America's Cup: NZ has close call on Cup Venue
by Richard Gladwell 27 Mar 2018 19:42 PDT
28 March 2018
Artist's impression of the agreed layout of America's Cup base facilities Auckland 2021 © Auckland Council
The combined prevarication of Auckland Council and the Labour-led Coalition Government came close to scuttling Auckland's Hosting of the 36th America's Cup.
Early last week Sail-World understands the America's Cup Defenders had decided privately that time was fast running out to make a decision, given the wave after wave of options being produced by the Ministry of Business, Innovation and Employment, and despite the previously agreed plan proceeding through a formal planning approval process.
The Defenders were up against a self-imposed deadline of March 31, 2018, for the announcement of the Class Rule for the AC75 foiling monohull. Sail-World's understanding has always been that the end of February 2018 was the point at which the team would start opening their Italian dictionaries and begin negotiations with Italy as the alternate venue, specified in the Protocol.
So by the third week of March 2018, and with a faced with a very tight base construction timetable, Auckland was living very much on borrowed time as the 36th America's Cup venue.
Last Tuesday, Sail-World understands that Emirates Team New Zealand had drafted their exiting press release, ahead of CEO Grant Dalton meeting with the Challengers in Milan, Italy to go through the AC75 Class Rule due to be released publicly this weekend.
Dalton's credibility is on the line in Milan. He could not have pushed a Class Rule to the teams - and then tried to shimmy his way around the shifting sands of the Venue location.
Fortunately, the Government side didn't attempt to call Dalton's bluff and drag their feet once again because the Cup would have been gone.
Had that happened, New Zealand would have been the laughing stock of the sporting world, having fallen into the same trap over the hosting for the 2003 Rugby World Cup and the Kiwi requirement for "[Advertising] Clean Stadia", preceded a couple of years earlier with the shock departure of Russell Coutts and friends to Alinghi. On both occasions New Zealand woke up to find that the unthinkable had happened and the situation was irretrievably lost.
The deal was put together last weekend with a one massive effort to get it done by all parties and signed off by 6.00pm on Monday NZT ready for the Challengers Meeting in Milan a few hours later.
Two weeks ago, on March 14, Dalton indicated that time was up on the bureaucrats' prevarication and posturing.
"We have a meeting with Challengers in Europe at the end of this month, and confirmation of Auckland as a venue and the class rule are eagerly awaited by them", he said in a written statement.
Trust evaporates mid-Feb
A month earlier, on February 14, the Labour-led Government backed away from a written commitment when a sixth plan was introduced yet another option involving Wynyard Point.
That came on the back of a plan produced by Viaduct Harbour Holdings Ltd, which had Emirates Team New Zealand booted off Hobson Wharf and onto Halsey Street Wharf.
VHHL claimed their new plan was an altruistic gesture to achieve the best possible outcome for Auckland. Waterfront cynics saw it as an attempt to prevent any obstruction of views from a new hotel complex planned by VHHL for the waterfront.
The approach taken by the Labour-led Government with their announcement of their so-called "Hybrid" plan on February 14, knocked the wind out of ETNZ's sails.
"We are surprised with the release of the Government plan at this point as from our perspective we are still working together towards a final agreement," Dalton said.
MBIE's move vacuumed the trust out of the Team NZ and Coalition Government relationship. The only gain being a statement by the Minister in the MBIE media release that: "As part of the plan ETNZ will be granted the prime spot at the end of Hobson Wharf in a development worth $30million".
That offer was retracted a month later prompting a terse riposte from Dalton. "David Parker agreed that we would have a permanent Base on Hobson Wharf. He has been forced by Viaduct Harbour Holdings threat to disrupt the resource consent process to back away from that commitment and move our base to the eastern end of Halsey wharf. To be honest, I'm a bit pissed off with this, but I will live with an equal Base at the eastern end of Halsey Wharf. "
After approving the option known as Wynyard Basin on December 14, 2017, and initiating the Resource Consent application process on January 15, 2018, the politicians, self-serving activists and vested interests weighed in as though the decision made in mid-December had never happened, or at best was just an initial negotiating point for their schemes.
