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Gladwell's Line: America's Cup has a turbulent week in Auckland

by Richard Gladwell, 6 Jul 08:12 PDT 7 July 2020
Emirates Team NZ returns - America's Cup - Auckland - June 30, 2020 © Richard Gladwell /

After several weeks of being in a holding pattern, the America's Cup finally felt like it had arrived in Auckland around 10.15 am, last Monday, when the blue-hulled BBC Destiny rounded North Head with the first of the 2021 America's Cup Challengers AC75's tucked in her hold.

While American Magic's AC75, Defiant, was not to be seen, a stack of containers in front of the superstructure was the giveaway with "American Magic" stencilled on the side, and a white plastic-wrapped chase boat on top. Defiant was in the bowels of the ship and covered by hatches, blocking a view of the AC75.

She was lowered foil arms, cradle and all into the Waitemata and towed by chase boat around to the new Wynyard Marina, where she was lifted onto the team base area.

It would seem that Executive Director Terry Hutchinson's big gamble has paid off - both getting an AC75 into Fortress New Zealand and getting the first (NZ Resident) team members through the Coalition Government's quarantine process. Their second AC75 is due into New Zealand in September.

Getting into New Zealand as soon as possible would seem to be a smart move, as the COVID19 quarantine system was declared to be "under extreme stress" after an audit called last week by the change of management in charge of the lockup. With New Zealand is close to reaching its quarantine capacity of 5,000 beds, it would seem likely that in future there will be some restriction on numbers, as many Kiwis decide to return home.

The last Monday was supposed to be the first sail, for ETNZ's Te Aihe. The AC75 arrived back in Auckland a month ago, after a four-month absence. Strong winds cancelled the Monday session, but she had a three-hour session in light to moderate breezes on Tuesday, followed by more and longer sessions on Wednesday, Friday and today, Monday.

Te Aihe seemed to be wearing the same style of wide span bulbless wings that she had on her final sail in New Zealand, back in mid-January. Her last of three days on the water as conducted well out in the Hauraki Gulf - usually a venue used for long-run speed testing.

On Friday, her foils were lowered and hidden as she was towed out in full sail, including a Code Zero set anticipating light weather. Establishing the cutover wind speed for dropping the Code Zero is one of the great questions of the AC75 class - the decisions being when to drop it and go to a jib only set up for the front sails, and also if their AC75 foiling starts earlier - with or without the big overlapping headsail.

Today, Monday was a day for the keenest of the keen - a five-hour session on "The Paddock" - America's Cup Course area "E", and their favoured training place for the 2017 America's Cup.

It is starting to feel like the middle of winter, in Auckland - with Te Aihe's tow-out taking place in the murk, rain and cold into a light easterly breeze. Fortunately, the skies cleared slightly later in the day.

Te Aihe is expected to be fitted with the more promising of the design creations, that have been developed in her absence by ETNZ's design team, and then tested on the half-size AC75 - Te Kahu.

The post lockdown sessions, using the test boat Te Kahu has been notable for the apparent changes/experiments have been on wing shapes - with bulbed wings being tested against variations of bulb-less wings. Those who follow these things will recall that ETNZ was the outlier when the first AC75's were launched - with the kiwis being the only ones to feature a set of long, probably maximum span wings without a centre bulb. The other three teams used ballast bulbs in their wings to get the shorter, lower drag wings up to the weight maximum. Emirates Team NZ and Te Aihe stayed that way until January, and then Te Kahu began sporting bulbs of various styles.

When the test boat, Te Kahu emerged after the lockdown, she appeared to be a lot more stable in her flight height - whether that was because of their use of an onboard computer, improved wings, or the crew had worked out a new technique in the simulator.

The interesting aspect of that observation is that the AC75 Te Aihe, in her first week, featured bulb-less wings - and that maybe points to the improved flight stability to be a result of a systems change, and not the wing design. Of course, there is always the possibility that she had an onboard computer handling flight height.

In her sessions on the Waitemata Harbour Te Aihe looked to have good flight height stability - aside from her first sailing session, which was punctuated with numerous adjustment breaks and was considerably shorter than the two subsequent sessions.

