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Gladwell's Line - America's Cup Arb Panel rules in favour of Team NZ?

by Richard Gladwell, Sail-World.com NZL on 8 Sep 2016
Emirates Team New Zealand AC45 Surrogate or Test/Development boat sailing on Auckland harbour in the late afternoon of September 1, 2016 Richard Gladwell www.photosport.co.nz
The strong indications are that the Arbitration Panel for the America's Cup has ruled in favour of Emirates Team New Zealand over the withdrawal of the Qualifiers from Auckland and re-allocation of that event in Bermuda.

The Hearing was held in London in July 2016, before the start of the America's Cup World Series, Portsmouth.

As yet the Decision of the three-man Arbitration Panel has not been published.

The Proceedings of the Arbitration Panel were made confidential in a Protocol change made by a majority of the teams on June 20, 2016. That was over 15 months after the incident on April 1, 2015, NZT when Emirates Team New Zealand supported the position taken by Challenger of Record Luna Rossa (ITA) over the change of America's Cup class from the AC62 to the smaller AC50.

The announcement of the Qualifier Venue for Auckland was made on February 15, 2015, by a confidential announcement to six teams by the America's Cup Events Authority as required by the Protocol.

By the deadline of the 31st March 2015 the America’s Cup teams voted by a majority in favour of changes to the 35th America’s Cup Protocol, which included a reduction in boat size to between a 45 and 50-foot foiling catamaran.

The Qualifier, formerly the Round Robin phase of the Louis Vuitton Cup, was withdrawn soon afterwards from Auckland and reallocated to Bermuda. Under the original schedule, Bermuda was not to come into play until after the Qualifiers were complete and one team had been eliminated.

The Challenger of Record for the 35th America's Cup, Italy's Luna Rossa believed that change of boat from the AC62 to the smaller AC50 - nine months after entries had opened - should only be made by a unanimous decision of the Challengers.


Italian gesture bites back
Previously the Italians placed a noose around their neck when they magnanimously allowed Challenger approval of any changes to the Protocol to be done by a majority of the Challenger Committee.

Had the Italian retained their original right, as Challenger of Record, of sole approval of any changes, then the AC62 would still be the America's Cup class, the Italians would still be in the Cup, and the Qualifiers would still be in Auckland.

It took just one utterance by Emirates Team NZ on social media of support for the Italian stance over voting for the proposed change in class for the Auckland hosting agreement to be ripped up.

That action by America's Cup Commercial Commissioner and former Vietnam combat pilot, Gen. Harvey Schiller set in train the events which led to an Arbitration Panel Hearing in July 2016.

In the meantime, Emirates Team New Zealand, the twice winner of the America's Cup and three-time winner of the Louis Vuitton Cup was left floundering. The 30year old Kiwi team, the longest standing in America's Cup history had to severely cut back its program and watch on as its rivals literally sailed away.

The loss of the Qualifiers triggered a media firestorm in New Zealand directed at Team New Zealand and CEO Grant Dalton in particular. One libel case was settled out of Court.

The Kiwi team had planned to run two sailing teams and AC45S test boats. They cut back to one sailing team. ETNZ were the last to launch their sole AC45S.


Three of the current America's Cup teams have been running multiple AC45S boats in the way ETNZ had planned. In a break with Cup traditions, Softbank Team Japan and Oracle Team USA are running a very overlapped development program despite one being a Challenger and the other the Defender.

In a media statement issued in early April 2015, Emirates Team NZ CEO Grant Dalton said, “Emirates Team New Zealand have filed an application to the America’s Cup Arbitration Panel in the belief that ACEA has breached their signed agreement and protocol obligations by discarding Auckland.”

“Prior to any hearing Emirates Team New Zealand will continue discussions with all teams and ACEA on the prospect of continuing to bring America’s Cup racing to Auckland.”

“We are fighting to keep Auckland as a qualifier. This isn’t about government funding, this is not the end of Emirates Team New Zealand, it’s about enforcing a contract and bringing America’s Cup racing to New Zealand as agreed by ACEA.” concluded Dalton.


Off to a slow start
It took ACEA, the event management arm of the Americas Cup Defender, Golden Gate Yacht Club 15 months after the events of April 1, 2015 to assemble a still secret three man Arbitration Panel, agree on Rules of Procedure, and commence the Hearing.

The other part of the Defender organisation is Oracle Team USA the racing team of Golden Gate Yacht Club.

OTUSA fell foul of the International Jury for the previous America's Cup losing three key decisions - over the legality of foiling; breaching surveillance rules; and copping a $250,000 fine plus crew suspensions over measurement issues in four America's Cup preliminary regattas. They did score one vital win over their foil adjustment system just before the start of the 34th Match in San Francisco.

A four loss, one win scoreline is not a good look for a Club which is the America's Cup Trustee.

The International Jury now only considers racing issues, and its other off the water functions have been assumed by a three-man Arbitration Panel. At least one of the Arbitration Panel, its Chairman, must be an Arbitrator for the Court of Arbitration for Sport.