The Defenders were being treated like HMS Pinafore rather than Emirates Team New Zealand, the America's Cup Champions.
The six plan shuffle
By one count there were up to six versions of the concept plans that had been proposed or anointed by MBIE/VHHL or the "anti" groups. Most of these consisted of coloured squares, representing bases, moved around the Viaduct harbour topography and then costed to whatever dollars the promoter thought would get their option across the line.
The Ministry of Business, Innovation and Employment (MBIE) commissioned a project timeline and costing exercise which to the surprise of no-one came down in favour of MBIE's latest preferred option.
All along the issue was whether the various options being put forward by the non-sailing parties were feasible for an America's Cup event, and if they included the below the fold costs and issues of site remediation, early lease break fees, and indeed whether the existing occupiers had even been approached before the plan was splashed in media.
Long story short in two months there was no progress being made beyond what had been achieved up to December 14, 2017, when the Auckland Council and Emirates Team New Zealand thought they had a deal.
The sticking point was MBIE who had been putting out options and attaching a price tag of questionable accuracy. It transpired that only some costs were being included for the Wynyard Point options.
When correctly costed last week, the preferred options became politically unacceptable, and the hosting of the 36th America's Cup was dead in the water.
In addition, to its share of the Infrastructure costs, the Government was being asked to pay a Hosting Fee for an unspecified amount to cover running expenses for the three-month-long regatta.
MBIE appointed high profile corporate undertaker, or insolvency expert, Michael Stiassny as their negotiator for the Hosting Fee - adding another layer of bureaucratic treacle to what was already becoming a very fraught process.
Out of deference to their long-standing suppliers and the New Zealand Marine Industry, but having already written the exit media release, Emirates Team New Zealand opted for one last roll of the dice with a solution that chopped NZ$35-50million out of the base cost equation.
The obvious place for this to come, on the matrix of costs/options put out by MBIE was by dropping the 45-75 metre extension of Halsey Street Wharf. That chopped NZ$49-79million out of the equation.
Deal cut in a weekend after three months of dithering
Last Thursday, the America's Cup champions came up with a last-minute design option, using the Viaduct Events Centre as the ETNZ base which went to Panuku Developments/Auckland Council, and MBIE for consideration.
The deal was accepted over the weekend, signed off and announced late Monday afternoon - subject to approval by the Auckland Council Governing Body at an Extraordinary Meeting on March 29, 2018.
Given the lateness of the deal, and the limited geo-technical work undertaken on Wynyard Point, the cost of the option can only be guesstimated at this stage.
Nevertheless, the price tag is tipped at NZ$214million.
Continuing their long-running state of combined confusion, Mayor Phil Goff says the Council expects the costs to be flexible as the building process becomes better defined. That’s code for an expectation that costs could increase.
On the other hand, the Minister, David Parker, says the Government has a limit which they have reached and cannot exceed.
Mixed in with the deal is a Hosting Fee to be paid by the NZ Government of NZ$40million. That covers organisation including provision of TV coverage - with the likelihood that a free-to-air, maximum audience model will be pursued instead of the rights fee model used for Bermuda.
That cost is in line with the Hosting Fee paid by New Zealand for the 2017 World Masters Games, and chump change compared to the NZ$108million event fee for the 2011 Rugby World Cup plus a further NZ$256million to redevelop the Eden Park Stadium. And to say nothing of the NZ$500million waterfront stadium offered by the previous Labour Government as a venue for the 2011 Rugby World Cup.
Yet to be resolved/announced are the costs of early break fees on the leaseholder contracts and remediation costs (for which the Council are liable). The break fee for the Stolthaven southern silo tanks and depot was put at NZ$6million. The other leaseholder required to exit is Bulk Terminal Storage which is still in operation as a working facility.
A base like no other
The provisionally agreed plan calls for seven base sites with Emirates Team New Zealand taking over the grand and futuristic Viaduct Events Centre.
The Challenger of Record will go on the new Hobson Wharf site - a 75metre wharf extension in front of the National Maritime Museum, where Emirates Team New Zealand was to be based.
