Rebuilding George Schuyler's Dream

by Richard Gladwell, nzeditor@sail-world.com on 15 Oct 2007
In a week, and for just the second time in its 150 year history, the America's Cup seems destined to enter the hallowed halls of the New York Supreme Court.

It is simplistic to portray this dispute as a battle between two belligerent billionaires. The situation has been brewing for some time and is created by an inherent weakness in the Deed of Gift.

Ever since Fremantle, the entrepreneurs of sailing have been keen to lift the America’s Cup to a higher level – similar to other sports which are controlled by a central body. The NRL (National Rugby League) is probably the closest example with a network of franchised teams, a pinnacle competition, and a governing body unafraid to act quickly (even mid-season) in the best interests of the competition.

Many have lobbied to have this style of competition created in the America's Cup. Inevitably it falls over in the transition from the current regatta to the dream game, because at some point the Defender has to give up the Defence rights – and to date this has never been a serious option for the Cup holder.

The way through this mire is the path adopted by Alinghi, where the Defender takes complete control of the event, bids the venue, and underwrites the financial risk. Good in theory.

In practice, this can only be done by selecting a very compliant club, establishing them as Challenger of Record, and then prescribing the rules and parameters for the event. Then it is up to other teams as to whether they wish to play. The conundrum is that the Defender must retain control, while still making the event attractive for the teams, particularly the established players, who come to the game with good competitive records, which add to the mana of the event.

In the journey for the 33rd America's Cup, Alinghi only got to first base - cementing a relationship with a compliant Challenger of Record. What they have been unable to do is create an event which is attractive to the established players.

Alinghi and their event management arm, America’s Cup Management, have been heavily criticised for the one sidedness of their approach with the 33rd America’s Cup, but it is minor league compared to what is possible under this approach.

For instance, the Challenger Selection Series could be set up so that the winner of the CSS competes for the right to sail against the Challenger of Record in the Final, with the winner sailing against the Defender in the Match for the America’s Cup. That would put a real bonus in the game for the Challenger of Record who would need to be in complete collusion with the Defender. Currently there is little point in being Challenger of Record. The role is very much a poisoned chalice, and is just clutter for a professional racing team focussed on winning.

The error that the Defender made with the 33rd America’s Cup was in dealing with a Challenger who does not meet the essential tests of the Deed of Gift. Had Alingi dealt with an established, but still very compliant yacht club, then the current action would almost certainly fail, or certainly have been a lot more difficult to win in Court.

On the arguments presented to date (and there can be no new material introduced at this point), Golden Gate YC should prevail in New York, primarily because the Club Nautico Espanol de Vela does not comply with the essential tests specified in the Deed of Gift. And, as a secondary argument there is the question of fiduciary responsibility of the current Defender as the trustee of the Deed of Gift.

The principle of Mutual Consent as the lifeblood of the Deed of Gift, should also be upheld by Justice Herman Cahn. However the inherent weakness in the Deed will still remain unless it is upheld that the Defender must act as required in the penultimate paragraph of the Deed of Gift.

Regardless of the outcome of the decision in New York, all parties should be looking beyond 22 October, and whoever 'wins' will have a massive recovery job on their hands. The 33rd Match for the America's Cup has been irretrievably damaged. There is little point in blamestorming the situation, or trying to determine fault.

The only way out, in the longer term, is for an amendment to the Deed to be enacted, enshrining a body like the Competitors Commission, which would operate under Mutual consent in an equal decision making relationship with the Defender and Challenger(s). The right of the Defender to choose the venue would remain its property as the winner.

Everyone is agreed on the goal or future shape of the America's Cup, which is that it should be the premier sailing event in the world. The difficulty lies in the means by which this is achieved.

Maybe Justice Cahn’s decision will provide a clear direction. Or maybe the parties will have to hang up their self-interest outside the negotiating room door, and instead talk of what is in the best interest of the event, and sport, consistent with George Schuyler’s great dream of 150 or so years ago.

Good sailing!

Richard Gladwell
NZ Editor.

Got a view on what should happen with the America's Cup to avoid another brouhaha? Click here: nzeditor@sail-world.com to send your comments and ideas for posting our America's Cup Email-bag

This article originally appeared as part of an Editorial in Sail-World's NZ newsletter. To subscribe to Sail-World.com's New Zealand FREE newsletter with the latest updates from the New Zealand and international sailing scene, click here: www.sail-world.com/subscription