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America's Cup - Crucial process gets underway in Auckland

by Richard Gladwell, 18 Jan 2018 03:12 PST 19 January 2018
Glenn Ashby speaks ahead of the America's Cup `presentation` in Bermuda - where it all began for Auckland in 2021 © Richard Gladwell

Panuku Developments lodged the Resource Consent applications for the 2021 America's Cup bases with the Auckland Council last Monday.

The lodgement of the consents is the first real step in the construction of the bases for the 36th America's Cup, scheduled to be held in Auckland.

The lodgment comes two weeks after entries opened on January 1 for the March 2021 regatta. They are only preliminary documents, and the final documents will be lodged at the end of January and then open for a 20-day public submission process.

There is little new regarding concepts for the options. However, the required detail has been inserted, extensive supporting reports added and the development has been progressed from conceptual drawings and graphics to plausible fine line detail.

One new feature is the addition of a Legacy use view of the new Halsey Street Wharf extension is as a waterfront concert venue. The drawing also shows Wynyard Point fully developed with a large public park on half of the available area, after the 50 plus silo tanks have been removed.

The application lodged is for the Auckland Council's stated preference known as Wynyard Basin, selected in a 12-3 vote in mid December. The long and shortlisted options are also included to illustrate a full consideration of all options.

In their commentaries, Emirates Team New Zealand have continued to express their support for the more expensive but centralised option of the Halsey Street Extension, as has the Royal New Zealand Yacht Squadron. Ports of Auckland pour cold water on the Captain Cook Wharf option.

The Wynyard Point option which is still being bandied about by the Minister for Economic Development, David Parker is also included with the other options. It is not known what the final form of the Wynyard Point option will be and where it will sit in the rankings, given that the Government will be expected to make a substantial contribution to the development costs estimated at $124million given that they are the beneficiaries of the tax and other similar windfall revenues from the event.

It is not clear how a second Resource Consent application could be processed. Panuku Developments told an Auckland Council Meeting that they did not have the resources to progress two Resource Consent applications on the required timeline. It is also not clear how the government can lodge Resource Consent applications on land it does not own.

One issue that is raised in the preliminary documents is the condition of Wynyard Wharf which is used in the Wynyard Point and Wynyard Basin options. The structure which is used for berthing of discharging tankers and other vessels is 85-100 years old (having been built in three phases). The preliminary assessment notes that it is well past its design life. A condition assessment of the southern end of the wharf is to be conducted in late 2017/ early 2018 and is expected to be only fair, and the worst of the other wharf structures considered. Wharf structures need to be able to support the weight of 25tonne launching cranes.

The Council preferred option features five bases on the end of a 75-metre extension to the Halsey Street Wharf constructed for the 2000 America's Cup and reported to be in excellent condition. They include a permanent base for Emirates Team New Zealand.

Three other bases are contained on Wynyard Wharf.

Deep-seated barriers to entry

For various reasons, there is a possibility that there could only be four teams - being those who have already announced they will be entering the 36th America's Cup. That would allow the three Wynyard Point bases to be snipped off the plan allowing a substantial reduction in cost, and avoiding the engineering complexity of 85-100-year-old wharf structures.

The biggest barrier is not the cost and complexity of the AC75 as touted in some circles, but the 100% Nationality clause contained in the Protocol for the 36th America's Cup for expected 11-member sailing teams.

That clause works against several teams who competed in the 35th America's Cup, where only one member of the six-member sailing crew had to be a passport holder of the country of the yacht club of the Challenger/Defender.

A second and overarching issue is that the America's Cup has never recovered from the damage that occurred during the New York Supreme Court case taken by Golden Gate Yacht Club against the Societe Nautique de Geneve in 2007-2010.

In the 2013 America's Cup team number had dropped from the 11 Challengers from nine countries (12 teams) that contested the 2007 America's Cup in Valencia, to just three Challengers (4 teams/countries) in San Francisco. One of those teams sailed just four races.

