone is the so-called 'Dalton clause' introduced in the 34th America's Cup over and above the prescriptions of World Sailing to prevent criticism of the event and event organisers by a team member - with the threat of a $250,000 fine.

In fact, all fines and penalty prescriptions are gone - which in the last Cup provided for fines of up to US$1million to be levied by the Arbitration Panel, who was anonymous, and it was even an offence to disclose that a matter was before the Panel.

The four pages of complex and almost unintelligible AC50 daggerboard rules are of course gone and won’t be mourned.

Gone too is the Challenger Committee, the only body mentioned is CoR/D (Challenger of Record and Defender, pronounced as “cord”). It is over to the Challenger of Record as to how they deal with the Challengers. The days of the Defender having their fingers in the Challenger pie are no more.

In the same vein the organisation of the events prior to the Match are simply made the responsibility of the Challenger of Record, carving more prescriptive text out of the Protocol.

The role of Commercial Commissioner has also been given the heave-ho. There are several sections dealing with commercial issues surrounding the various regattas, the rest of it gets sorted out by discussion within CoR/D.

Began with previous NZ documents
'The Protocol and the organisation are actually quite traditional,' says Green.

'The base document was what we started with for the 31st America's Cup because that is the basic structure we had. We looked at a lot of the good points from previous Cups like some of the commercial aspects.

'Then there were other points we wanted, like the ban on weather programs. We didn't want teams going out with eight chase boats every day and spending six months sitting on the course analysing weather. There will be a joint program and the ability to get weather that is available to the public - same as AC35.

'We were concerned about the huge costs of tank testing. So we have banned that - we will stick to CFD.

'Essentially, we have taken the 2003 document and modernised it.'

Green says the Protocol discussions with Luna Rossa started after the team left Auckland.

'We had initial talks - nobody in the team knew about this - but we had initial discussions just after we went to Bermuda. Then we had to sort out the Notice of Challenge and receive the challenge in compliance with the Deed of Gift.

'Then we took the initial Protocol document we had developed and refined it over the last few weeks.

'Nothing signed on the Protocol before we left Bermuda.

'We were on the same page and had talked about a lot of things. The structure was agreed, and then it was a matter of taking the other things we have put into the document.'

Russell Green says that both groups have been talking to teams that competed in the last Cup, and prospective teams. 'There are obviously some that would be keener to stay with multihulls others that would go to monohulls,' he says.

Even though the monohull decision was leaked in the Italian media by Luna Rossa ahead of the Protocol announcement, Green believes 'the reaction so far seems to have been good.'

'We didn't make any comment initially, but once Patrizio Bertelli let it out, then we confirmed it.

'The message we have been getting is not to go back to slow displacement boats.

'We need high performance, exciting boats and the concepts that Dan Bernasconi and the guys are talking about to the Challenger of Record will meet that criteria.

'I think they will be exciting boats,' he concludes.