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America's Cup: Kiwi Government kicks for touch as Challengers circle

by Richard Gladwell/Sail-World.com 12 Feb 05:13 PST 12 February 2021
Emirates Team NZ - January 12, 2021 - Practice Racing - Waitemata Harbour - Auckland - 36th America's Cup © Richard Gladwell / Sail-World.com

Local and national politicians and their acolytes appear to have learned little from the past decade or two of America's Cup history, based on their reaction to a Venue Selection Process Hosting Guide developed on behalf of Emirates Team New Zealand

In a statement issued yesterday by the Minister of Tourism and Economic and Regional Development, Stuart Nash stated "with the Prada Cup underway, and the Match yet to start, it’s too early to start talking about what may or may not happen with the next event."

"We are committed to supporting America’s Cup Event Limited and Emirates Team New Zealand deliver a successful 36th America’s Cup."

It took almost two years from the America's Cup win in Bermuda in June 2017 to get the Host Venue Agreement between the NZ Government, Auckland Council and Emirates Team NZ, signed in April 2019. Part of that period was taken up working through various impractical proposals, which reflected a lack of understanding of the America's Cup rights and requirements by local and national level politicians and civil servants.

The next Cup, if the trophy is retained by Emirates Team New Zealand, is set to be run on a much shorter timeline.

Short listed venues for the 37th America's Cup, if Emirates Team NZ successfully defend, will be announced next month just a couple of weeks after the conclusion of 36th Match.

The last time the venue was put out to a six-city short list, Bermuda was the winner with a financial package worth approximately US$77 million (NZD$106million), including a $15 million (NZD$20.7m) sponsorship fee, $25 million (NZD$34.6m) for infrastructure improvements, $12 million ($NZD16.6m) operating costs and a $25 million ($NZD34.6m) guarantee against commercial sponsorships. Some of that is already spent in Auckland with the $NZD200 million infrastructure spend on decayed land, wharves and storm water by Auckland Council with Government financial assistance. The Kiwi Government paid the $40million Hosting Fee which only partially offset the Event costs, with America's Cup Event Ltd having to fund the balance.

The leading Italian newspaper La Stampa heralded the return of a Kiwi nemesis last Wednesday. "There are rumors that negotiations are also underway between Luna Rossa and Alinghi, which would see the return of the Swiss team led by Ernesto Bertarelli as Challenger of Record in the event that the Italian team wins the America's Cup.

"It seems that the agreement would include the elimination or significant reduction of the nationality rule, which otherwise would create some problems for the Swiss challenge."

In the past La Stampa has been very well connected with the Italian America's Cup team, breaking new that the AC75 foiling monohull would be used for the 36th America's Cup - a couple of days before the official announcement.

Similar claims on the involvement of Alinghi have been heard from America's Cup teams in Auckland, as they look ahead to the middle of March and the conclusion of the current America's Cup cycle and the start of AC37.

Alinghi, led by Swiss billionaire Ernesto Bertarelli are two times winner of the America's Cup. However in the past Bertarelli has expressed a strong preferences for the Cup to be sailed in catamarans, in which he is an accomplished sailor.

Most New Zealanders including Minister Nash, will be only too familiar with the events of May 2000, less than two months after NZ successfully defended the Auld Mug, Russell Coutts and Brad Butterworth led a group of six senior members of the Cup winning Kiwi crew to form the Alinghi challenge. The move came out of the left-field, and was announced to an incredulous Kiwi sporting media, by Butterworth alone - with Coutts absent overseas.

Butterworth, under Coutts as skipper, was part of the multi-national crew, the first in recent America's Cup history, to win the prestigious trophy on their first attempt. Coutts and Bertarelli later split over the choice of the 2007 Defence venue, with Bertarelli opting for Valencia, Spain instead of the Coutts favoured Cascais, Portugal location. Butterworth replaced Coutts as Alinghi skipper, and with Ed Baird (USA) on the helm, along with the Kiwi "Tight Five" they successfully defended the trophy in Valencia in 2007.

That 32nd Match and associated regattas, plus two seasons of America's Cup World Series racing was run on a sound commercial basis with Emirates Team New Zealand taking a $14million share of the surplus from that event. No America's Cup has generated a pay-out for the teams since. However Team New Zealand's windfall was soon burned when the team went into survival mode for over three years waiting for the 33rd Match to be sailed in 120ft multihulls, under the default provisions of the Deed of Gift, between software mogul Larry Ellison's Oracle Racing and Alinghi.

