America's Cup- Luna Rossa stays true to principles and withdraws

by Richard Gladwell, Sail-World.com on 3 Apr 2015 To the surprise of no-one, the Challenger of Record, Luna Rossa, has announced that they are withdrawing from the 35th America's Cup after the Class Rule was changed on March 31, 2015.

The Italians had issued a statement four days previously stating that they would undertake such an action if the Class Rule were switched without the agreement of all competitors.

The America's Cup Events Authority, the event organising and marketing arm of the Golden Gate Yacht Club, called the Italian's bluff by making the change with a 3-2 vote after the Challengers were polled. It is presumed that Oracle Team USA were in favour of the change, as they did not exercise their right of veto in the matter.

On March 31, 2015 the ACEA announced that the rule would be changed to the new AC48 class, a shorter boat with very tight design controls removing design innovation that has been one of the tenets of the America's Cup.

From the statement issued by the Italians it seems that the America's Cup World Series in Cagliari, Italy will go ahead in early June, however that will be the end of the Italian involvement in the 35th America's Cup.

Luna Rossa was the second longest standing Challenger, with a 20 year involvement, and being the Challenger in the 2000 America's Cup Match in Auckland. They competed in the 2003, 2007 and 2013 America's Cups plus on the Louis Vuitton Trophy circuit during the Cup hiatus from 2007-2010 while Golden Gate Yacht Club took the then holder of the Cup Societe Nautique Geneve (SUI - Alinghi) to the New York Supreme Court, because GGYC believed they were not in compliance with the Deed of Gift that governs the conduct of the America's Cup.

The Italians are the second Challenger of Record in just eight months to exit the America's Cup. The Challenger of Record is responsible for negotiating the Protocol with the Defender GGYC.

After several months of negotiation the first CoR, Australia's Hamilton Island Yacht Club, withdrew after they negotiated a Protocol that provided a regime that was too expensive for them to compete.

Luna Rossa as the next Challenger to have lodged their notice of Challenge, and endorsed the Australia's protocol with a few changes - one of which, in the interest of Cup harmony was to accede the effective Right of Veto that a Challenger if Record has over changes to the Protocol.

Instead Luna Rossa agreed to the will of the majority of the Challenges prevailing.

However they did not expect this to be used against them in the way that it was this week.

A fundamental of any sailing event is that an offer is made to potential competitors by regatta organisers, by a Notice of race - which contains the basic conditions of the regatta including the class to be sailed. In this case, it was the AC62 class for which a class rule had already been published.

Competitors enter the event by accepting the conditions of the entry and paying the consideration of the entry fee - so the three elements of a binding contract are in place - Offer, Acceptance and Consideration.

It follows that the conditions set out in the Offer (Notice of Race) cannot be changed without the consent of all Competitors who have Entered and paid their Entry Fee. That is the nub of the Italian and Team New Zealand argument with Cup organisers.

Luna Rossa and Emirates Team New Zealand believe that Cup organizers broke the conditions of that contract, when the class was changed from an AC62 to an AC48 - a much smaller boat and with substantial one-design elements which were not present in the AC62 class for which many teams were well advanced with design work and strategy.

Luna Rossa and Team New Zealand and Hamilton Island Yacht Club all put forward measures, a year ago, to reduce the cost of competition in the America's Cup - however these were ignored at the time, and Hamilton Island YC eventually withdrew in frustration, and faced with competing in an expensive event.

There has been no official comment from the teams or America's Cup organisers.

From here a new Challenger of Record will have to be appointed, which is expected to be he Royal Yacht Club of Sweden (KSSS) or Artemis Racing. However the rights of the Challenger of Record have now been enshrined in the Challenger Committee, and all decisions are made by a majority vote of that Committee, subject to the agreement of the Defender.

It is uncertain whether the America's Cup World series event scheduled for Cagliari in early June will continue. Luna Rossa have said they will honour all contractual obligations, however they are not the event organisers.