Two year tenure
Fast forward to mid-August 2016, after the secret Arbitration Panel Hearing, and rumours, backed by some fact, began to circulate that General Schiller was stepping down.

He finally confirmed that last Wednesday, August 31 with a Facebook comment: 'For those who might not have heard, I decided to leave America's Cup after five years of service. It's been a great experience with many special people. Many new things ahead.'

Gen. Schiller had preceded this note ten days earlier with the cryptic message: 'if you tell the truth, you'll remember what you said' on his Facebook page posted on August 20.

The silence has been deafening from his former employer, America's Cup Events Authority - the event management arm of the Defender Golden Gate Yacht Club, which is also the current America's Cup Trustee, under the 19th century Deed of Gift which governs the conduct of the America's Cup challenge trophy.

ACEA have not even issued a pithy media statement in the style normally issued in such circumstances, which would have noted that the good General had decided to pursue other opportunities and that ACEA wished him all the best for the future.


The Commercial Commissioner is a key role in the 35th America's Cup.

His was an appointment that was announced on August 28, 2014, amid a media fanfare as the person who was going to restructure the television side of the event in particular, and turn it into the spectacle that built on the foundation laid in San Francisco in 2013.

It is hard to believe that General Schiller's quiet departure is not linked to the proceedings or outcome of a Hearing that appears to have not gone well for his employers.

Would Gen. Schiller still be in the Commissioner's seat had ACEA's position on the Qualifiers been upheld by the Arbitration Panel? Most likely.

A report in Sports Business Daily on August 23, says that Gen Schiller, former Executive Director of the US Olympic Committee 'will focus on baseball’s return to the Olympics, USA Team Handball and a long-delayed shoulder replacement surgery once he steps down from his job as commercial commissioner of America’s Cup on Aug. 31.'

But if new venture is the full story and not a smokescreen, then it would be usual to make a reference in a media statement (which are issued almost daily by ACEA). Once again the silence is deafening.

General Schiller himself could also have made some comment to this effect along these lines on his Facebook page. He has over 1500 adoring followers but instead made a comment about telling the truth.


Under normal circumstances, it is difficult to comprehend just why Gen. Schiller would leave an event organisation in which he had worked since 2014. The America's Cup World Series may be on a sound, repeatable footing, but the Main Event was yet to come.

The America's Cup World Series has established more than a toehold in the sailing and sports market and seems to enjoy varying levels of public and media following. One would have thought that ACEA would have paid some tribute acknowledging General Schiller's contribution. But again there has not been a word said - publicly at least. Presumably, the teams have been kept appraised of his departure.

Neither has anything has been said via media statement about General Schiller's replacement - temporary or permanent.

Agreement credibility on the line

In previous stories, and again at the top of this commentary, we have traversed the issues in the Arbitration Panel Hearing - based on what in the public domain, before the late, wet blanket of confidentiality was slapped on the matter.

Clearly, the central issue before the Arbitration Panel was one of credibility as to whether the two portions of the hosting agreement touted in April 2015, by Team New Zealand were part of a single valid agreement, or whether the Commissioner was legitimately within his rights to withdraw the Qualifier from Auckland and re-allocate the event to Bermuda.

As has previously been reported in Sail-World, while there were a number of reasons for the withdrawal of the Qualifier event, Gen. Schiller was reported in the Associated Press in late March 2015 that the biggest was Team New Zealand 'bouncing back and forth on support' for the unprecedented mid-course downsizing.

Simply all the markers point in the same direction - to an Arbitration Panel decision in favour of Team New Zealand. That being so, it seems that the Kiwis have little fault in the sorry saga. Complicit or not, the other Challengers are beneficiaries of the windfall created by the Team New Zealand upset in April 2015.

While the America's Cup has never been fair, clearly some leveling of the game needs to take place.



What happens from here?
At the end of March 2015, Emirates Team NZ had a home Qualifier and substantial NZ Govt sponsorship in place and had a solid foundation for the 35th America's Cup.

A week later with the Hosting Agreement in shreds, Team New Zealand's 2017 America's Cup campaign was effectively nobbled.

While it is easy to measure losses in financial terms, that is superseded by the fact that the America's Cup is a time management exercise. There are few ways in which the time can be given back to the New Zealand team. The surprise decision by ACEA around April 1, 2015, is a bell which cannot be unrung.

In the time that has intervened, Team New Zealand has had to watch other teams launch two and three of the AC45 Surrogates, and sail those against each other in Bermuda.

On the other hand, the Kiwis have only just sailed their first AC45S. For a team which has usually been first off the block with launching boats and general preparedness, Team NZ are well behind their own benchmarks set in their previous eight America's Cup campaigns.

That gap is only going to get bigger in the coming months as the Challenger and Defender teams who are collaborating on design and performance development, come up to full speed.

It was the current Defenders who touted the concept of Neutral Management following the events leading up to the Deed of Gift Match in February 2010 in Valencia. Those lofty ideals seem to have slipped away.

The determination of a remedy in the current Arbitration Panel case now hinges as much on the credibility of the current America's Cup Trustee, Golden Gate YC, as it does in equity for Emirates Team New Zealand.


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