The entries improved to six teams in Bermuda, with Softbank Team Japan being a late addition after signing an unprecedented partnership agreement with the Defender, Oracle Team USA. Two teams withdrew before the regatta began - Challenger of Record, Hamilton Island Yacht Club after negotiating a Protocol for an event in which they could not afford to race. Luna Rossa withdrew after the America's Cup class was changed by a 3-2 majority vote, nine months after entries closed.

The 2007 America's Cup also generated a healthy surplus of more than US$50million, shared amongst the teams. ETNZ's share was put at US10million, which was spent trying to survive in the six-year hiatus between the 2007 and 2013 America's Cups. There was no distributed surplus from the 2013 or 2017 America's Cups. The effect is that teams have no ongoing cash flow to fund them until the next round of sponsorship kicks in - unless they have a billionaire backer with deep pockets.

TV audiences have not really built either. The TV model used in the 2017 America's Cup was a big step back from that used in San Francisco - where most fans could see the racing on free to air TV or free to air on Youtube. The 2017 TV deal did generate more rights revenue to cover the costs of the event.

At the end of July 2017, all Youtube content relating to the 2013 and 2017 America's Cups was removed from public display, along with the America's Cup image libraries from those years. The result is that ongoing viewing is not possible which makes a start-up Challenge a difficult sell to a potential sponsor. The Auckland regatta is expected to revert to a free to air, viewer maximisation model.

For several months after the conclusion of the 35th America's Cup the website for was diverted to a Cup clothing disposal outfit in UK and was only recently released to the rightful holder of the site. The effect again was to kill any residual fan interest. Similarly with social media, with the Facebook page with several hundred thousand followers still not being operative.

It is not known whether the "Framework Agreement" signed by five of the teams at the 34th America's Cup (ETNZ being the only non-signatory) is still binding on all who signed an undertaking to sail the next (35th) America's Cup in AC50 catamarans. So far only one team (Land Rover BAR) of the five Framework signatories has announced that they intend to enter the 36th America's Cup.

Cost of AC75 to be controlled

The sailing world was shocked at the sheer audacity of the AC75 foiling monohull design when the concept was announced in concept in mid-November. While some were quick to attach an expensive price tag to the new class, Emirates Team New Zealand expects to be able to conduct their campaign for around $100million (similar to previous Challenges). Their 2017 campaign was re-budgeted at $78million after a $20million budget cut following the announcement of the Bermuda venue.

The team told Sail-World they expected an AC75 to cost a similar amount to an AC50 adding that their AC50 cost was less than the AC45S of which they had just one, compared to the three or four AC45S test boats launched by three of the other teams. Boat cost was not a significant issue for some teams in the last cycle. Personnel costs are usually put at 60-65% of a teams budget, with boats being a much smaller percentage.

Entries for the 36th America's Cup opened on January 1, this year. Teams will be allocated bases in order of entry.

The Class Rule for the AC75 will be announced at the end of March 2018. The Entry period closes at the end of June 2018 with late entries closing five months later and attracting a late fee of US$1million.

The Protocol specifies that once published the AC75 Class Rule cannot be replaced.

The boat switch of the AC62 with the AC50 which occurred in late March 2015 is cannot happen.

Until June 30, 2018, Emirates Team New Zealand and Luna Rossa can alter the Class Rule without reference to other teams. After the end of June, it can only be altered by the unanimous agreement of the entered teams.

If there are features of the AC75 which add significantly to the cost, then the Protocol provides a way for the class rule to be modified to achieve cost reductions if required.

There was a similar cost reduction exercise with the AC50 in the last America's Cup cycle with tooling being made by Core Builders Composites in Warkworth and then given to other builders. For the first time in an America's Cup, there were one design parts, and that could be taken to another level in Auckland with one design, supplied parts - although that raises the vexed issue of supplier/organiser responsibility in the event of a failure.

Other items such as the wingsail profile (and therefore area) were restricted to save teams spending design dollars on optimising a shape which made a very minimal difference to speeds between the boats.

The timetable for the Resource Consent process requires them to be lodged on January 15, 2017. Then there is a two week period in which the Applications could be reviewed and queried by the assigned Council staff and additional information sought before the Consents are publicly notified and open for submission for a 20day period.

In early April the documents will be filed with the Environment Court for a Hearing at the end of June, with a decision expected in late July or early August.

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