America's Cup- Significant changes for Teams on formats and finance

by Richard Gladwell on 1 Jun 2011
America's Cup organisers have announced significant changes to the structure of the event and its preliminary, the America's Cup World Series.

Today's announcement comes after the conclusion of a Competitors Forum yesterday, conducted by teleconference, and a second teleconferce today concluded the deal.

Yesterday, Sail-World was told by sources in USA that the Competitors Forum had broken up without coming to any conclusions on the issues before it. Sail-World was told that there were three options regarding the AC45/AC72 placed in front of the Competitors group, and it seems that the decision was either made/confirmed within 24hours of the meeting's conclusion.

A further announcement of significant changes to the Protocol is expected in the next day or two.

The smaller AC45 design will stay in use for the America's Cup World Series for a longer period, and the cut-over the larger AC72 catamaran, to be used in the America's Cup itself, has been delayed.

Requirements for the payment of the first Performance Bond have been erased and replaced with a requirement to commit to the purchase of an AC45 yacht within the next 10 days.

Teams have effectively been given another three months for AC72 construction, with the old date of cutover to the new class for the America's Cup World series of 30 March 2012 being changed to 1 July 2012.

Issues relating to the non-payment of the Performance Bond on 30 April 2011, have been circumvented by the elimination of any requirement to make that payment. The previously amended Entry Fee of USD100,000 remains to be paid in June 2011.

As the Protocol stood before the Competitors Forum a second, now only, Performance Bond at this stage remains set at USD800,000, to be paid in December 2011. Whether that stays in place remains to be seen.

The sting in the tail comes with the requirement, where none had previously existed, for teams to sign a contract, together with a 50% deposit, to purchase an AC45 yacht within the next 10 days.

The cost of an AC45 has been set at EUR650,000 or about $1million NZD. The cost of the deposit is a substantial impost for the cash-strapped potential America's Cup teams, and the move is clearly designed to flush out the weak, infirm and wavering.

In a minor change, the requirement for teams to swap to the America's Cup website has been changed by a month to 1 July 2011.

A spokesman for Emirates Team NZ, said they were happy with the changes as it gave them a longer lead time for both AC72 build and design.

The extended time for the use of the AC45's would not really affect the twice winner of the America's Cup, and they would not be purchasing a second AC45.

Their request to the International Jury announced last Friday remains on the table.

The impact of the changes on other teams is expected to ease the immediate financial pressure. The need to lodge the non-refundable deposit on an AC45 will give ACWS organisers some certainty as to entries for the ACWS, which gets underway in Cascais, Portugal starting on 6 August 2011. The expectation is that ten teams will be on the startline for that event.

The dropping of the performance bond, and requirement for a boat deposit will have a more positive and visible effect on entries, of which there are nine named, including the Defender on the America's cup website.

While penalty for a no-show at Cascais, or any ACWS event, was set in the Protocol as the forfeiture of the first Performance Bond (initially USD1.5million and now eliminated completely). Failure at attend a second event would, according to the Protocol see the forfeiture of the second Performance Bond.

Provided a team pays its deposit on an AC45 by 10 June 2011, the team could technically sit out the first three events, without penalty, and without taking delivery of an AC45. But it is understood that all ten AC45's will be shipped to Cascais, and teams will have to take delivery in Portugal.

Overall, the expectation is that the teams who have lodged Notices of Challenge - initially consisting of 15 teams as of 31 March 2011, has now dropped to an announced 13 teams. The field is expected to drop further and may settle on just six to eight teams sailing AC72's in the 2013 America's Cup.

While the requirement for the shift in the cutover date to the America's Cup website, seems innocuous, the issue is very fraught. The entered teams are required to redirect their URL to americascup.com and a team like Emirates Team NZ which are a professional racing team, conducting multi-faceted racing campaigns would, on the face of it, have to direct all their traffic to the America's Cup website.

Team New Zealand's website contains Volvo Ocean Race information on the team, as well as Extreme 40 campaigns and other sailing and racing activities in which the team is involved.

There is still no external announcement of plans for the TV coverage, in terms of rights broadcasters and regions - essential for those professional sailing teams requiring sponsor commitment for funding. The venues for ten ACWS events to be sailed in 2012 and 2013 are also publicly unannounced. However it is probable that teams were bought up to speed on the current situation regarding both these basic issues during the Competitors Forum, yesterday.

The extension of dates for the use of the AC45, of course sets back the start date for the Youth event, which was to take over the AC45's once the AC72 had come into play for the ACWS. However no other arrangements have been announced to date for the Youth event, save for the intention to move in this direction.

The media release from America's Cup organisers is as follows:

With the newest generation of America’s Cup boats exceeding the expectations of event organizers and the teams, the AC45 wing-sailed catamaran has now been selected by competitors for use in all America's Cup World Series events.

The recent AC45 test period produced two major results - outstanding on-the-water racing for the teams and superior television images for spectators. With that in mind, the AC45 today was confirmed for use in all America's Cup World Series events leading into the 2013 racing season.

'The AC45s are ticking off all the boxes for a great event package,' said Iain Murray, America’s Cup Race Management CEO and Regatta Director, following the close of the Competitor Forum today. 'The sailors have found these cats to be fast and fun to race. They are challenging, they are exciting, and when the best sailors in the world get their hands on them, they produce close, tight racing.'

Using the AC45 in all AC World Series events instead of switching to the AC72 in season two was one of several changes voted on by America’s Cup competitors on Tuesday. This move also provides teams with another opportunity to manage competition costs.

'After we put the AC45 through its paces in New Zealand, we knew we had the right boat for the next era of America’s Cup sailing,' Murray said. 'By making the AC45 the boat of the AC World Series, logistics and overhead can be dramatically reduced at the outset of the 34th America’s Cup cycle. This is a great benefit for all of our teams, providing them with more time in the commercial marketplace and less of a cash investment up front.'

The larger AC72 will now appear on the water from July 2012. Teams will work up their AC72’s and race the AC World Series leading into the Louis Vuitton Cup, America’s Cup Challenger Series, and the 34th America’s Cup Finals in San Francisco. The extended time-period for the debut of the AC72 allows teams more time for development of the boat.

The race format and scoring for the 2011 AC World Series have also been released. The format will include a combination of Fleet and Match Racing with winners for each as well as an overall winner that will be determined on the final Sunday of the regatta. The AC World Series starts August 6, 2011 in Cascais, Portugal.
Other updates agreed by the Competitors today include:

+ Teams to launch AC72s starting July 1, 2012 (there is a limited exception to launch and sail earlier for any proven pre-existing contractual obligations)

+ Teams have the same limited number of testing days in the AC72s in advance of racing

+ The first Performance Bond for the AC World Series is eliminated and replaced with an Entry Fee ($100,000 USD)

+ Updated late entry procedure – Teams can enter late at discretion of the Defender

+ Competitors must sign an AC45 purchase contract with a 50 percent non-refundable deposit paid by June 10

+ Teams will consolidate their websites into www.americascup.com by July 1, 2011.