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America's Cup: Valencia back as a potential venue - but with a study

by Richard Gladwell/Sail-World NZ 15 Oct 2021 14:22 PDT 16 October 2021
Valencia the exit channel from the Darcena in Valencia - Louis Vuitton Cup Semi Finals Spectators at Port America's Cup © ACM 2007 / Vicent Bosch

A report in the Spanish media indicates that a new bid from Valencia, Spain, is under development for hosting the 37th America's Cup.

The original group promoting the 2007/10 Cup venue to be used again in 2024 withdrew abruptly, a week before the AC37 venue announcement was due on September 17, saying the Spanish Government would not financially support their bid.

According to reports in the Spanish media on Thursday, the Vice Mayor of Valencia, Sandra Gómez, spokesperson for PSPV-PSOE the socialist party of the Valencia region, has "advocated for a public-private collaboration" to host the 37th America's Cup.

Speaking at a breakfast to announce her return to "municipal activity after her maternity leave", Gómez said that "informal contacts" had been made, and that they were waiting on a proposal from Real Club Nautico de Valencia to "present a serious and rigorous study". Whether that is a reference to a formal proposal, or if that is also part of a "return on investment" study - at which point the parties would make a decision and sign-off or decline.

The Minister for Sports, Pilar Bernabé, also a member of the socialist party, indicated the Government was prepared to throw in the existing infrastructure already developed for the 2007 America's Cup. But that was provided private and commercial interests could work together to pay the hosting cost. She said that it was expected that the Council costs would be in the hundreds of thousands of Euros, not millions.

Given that the Valencian infrastructure is already in place and cost absorbed, if the commercial parties can see their way to making their investment giving them a positive return (rather than for the region as a whole), then the bid may be viable.

The AC37 venue bid process opened in late 2020 and closed before the staging of the 36th Match for the America's Cup in early March 2021. Since then, the 35 expressions were reduced to just three to five - being Valencia, Jeddah and Cork. Barcelona was a surprise late entry, and Auckland remains in play, despite the NZ Government being unable to successfully negotiate an agreement during their three-month exclusive period, which ran out on June 17, 2021.

The elephant in the room is still the impact assessment report, commissioned on behalf of the New Zealand Government, which claimed the ridiculous cost of the 36th America's Cup was $NZD774million.

The NZ report stated that it was not developed using conventional accounting methods, used for all preceding Cups, but instead just assessed economic values to various items, tangible and intangible. It also loaded the entire cost of the infrastructure used for the 2021 Cup, along with close to $100million of public works such as new stormwater systems fed by surrounding rich-list suburbs, relocated ferry terminals and remedial work on a disused fuel tank farm, all of which were budgeted Council projects. A second report by the other partner in AC36, Auckland Council, compiled using conventional accounting principles correctly separated out the new infrastructure asset costs. A third report compiled by America's Cup Event Ltd, also compiled using accepted financial accounting conventions, put the operational costs of the regatta at $45million (€27million).

A more credible impact study for the previous America's Cup, in Bermuda, prepared by international consulting firm PWC using accepted financial principles, showed a return of over USD$5 for every USD$1, invested by the Bermudian Government. The infrastructure costs in Bermuda were carried by a private company that will have the legacy use, under a deal guarantied by the Bermudian Government.

The NZ Govt report also substantially undervalued the AC36 television exposure compared to Bermuda.

The NZ report claimed to have used the same (Equivalent Advertising Value) method as used for Bermuda, coming out with a value of just $5.3 million for Auckland using an audience of 68.2million viewers, while PWC calculated the value at $NZ115million for a smaller audience of 51million viewers. Both calculations looked at the value to tourism only. The New Zealand report made no mention at all of the opportunity cost of superyacht servicing of $300million. That lost revenue was a result of the rejection of entry of 110 superyachts into NZ, who had paid berth deposits, which were refunded.

It is understood that currently, most of the named venues have revived bids under consideration, given the new business environment as economies look for a revival path post-COVID.

However, rather than being given additional time, as requested by some, it is now believed to be a case of the first acceptable proposal will be announced as the preferred venue, followed by a two-month process leading to a signed Host Venue Agreement covering the 37th America's Cup.

Cup holders Emirates Team NZ have already been announced that design work has started on the development of a 40ft version of the AC75 wingsailed foiling monohull. The AC40 will be used for preliminary regattas in the period between 2023 and 2024. ETNZ have also announced that they have completed the design work for hydrogen-powered chase boats to be used in the Cup, and the regatta is set to have a very eco-friendly image, making it attractive to team and event sponsors.

The Protocol, or governing rules, for the 37th America's Cup is understood to be in the final stages of negotiation and will be announced as planned on November 17, 2021.

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