NZ entry Visas still an issue

American Magic's AC75 Defiant is expected - politicians willing - to be joined by INEOS Team UK who are expected into New Zealand sometime in August, with Luna Rossa projected to come into Auckland at the end of September and be sailing on October 20.

While there is now a Challenger AC75 in town, it has been slow progress for the international crews, and their families leave the USA/Europe/UK and go into quarantine in New Zealand. Some had lodged their Applications March - how long does this take - particularly when they are paying for their own accommodation and supervision?

Sadly the Youth America's Cup appears to be in a similar situation, with 17 teams from 12 countries as paid-up entries - who have to get themselves on the Coalition Government's approved event list. But as we have pointed out previously, there are ten different groups that should be on the exempted list for an America's Cup - of which the Youth America's Cup group are but one.

Emirates Team NZ hits the headlines

Late on Tuesday evening, Emirates Team New Zealand issued a shock media release claiming they had identified "informants" in the midst of their event organisation, America's Cup Event Ltd.

The release was triggered after a tip-off that one of the major dailies had in turn been tipped off that someone had put Team New Zealand's weights up within the Ministry of Business Innovation and Employment. The America's Cup champions decided to front-foot the issue.

Three contractors were identified as being involved, and the team announced they had been exited. Not surprisingly this set off a media feeding frenzy, at the start of the quiet part of the week for sports news.

The following day, Wednesday, the fallout from the "informants" issue was leading the primetime TV news, was the lead story in the major dailies, and had attracted some international interest amongst America's Cup fans.

By the week's end, ENZ had obtained a High Court injunction barring media outlets from publishing leaked documents relating to the audit ordered by the Ministry of Business Innovation and Employment. The Kiwi media is obsessed by the $40m (UD$22.5million) Event Fee paid to America's Cup Event Ltd. They then add in the $200million spent on infrastructure, give it all a quick stir and then serve it up as the backdrop to the latest issue.

The reality is that the Event Fee is only a percentage of the overall cost of staging the Event - with the rest coming from sponsorships that ACE is required to raise under the requirements of the Host Venue Agreement.

A formal High Court Hearing took place in Auckland today, Monday, before former Crown Prosecutor Simon Moore, now the Hon. Justice Moore.

As expected judgement was reserved for a week, and the injunction remains in place until a final determination has been made.

ACE and Team New Zealand will have passed over a lot of confidential information about team finances and budgets, to the MBIE commissioned audit team. The financial records of any America's Cup team are highly confidential, for the simple reason that vital numbers can be compared and deductions made to develop a competitive understanding of the Kiwi campaign.

With a new boat type such as the AC75, plus being current champions, and the most experienced team in the regatta, there's plenty that can be learned about the team that has to be beaten if the America's Cup is going to have a new champion come April 2021.

The issue for Team New Zealand is that the leaking of confidential correspondence, by those with little to no America's Cup experience is a very serious matter - let alone the self-righteous firestorm of media misinformation, and speculation, that it ignites.

Understandably the team now lack the confidence or trust in their event partners. Having been on the receiving end of one leak of confidential information, they don't have the luxury to take a second chance with the final report. The genie cannot be put back in the bottle.

Quite why the Final Report should be made a public document is baffling, and just makes a bad matter worse.

The fact that confidential remuneration information has been given to Wellington means the team is affected both now and in the future by the activities and ploys of headhunters - as with the crew pillaging that happened in 2000-2003, and arguably cost the Kiwi team a successful America's Cup defence.

The claim expressed at the Hearing today that it was not the intention to damage the America's Cup defence, is simply idiotic.

There is no confirmation that design secrets have also been revealed outside the team. Or when - given that all teams are now in the critical phase of design and construction - and even just getting a steer on the direction of Team New Zealand's next boat either gives self-confidence or challenges the design assumptions that have been made.

Allegations of "fraud" were quickly bandied around within a day or so of the initial media release by Team New Zealand just a week ago. The claims centred around payment instalments of the $40million Hosting Fee by MBIE to ACE, with $29.7million paid to date. Further payments have been suspended, pending the final audit report. Team New Zealand say they support the suspension.

