America's Cup- Cost Savings vote really aimed at a late change of Boat

by Richard Gladwell, Sail-World.com NZL on 30 Mar 2015 The official America's Cup website reports that the entered Competitors in the 35th America's Cup will vote this week on changes presented as cost saving measures.

In effect, the measures centre around a complete change in the boat already announced in the Protocol nine months ago, and for which several teams have design projects underway.

The specific size of boat has not been stated but it is bigger than 45ft overall and smaller than the AC62fter currently specified, and for which a design rule has already been published.

It is understood that the options put forward for voting include significant one design elements for the Cup boat, which under the 19th century Deed of Gift, which governs the Cup, has always been a design/technology contest between yacht clubs.

One design has not been previously used in the America's Cup, and indeed disciplinary action relating to breeches of one design rules for the AC45 one design class in four of the previous America's Cup World Series regattas are still not fully concluded. The breeches resulted in the suspension of sailors and the Defending team being fined $250,000 by the International Jury. The infringements were initially picked up inadvertently, and not by official measurers who had passed the boats several times previously.

While teams can make changes to conditions of the match by majority, subject to the effective veto of the Defender, it is not clear if this degree of change can extend to an already announced boat to be used in the regatta.

Deed of Gift kicks in
The simple premise of the Deed of Gift is that the America's Cup is a Challenge Trophy, where the Challenging Club nominates the class of boat and the dates of the Match. The Defender names the Venue for the Match and Sailing Rules (generally those of the home club).

The Deed of Gift timeline for the 35th America's Cup is that Hamilton Island YC challenged in September 2013, they worked with Golden Gate YC to produce a Protocol under the mutual consent provisions of the Deed of Gift. They announced that under Mutual Consent it had been decided to race in a new AC62 catamaran class and published the Rule for that class.

GGYC then opened entries for the Cup, which closed on August 8, 2014. Five Challengers plus the Defender entered, by the close of entries. In varying degrees, the Challengers started preparing and spending budget against the date of the Match and preliminaries and designing to the Class - AC62.

Established Challengers such as Emirates Team NZ and Luna Rossa could further develop their existing foiling technology adapting it from the AC72 class to the AC62 - designed as a wingsailed foiler.

The other Challengers are starting from scratch and needed to develop a proven foiling capability in the AC45 class.

It clearly suits the purposes of the newer group of Challengers to wipe out as much of the technology advantage of the established Challengers, and the way to do this is to change the class of boat and introduce one design.

However that is all for the 36th America's Cup, and the basic terms of the 35th America's Cup (Class, Venue, Dates) are locked and loaded at the time the entry period for the 35th America's Cup opened.

The only way that the Class can be changed under the intent of the Deed of Gift is for all teams to agree to sail a Class different from that which they accepted the offer by GGYC to enter the original competition. While the Deed of Gift provides for the terms of the match to be varied by Mutual Consent for obvious reasons that cannot be just a decision of a simple majority.

Will the real CoR please stand up?
The Deed of Gift does not contemplate a group of Clubs being a Challenger of Record. The simple situation is that Hamilton Island YC were original CoR. That club gave notice that it did not intend to continue with its entry and did not pay the prescribed entry fee. The role of Challenger of Record then passed to the yacht club under which Luna Rossa entered the 35th America's Cup competition. Through that transition of Challenger's of Record the AC62 stayed as the Class - when it could have been changed under the Mutual Consent provisions of the Deed of Gift and the class continued to be locked into the Protocol governing the 35th Match.

Despite handing over their voting rights as Challenger of Record to a majority of the Challengers as part of the CoR transition, Luna Rossa, or rather it club remains the Challenger of Record in terms of the Deed of Gift and cannot abrogate that obligation except as provided by the Deed of Gift.

Currently, it is not possible to take such an issue to the Arbitration Panel to be be used to determine rules and other issues within the competition, for the simple reason that the Panel has not been appointed.

The current Protocol marginalises the role of the world body for sailing, the International Sailing Federation and it has no real jurisdiction in the event.

The vote referred to in the report published on the America's Cup website, is believed to have already taken place.

Minnows vote for cost cutting
Challenger of Record, Italy's Luna Rossa stated late last week that it was opposed to the change of boat from the already announced AC62. Emirates Team NZ, who has almost 30 years of America's Cup involvement said by social media that it agreed with the Italian position, and within hours of making that statement were advised that a Qualifier series would not be held in Auckland.