This Cup cycle, Butterworth has been working with Luna Rossa, in an ambassadorial role ostensibly to smooth the usually testy relationship between Challenger and Defender. It may be that relationship which has sparked the rumours of a Swiss and Italian connection.

Earlier this week copies of the Venue Hosting Guide prepared by UK-based Origin Sports began to appear in international media, revealing the advanced state of Emirates Team New Zealand's plans for the next Cup, should it be successful in its Defence of the trophy in three weeks.

While the Hosting Guide has been sent to interested venues, the process for dealing with the New Zealand Government or other parties interested in retaining the Cup in New Zealand is unclear. It is not believed that the estranged MBIE has been sent a copy of the bid document developed by UK based Origin Sports Group, a spin-off organisation from Team Origin, a Sir Keith Mills and Sir Ben Ainslie led group formed to challenge and compete in the 2013 America's Cup. Commitments by both to the 2012 London Olympics resulted in Team Origin, being hibernated and then revived as Land Rover BAR for the 2017 Cup in Bermuda.

There appears to be no provision in the current Host Venue Agreement for there to be a negotiation with ETNZ if it retains the America's Cup. There are clauses relating to the ongoing use of the bases by teams in the eventuality of a successful Defence in AC36, but no prescribed process following an Emirates Team NZ win.

However the team CEO Grant Dalton has always made it clear that they were obliged in good faith to negotiate with the Government for a three month period if ETNZ wins the 36th Match.

If the Kiwis retain the Cup it seems that there will a dual negotiation between the NZ Government and ETNZ running alongside a similar negotiation with the short-listed venues arising from the Hosting Guide process.

The mistake made by Minister Nash is that for Challengers, two of the three questions vital to mounting a campaign for 2023, have already been answered, without waiting for the current Match to be determined, and that information gives would be challengers more than enough traction to start a formation lap.

The boat will be the AC75, and the timing will be in September 2023 for a Cup regatta in the Northern Hemisphere. Only the third question - the venue - is to be announced. However the short-listed options on that count are expected to emerge in four to six weeks, and will be in Auckland, or the northern hemisphere. Australia is also a possibility, with Southport being in contention for the venue, for a time, for the 33rd America's Cup held in 2007 venue of Valencia, Spain.

In the 2013 and 2017 Cups the answers to these three questions were dragged out over 18 months, with the venue Bermuda being announced 15 months after the conclusion of racing in the San Francisco Cup in September 2013. The first America's Cup Class announced in June 2014 was the AC62, replaced nine months later in late March 2015, with the AC50 one design.

Emirates Team New Zealand cut this cycle to just six months for the current Cup, and if it prevails in March 2021, two of the key announcements have been made already, with just the venue to be confirmed.

While some may consider the current approach adopted by the Kiwi team to be premature, it is somewhat consistent with the long standing practice of the ultra-conservative New York Yacht Club, in the 12 Metre era, when it announced before the conclusion of the current Match that if successful, it would envisage sailing the next edition in a particular year and in the 12 Metre class. Challenges were invited on these terms from yacht clubs over a specified period, from which the New York Yacht Club accepted one that would become the Challenger of Record.

As well as Emirates Team New Zealand, pressure will be exerted on the existing teams, with two of the three basic America's Cup questions answered for the next regatta.

New Challengers will be able to acquire existing AC75's and get sailing in 2022.

A point made by one of the senior management of one of the Challengers based in Auckland to Sail-World, is that introducing new teams to the AC75 game is all very well, but he noted that the number of top people across all the major design, engineering, shore team, construction and sailing facets of a Cup team is very limited.

Competition for scarce resources will likely trigger a head-hunting operation across all existing teams with ETNZ being a prime target.

It is essential, if Emirates Team New Zealand is to become the first team outside the USA to twice defend the most prestigious trophy in sailing, and maybe international sport, for the team to remain intact, as it did after the 2017 win in Bermuda. To achieve that level of stability the Kiwi America's Cup team needs a certain financial future - which is driving the current international venue search.

ETNZ CEO Grant Dalton has been consistent in saying that his first loyalty is to protect the team and its future, and this circling of the team's valuable wagons would appear to be the primary driver behind the America's Cup champion's distribution of the Venue Selection Process Hosting Guide to qualified venues and parties.

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