The Venue Hoisting Agreement is a publicly available document, which carries an extensive list of deliverables from ACE, of which MBIE is only a part-funder. America's Cup Events has to secure additional sponsorship to stage the Event and give sailing fans their free show - onshore and online.

It is hard to see how MBIE could be seriously affected by a claimed "misappropriation". The Host Venue Agreement creates an Event Steering Group - which has representatives from ACE, Auckland Council and MBIE. The ESG body meets regularly and must approve any payments made to ACE against a schedule of agreed milestones, or Key Performance Indicators in a report that is required to be filed with the ESG a month before the payment is made.

While misappropriation has serious implications in law, in the context of the HVA it is a way of describing a mistake made in the way costs and revenues are apportioned between the entities - as is common in many sporting organisations which receive grant funding from Government, Trusts etc.

In a wash-up phase of the 36th America's Cup if the percentage splits were not applied correctly, or there was too much or too little cross-charged, then the HVA says this should be remedied retrospectively.

For its part, America's Cup Event Ltd is charged with delivering a series of regattas event against a functionality checklist, and to "deliver the Events to a standard that a reasonable objective person would view as being no less than the corresponding events for the 35th America's Cup [Bermuda}."

What has to be delivered as a minimum standard is clear. It is over to ACE as to whether they can deliver it for the funds raised from an Event Free plus sponsorship. If they can't meet that standard of delivery, that is ACE's problem, not MBIE's or anyone else.

ACE is responsible for providing and providing the Host Broadcast feed, which would eat up a significant part of their €22.25 million Event Fee paid by MBIE if they were the sole sponsor of the event - which they are not.

If there is a "misappropriation" - the agreement provides for an adjustment to be made by "refunding any amount of misappropriated Event Investment or terminating the relevant Personnel's employment".

Most of the Auckland Council's contribution to the America's Cup consists of infrastructure projects that were planned anyway in the decade by decade long term Council planning. This is made plain in an explanatory document released by Auckland Council on Saturday - presumably to answer media confusion that the total amount of infrastructure spend was being tipped into a "billionaires yacht race."

When Emirates Team New Zealand won the America's Cup and the right to stage the next Match, Council planners went through their long term plans and pulled forward the elements required for the Americas Cup. Same too for the APEC political bun-fest, scheduled to start before the America's Cup events and concluding a year later, with nine events spread across three cities and expected to pull 20,000 visitors. The destruction of the new Sky City Conference centre, by a spectacular fire, and the arrival of the coronavirus forced the cancellation of APEC - which will now be a virtual event.

The point is that the "America's Cup" infrastructure was on the drawing board anyway, and all that is happening is that planned facilities are being constructed ahead of their scheduled time. They are still part of the planner's vision for Auckland.

The construction is undertaken by Wynyard Edge Alliance and is ahead of time and below budget. As well as the infrastructure to be used for the Cup, the Daldy Street stormwater outflow is being extended, and the Sealink ferry terminal has been moved. Additionally, the tank farm has been partially removed, with decontamination of the sites included in the "America's Cup" costs. The cost of rectification of those three sites, according to two Supreme Court (New Zealand's highest appellate court) is $50million each. One vacating company was ordered by the Court to pay $10million as its contribution to the environmental damage. The Council was up for substantial expenditure on the Wynyard Wharf and Wynyard Point, the America's Cup was a just an accelerator.

MBIE assisted the Council with funding the infrastructure costs. Of several options considered for the area, Auckland Council and MBIE opted for the most expensive project, but the best from a legacy use perspective.

The MBIE audit should be complete this coming week. The mainstream media had an intense interest in the details of the Event funding and expenditure.

But far more serious is the leaking of the interim report and other confidential information into the media, which is competitive information, and its the effect of its disclosure probably won't be known until the Cup is over.

One of the issues to be addressed and verified in the audit is cost-recovery by Team New Zealand against the Event - primarily for selection of the America's Cup Class and development of the AC75 class rule. However, for that assessment, salary and remuneration information has probably been disclosed.