There the Kiwi team would have been adjacent to the display of NZL-32, the 1996 America's Cup Champion, and a host of other America's Cup and Peter Blake memorabilia. Their presence would have completed an America's Cup hub in Downtown Auckland consisting of the America's Cup display in the museum, a working ETNZ base, the Big Boat display and IACC yachts being sailed across the way from the Viaduct Harbour
The other five teams will go on the southern end of Wynyard Point, where the plan is for the fuel and hazardous substances tanks and depots to be clear-felled.
It is expected that both Resource Consent Applications lodged with the Auckland Council will be withdrawn after the Thursday morning's meeting of Auckland Council's Governing Body of 23 Councillors representing various wards in the wider Auckland area.
The primary application was for the America's Cup Base option approved by the Auckland Council on December 14, 2017.
The secondary application covered the relocation of the sea plane, the car ferry and fishing fleet around to the western side of Wynyard Point and a controversial 100-metre extension sideways off the Point. That proposal will now be dropped completely and the various users will continue to work out of their current locations and will be redeployed on a temporary basis during the Cup.
It is understood that under the timelines for the latest of the now discarded plans, the Defender would have been the last to take delivery of their base. That would have put the America's Cup Champions in the embarrassing position of having two AC75's but being unable to train from their base.
Having that level of late base delivery, is a good indicator of the level of disconnect between the politicians, pressure groups and sailors. It is understood that there was an army of 60 bureaucrats on the political and planning side of the Bases equation negotiating against just four on the ETNZ side.
Under the costings released on March 14, by external consultants, the most expensive option (Wynyard Basin) was costed at NZ$175million. That didn't include the NZ$40million Hosting Fee - now included in the Government share of costs, for a total of NZ$215million – which is near as dammit to the current projected current cost of NZ$214million.
MBIE gets a pat on the back
The politicians have been long on self-congratulation on the deal, claiming it has saved money.
Minister of Business, Innovation and Development even went so far as to have a backbencher ask three "patsy" questions during Question Time in Parliament on Tuesday afternoon.
David Parker, in a self-congratulatory mode called it "a fantastic achievement by the officials involved", omitting to mention that it was an Emirates Team New Zealand logo on the concept plan.
By some sleight of hand with the accounting he was able to claim savings of $NZ50million along with a similar amount of "environmental savings" by equating the size of the previous wharf extensions with 40 waterfront 400sq metre properties valued at $1.25million each, and thus plucked another $NZ50million rabbit out of the hat.
"Our interventions have helped save NZ$100million in financial and environmental costs", Parker added lauding MBIE’s efforts.
Emirates Team New Zealand did not get a single mention or an ounce of credit in the three replies given by the Minister.
Plugging the gaps
There are some obvious gaps in the provisional plan.
There is no indication as to where the media centre and international broadcast facilities will be located. These were to be housed in the Viaduct Event Centre and would have been equidistant between the bases on Hobson Wharf and the bases on Wynyard Point. The current layout while meeting the agendas of the politicians and their backers is very dispersed in comparison to other options - which had previously been rejected by Auckland Council's Governing Body.
Under the Protocol, the responsibility for the Media Centre and IBC is the responsibility of the Challenger of Record - Luna Rossa - on behalf of the Challengers - who derive most of the benefit.
Race administration is in a similar situation and also needs its own facilities, or could operate out of Royal New Zealand Yacht Squadron.
It would also seem that the current plan is the lightest on Superyacht/J-Class berths. Whether the owners of those vessels would have been quite so enthusiastic about having their fine craft within a biscuit throw of public walkways as the planners and graphic artists was never revealed, just assumed.
The elephants in the room are once again the ubiquitous property developers. Under the Auckland Council's Long Term Plan the southern part of Wynyard Point is to be given over to yet more apartments, office blocks and hotels.
There has been no indication whether that process will be blocked altogether, or if the land grab will start in April 2021, as it did in April 2000 when New Zealand successfully retained the Cup and the 2003 Defence and Challenger bases had to be accommodated on a shrinking block of land.
Final confirmation of the plan agreed in principle by the Government and Emirates Team New Zealand is expected tomorrow morning after a special Auckland Council meeting.