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Gladwell's Line: Kiwi Government has starred in this movie before

by Richard Gladwell, 10 Jul 2020 04:14 PDT 10 July 2020
Emirates Team New Zealand heads of for another mid-winter training session - Waitemata Harbour - July 5, 2020 © Emirates Team New Zealand

Ten days ago Emirates Team New Zealand sent their bombshell media release advising that they had exited three people they have claimed to have identified as "informants".

The note also revealed that the super-Ministry of Business, Innovation and Employment was investigating claims that had been made regarding America's Cup Event Ltd. But some of those issues had been rattling around for six months - so why now?

The kiwi media, who are more used to following the latest political intrigue, struggled to get their bearings for a day or so until the Herald dropped a confidential letter into the mix signed by the CEO's of Auckland Council and the Ministry of Business, Innovation and Employment.

That got splashed across the front page of the Herald for the next three days, prompting Team New Zealand to issue a second media release responding to many of the reports raised in the Herald story and elsewhere, as "sources" began popping up like mushrooms after a shower of rain.

The media feeding frenzy died an unnatural death with the issuance of an interim injunction based on a phone call with a High Court Judge. The issue was set down for a Hearing on Monday afternoon when the formal submissions were made by Emirates Team New Zealand and their event management arm, America's Cup Event Ltd. NZME responded and MBIE also. Justice Simon Moore reserved his decision which will be delivered in writing next week.

Emirates Team New Zealand fired off a flurry of media releases with the very detailed second one (July 1, 2020) raising a raft of issues that had been alluded to in the Herald report. There was a second letter from ETNZ/ACE responding to the points raised by the CEO's of Auckland Council and MBIE - but apparently, that didn't find its way into the Herald's Inbox.

One of the assertions was that there had been a bank scam over a payment to Circle-O, the German Host Broadcast contracted to provide the host broadcast (the creation of the content pool of video and audio shot by various sources during the racing drawn on by licenced broadcasters).

Sources spoken to by Sail-World say the amount of $3million is incorrect. But more significantly the same scam (for lesser amounts) is reported by as having been "implemented" on at least four companies in the NZ marine industry. The payment by ACE was made six months back in December 2019.

Quite what is behind all the current commentary and the audit is a little hard to fathom. But there is a long history of the Government of the day and the America's Cup team having at least one stand-off during an America's Cup cycle.

On April 1, 2015, Italian Challenger of Record Luna Rossa withdrew from the 2017 America's Cup, nine months after entries opened, when the majority of the teams (including the Defender Oracle Team USA) opted for a change of class from the AC62 to the new class AC50. Emirates Team New Zealand came out with a statement supporting the Italian position and promptly had the 2017 America's Cup Qualifier withdrawn - a deal vital to the Kiwis from a financial perspective. They lost the Government funding that had been arranged around that event being sailed in Auckland.

It took 16 months for the Arbitration Panel to make a decision - coming down hard in favour of Emirates Team New Zealand with a good financial settlement. The other teams "voluntarily" agreed to defer the launch dates of their AC50's by a couple of weeks for a 28 day time out - which the Kiwis used to transit to Bermuda in the cargo hold of an Emirates airline freighter.

Then there was the Black Friday incident on June 13, 2014, at a media conference called by Team New Zealand when they were located in the Alinghi base. The purpose of the conference was to update with the funding situation as the team struggled to get backing off the back of the San Francisco loss less than a year previously. In October 2013 Team NZ received an initial $5million backing from the National Government to hold key crew members.

But by the end of April 2014, those funds were close to running out. $12million was the next ask, to which Joyce said he expected that some money could have come from sponsors, and not just all from the Government. A week later, the team came up with $6million, which was a very good effort in the circumstances, but payment dates for big non-refundable entry fees were looming. Towards the end of a media conference which had spent 40 minutes on some very sympathetic questioning the Protocol, the media session crash-gybed and Dalts came under some very repetitive media questioning, about whether he "really" needed the Government contribution.

After the fifth repetition of the same question, he changed his answer slightly as to whether they "needed" the additional Government funds injection. That got twisted into an "ultimatum" and relayed within the hour to the then Minister of Economic Development, Stephen Joyce, in Wellington. Predictably Joyce would not allow himself to be seen to be pushed into taking an "ultimatum" from an America's Cup team. He left the team to be circled by the media sharks, who had smelled blood. Long story short is that once again, some more funding was found, and the kiwi team survived to fight another day. They hit the wall six months later without any media fanfare and were within 24 hours of shut-down.

Team New Zealand was financially insulated for the two previous Cups - 2007 and 2013 - by virtue of a two-cycle contract signed with the Helen Clark led Labour Government which covered the 2007 America's Cup in Valencia and 2013 in San Francisco.

In between was the hiatus created in 2007 by Golden Gate Yacht Club calling out the Defender, Societe Nautique de Geneve (Alinghi) over their choice of Challenger - the newly formed Spanish yacht club - Club Nautica Espanol Vela - or the infamous CNEV. They tamely handed over all its rights as Challenger of Record to the Defender.

It was probably the right move for all the wrong reasons as SNG/Alinghi tried to bring in a new class of boat - the AC90. Ernesto Bertarelli thought he could improve on their excellent commercial result from the 2007 Cup - where America's Cup Management - the 2007 version of present-day America's Cup Events Ltd - ran up a $48million surplus which was distributed amongst the teams - with ETNZ said to have pocketed $14million. However, that was soon eaten up with surviving the 2007-2010 legal hiatus, competing in Louis Vuitton Trophy events and generally trying to keep their name up in lights, and sailors on board.

The NZ Government changed in 2008, with the subject of the America's Cup contract being put to incoming Minister of Finance, Bill English. His response that he'd dearly love to rip it up. The inference was that then Minister of Sport (now Speaker) Trevor Mallard had future-proofed the document in such a way that the Government of the day were up for their Team New Zealand investment of $37million - contract or not.

In the end, New Zealand Inc got very good value for their investment in Valencia and San Francisco - with the Cup creating a lot of opportunities for business networking and hosting with key people and companies who would otherwise be impossible to access. The high visibility of the New Zealand team in a state with eight times the kiwi population did the country's profile no harm, either. Whether New Zealand reaps a similar level of desperately needed benefit is largely up to the same MBIE and Auckland Council who are pursuing the audit exercise.

Going into 2017, once the Auckland hosted Qualifiers had flown the coup, there was no Government interest in Bermuda as a venue. It was the only venue of the five bandied about which got the thumbs-down from Wellington.

Against that backdrop, maybe we should not have been surprised at the occurrences of the past couple of weeks.

The good news is that from what we've seen this week and the last, Te Aihe looks to be sailing fast and well under control. Hopefully, she will be joined by American Magic in two or three weeks.

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