Fortunately Team New Zealand was able to obtain a High Court injunction prohibiting further publication. Whether the information provided under trust by Team NZ to MBIE has been disclosed to other parties must also be investigated. If it has passed into the hands of another team, it is a breach of the Protocol and a matter for the Arbitration panel to determine.

The parties were back in Court Monday afternoon for a full hearing.

A breach of confidentiality is a very serious issue in New Zealand at present over the identity of COVID19 patients.

There will be no postponement

Before the current brouhaha, the chit-chat out of Wellington, repeated late last week, had it that the America's Cup might have to be postponed or compressed. It was felt that some "international media" might not want to come into New Zealand for the Christmas Cup in mid-December, fly home for Christmas and then jet back into New Zealand sometime in January for the Prada Cup and then the America's Cup in March or later.

One slight problem with that - international media aren't on the NZ Government's border exemption list either - so quite how the "international media" were going to fly in and out of New Zealand would have been interesting - let alone quarantine twice.

The postponement story did get some traction in the media despite not having any basis in fact and got regurgitated late last week.

There are several sound reasons as to why there cannot be a postponement of the America's Cup.

Firstly on safety grounds. Under the original program, the teams should now have had two regattas in Cagliari and Portsmouth which would have allowed the crews and officials to resolve any issues associated with racing the new class and boat type.

Safety was a major issue in the 2013 America's Cup in San Francisco after a crew member died following a catastrophic structural failure on the Swedish challenger, Artemis Racing, in a practice session.

The Principal Race Officer for the 36th America's Cup is Australian Iain Murray - a current world champion, a top designer, and PRO for the 2013 and 2017 America's Cups as well as the SailGP series.

Murray was uncompromising on safety - after the fatal incident in the leadup to the 2013 America's Cup. He quickly instituted his own safety changes, when the Committee set up to inquire into the incident, failed to make recommendations.

In Bermuda, there were two racing incidents involving serious boat damage. The first when Team New Zealand was shunted at the start of the final practice race and the British AC50's bow went through the kiwi's topside. Land Rover BAR skipper Ben Ainslie later dismissed the incident as a "love tap".

He was not quite so chipper in a second incident on the opening day of the America's Cup Qualifiers when the Brits boarded Softbank Team Japan during the prestart incident. The damage to the British boat was massive, requiring six metres of the hull to be cut away, and they came close to sinking when the boat arrived back at the dock.

These two incidents involved crews who were well experienced having raced against each other for several years in one design wingsailed foiling catamarans of a similar size to the AC50's.

The safety can't be sorted out a week or so ahead of the start of the Prada Cup. We do know that two AC75's have performed "Sky jumps" leaving both leaving the water completely in moderate winds - with one capsizing. Racing under pressure is an entirely different situation from lone practice or working in the simulator, and having your first racing regatta just a week or two before the start of the Prada Cup is not a good move.

Testing out the Umpiring system should also have been done in Cagliari and Portsmouth. The Liveline system used by booth umpires in the 2013 and 2017 America's Cup will not be used in the 2021 America's Cup, and a new system will be used.

The teams, officials and developers need to work together to resolve umpiring and rules issues with on the water trials ahead of the regattas. A three day Christmas Cup regatta held in mid-December, with several days of practice racing allowed, is minimal.

Specifically, the AC75's have the minor matter of how carbon foil arms and wings are handled in the racing rules - and how that treatment is overlaid into the umpiring. The initial thinking was that there would be a virtual boundary created around each boat encompassing the foil arm and wing. But given the issues which occur with artificial boundaries, where AC45' s/AC50's and AC72's frequently sail over the virtual sidelines despite all manner of warning lights. Quite how a virtual boat works in the reality of an AC75 match racing start is something that needs to be sorted out well in advance of the Prada Cup.

The astonishing aspect of the postponement storyline is quite how it gets so much traction in the face of so much evidence to the contrary.

Today ETNZ gave the High Court shenanigans their best response - by going sailing.

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