The so-called cost cutting moves are believed to be supported mainly by first-time teams, and those who have not entered the competition, for which entries closed on August 8, 2014. The Defending Club does have the right to accept late entries. However, there are just 27 months to go to the 35th Match. In the previous America's Cup cycle more than ten 'Challenger' teams competed in the America's Cup World Series, but only three of those managed to garner the financial and technological ability to mount a full America's Cup Challenge, however until they were stopped by the International Jury, the minnows did have equal voting ability on rule changes in the full America's Cup.

There has been nothing published to indicate that other areas of the Protocol be changed - which have a significant impact on costs, such as a reduction on the use of surrogate boats to test design concepts. Currently, a team can run up to four AC45 hulled yachts - two one design and two development. Also not explained yet is why surrogate boats just a few feet shorter than the proposed new class, would even be allowed.

There is no limit on salaries, and in one of the employment actions that the Defender has against it in the California state judicial system it was revealed that a grinder had been offered a contract for $25,000 per month or $300,000 per year for a two-year period. That is $600,000 for the campaign plus another $96,000 accommodation allowance for Bermuda.

Personnel costs are generally reckoned to constitute 60% of the total cost of a campaign where teams in the last cycle ran to 120 people. Already Team NZ are running a team of 50, and Luna Rossa are believed to have over 80 on the payroll.

The payroll budget for the teams completely belies the claim that the boat size reduction will make the Cup more affordable for teams. Historically teams have spent whatever funds they can raise - if they don't spend it on the boat they spend it on people - but the overall dollar number does not change.

The surprising part of the Dean Barker saga, and the initial announcement from Team New Zealand, was not no much the split with Barker. But the first time a top Cup team had come out and publicly said they were trying to run their campaign for substantially less than their previous rendition - and had made the cuts in personnel and boat expenditure to achieve that budget objective.

The many meanings of One-Design
One design, oddly has two meanings in sailing rules. One design rules exist for all International classes run sanctioned by the International Sailing Federation, but there are two types. They allow for multiple manufacturers/builders to build to a set of design tolerances, using the manufacturers own male plug/female moulds - often these are optimised to the tolerances which are generally +/-4mm or a range of 8mm at a measurement point. In the Olympic classes, the 470 is a good example of multiple manufacturers being able to build boats to their own 470 shape within the 470-class rule. The boats are measured using a combination of direct measurements and templates (to check hull shape).

Or, there is the single manufacturer one-design classes - where a single manufacturer provides all boats from a set of moulds they own, or they can provide a female mould to other licenced builders. It was this system which was used in the AC45 class leading to the 2013 America's Cup regatta, and where boats and parts presumed to have come from a single manufacturer were deliberately altered. It is very hard to detect cheating under this system.

Under the AC62 rule, the first mentioned one design philosophy has been adopted - specifically with wingsail shape, and also hull volume. But there is still considerable design freedom. In terms of cost reduction with this form of one design the savings are largely theoretical as in practice design teams pour the same resource into exploiting the nth degree of advantage from the freer areas of the design rule - even though the gains may be very slight.

The bottom line is that at the end of the regatta there is no effective reduction in costs as teams will find ways to spend whatever budget they can raise to win the regatta.

Of course, in a bizzare twist to what is being proposed, the original Challenger of Record, Australia's Hamilton Island Yacht Club, who bailed for financial reasons could now decide that the new class is within their budget, and make a late entry for the America's Cup. The issue being that their Commodore, Iain Murray is now the Regatta Director for the America's Cup Regattas. HIYC is specified in the Protocol - Article 14.1 as the Challenger of Record. Late Entries can be accepted only at the discretion of the Golden Gate Yacht Club, and there is no deadline for such entries.

Prior to August 8, 2014 any Club was entitled to make a Challenge on the basis that the boat was the AC62 for which the Class rule had been published in June 2014.

The statement published on the official America's Cup website reads:

The six teams entered in the America’s Cup will vote this week on whether to adopt a new America’s Cup Class that will significantly reduce costs.

The new America’s Cup Class under consideration is a wing-sailed, foiling catamaran between 45 and 50 feet. The boat would make its debut for racing in Bermuda in 2017.

“If these changes are adopted it seems certain new teams will join this edition of the Cup,” said Russell Coutts, the CEO of the America’s Cup Event Authority (ACEA).

“We’re trying to take as big a step as possible to reduce costs now and in the future. The good news is all six teams agree we should reduce the size of the boats to save money. However, there is still some debate as to the size of the boat we should adopt.

“While some teams would prefer a smaller change that wouldn’t result in such significant cost-savings, the majority believe it is better to take a bolder step that will work for this edition of the America’s Cup and for future editions as well.

“When it comes to cost-reduction, size matters. Under 50 feet, real savings kick in on all levels: design, boat-building, sailing team and operations, so that’s why we’re looking at this range.”