The statement issued by Luna Rossa and their Patron, Mr Patrizio Bertelli reads as follows:

The result of the vote proposed by the Event Authority with the agreement of the Defender of the 35th America’s Cup has overturned, with a majority vote, the America’s Cup Class Rule for the boat with which this edition will be held; this happened notwithstanding the fact that such rule had been previously adopted unanimously by the teams and was in force since June 2014.

Following a careful evaluation of the serious implications of this unprecedented initiative, Team Luna Rossa confirms that it will withdraw from the 35th America’s Cup.

Team Luna Rossa indeed considers illegitimate the procedure adopted and founded on an evident abuse of process by surreptitious use of procedures to modify the Protocol in order to overturn the Class Rule, which instead requires the unanimity of the teams entered.

This is an attempt to introduce boats that are substantially monotypes and in total contrast with the ultra-centennial tradition of the America’s Cup, not to mention a two-month extension period to introduce further modifications to the rules, decided by the majority.

All of the above contributes to a lack of credibility and uncertain technical grounds for what should instead be the most sophisticated sailing competition in the world.

This radical change also implies a waste of important resources already invested based on the rules that were sanctioned in June last year. This means that the claim to reduce costs reveals itself as a pure pretext aimed to annihilate research and development achievements of some teams, and to favor instead preconceived technical and sporting positions by means of changing the most important element in the competition, the boat.

As a confirmation of this, it is important to underline the fact that Luna Rossa frequently advanced proposals aimed at containing costs that however would not have changed the nature of the boats, but these proposals have systematically been rejected by the Defender.

Team Luna Rossa has also taken into consideration the possibility to protest through the Arbitration Panel as foreseen by the Protocol; it has however noted that, ten months after signing the Protocol, the Defender is only now initiating the first formal procedures to compose this important body. This fact contributes to making the entire governance of the Event even less credible and reliable.

Team Luna Rossa regrets the repercussions that this difficult decision will have on the members of the Team - although it will honor all of its contractual obligations - and on the sailing event planned to take place in Cagliari next June and obviously understands the disappointment of the many fans who have supported Luna Rossa during the last four editions of the America’s Cup.

Patrizio Bertelli declared: 'I want to thank the whole team for its hard work during this past year; regretfully this effort has been frustrated by this manoeuvre that is unprecedented in the history of the America’s Cup.

However, in sports, as in life, one cannot always go for compromise, after compromise, after compromise; sometimes it is necessary to make decisions that are painful but must be clear cut, as only these can make everybody aware of the drifts of the system and therefore set the basis for the future: respect of legality and sportsmanship”.

Emirates Team New Zealand have expressed their sadness at the Italian move.

America's Cup Commissioner, Harvey Schiller issued a statement:

The America’s Cup is disappointed to learn that Luna Rossa intends to withdraw its challenge for the 2017 America’s Cup.

While we have not yet received a formal notice of withdrawal, we take the team’s media statement that they are leaving the America’s Cup as real.

“I know all are disappointed with this decision taken by Luna Rossa, especially based upon their significant history in the America’s Cup,” said Commercial Commissioner Harvey Schiller.

“Since we started the Competitor Forum, I’ve worked closely with skipper Max Sirena on many issues facing the America’s Cup and our teams. We offered a range of solutions for reducing costs by introducing a new America’s Cup Class. Unfortunately Luna Rossa wasn’t prepared to accept the majority decision, as written in accordance with the rules of the event.

“It’s difficult to understand this withdrawal when our shared purpose has been to control expenses, encourage additional entries and build a better future for the Cup. It’s even more puzzling as it was Luna Rossa who insisted on the switch to majority rule on these issues.

“But looking at the bigger picture, the America’s Cup is now more accessible for new teams and with a new generation of people like Ben Ainslie, Nathan Outteridge, Jimmy Spithill, Franck Cammas and Pete Burling we have a strong foundation for a very competitive event.”