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America's Cup: Freedom of Infomation requests reveal Irish bid is progressing

by Richard Gladwell/Sail-World.com/nz 15 Nov 2021 16:07 PST 16 November 2021
Cork, Ireland offers three course locations suitable for America's Cup racing. © Little Island Business Association

Email and other documents obtained by two Irish newspapers reveal that the Irish bid to host the 37th America' Cup is still alive and is further advanced than media reports would indicate.

A significant hurdle, probably a show-stopper, for Auckland has also emerged following comments made by one of the co-owners of The Ocean Race, who recently dropped Auckland as a stopover port for the 2023 event.

Both The Independent.ie and Sunday Times, Irish edition, have filed requests under the Freedom of Information Act seeking information on the America's Cup hosting bid for Cork.

They reveal that the Irish bid is being driven by adviser John Concannon, who was part of a team that organised the Galway stopover for the Volvo Ocean Race in 2009. He is currently the Director-General of the Global Ireland project to expand Ireland's global presence by 2025 substantially.

For over eight years, Concannon was Director of Market Development for Ireland's National Tourism Development Authority, with responsibility amongst several other projects for the domestic marketing of Ireland as a tourism destination and developed the successful 'Discover Ireland' consumer brand and marketing programme.

In 2010 he was awarded the accolade 'Irish Marketer of the Year' for the work relating to the marketing of Ireland as a tourist destination.

He is believed to have been on the project since late last year when a Venue Hosting Guide was circulated by UK based Origin Sports seeking interest from ports/cities interested in hosting the 37th edition of the America's Cup.

Both the America's Cup bid and the Global Ireland initiative are run out of the Department of Foreign Affairs. However, there is joint ownership of the America's Cup project with the Irish Ministry of Sport, Arts and Culture.

By law, the Ministry of Sport is not permitted to sign off on backing an event that shows a negative economic return. Two of the scenarios in the first EY report were well in the negative - the investment "cost" of the event was variously €200, €400 and €600million (NZD$970million or USD$683million).

In a second and later report, the total costs (Infrastructure and Event) have reduced by €376 from a worst-case of €606million down to €230million. That is a substantial reduction in the upfront risk.

Benefits now range from €35million to €200 - a bigger spread from the first EY report, which had the Benefits more tightly grouped in the range of €411million to €488million.

Like the confused report for the NZ Ministry of Business, Innovation and Employment, the Irish mix Infrastructure costs with Event costs. That approach ignores the fact that, spending on infrastructure will remain long after the America's Cup, and the city has use of the legacy facility for many decades, at no cost.

The NZ Govt report compounded the error by taking economic values - many based on various assumptions which were then expressed in funny money - and then confused the ascribed values with actual cash expenditure - producing astronomical "cost" projections.

The Kiwi Govt report openly acknowledged that it was constructed using a methodology not previously used in an America's Cup and could not be compared with earlier reports.

The financial cost to stage the 2021 America's Cup regatta by America's Cup Event Ltd was NZD$45million (including an NZD$3million recharge to develop the AC75 Class rule). The previous Cup in Bermuda had a comparable financial cost of USD64million.

The Independent reports that "rather than finalising its bid, the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media (TCAGSM) is now assessing whether it is worth pursuing at all.

“The Department is currently engaged in an assessment which will take six months and is aimed at evaluating the potential of this event before a decision could be made on whether or not Ireland should move forward in the 37th America’s Cup host venue bid process,” the department said last Friday.

"TCAGSM refused to release hundreds of pages of records about the bid, citing the “deliberative process” clause in FOI law."

The comment about a review taking six months to complete was the same party-line expressed last September, and is a bureaucratic smoke-screen. The release of only very limited information indicates that the process is currently continuing.

Auckland Show-Stopper.

The situation with the other three venues, Valencia, Jeddah and Auckland is not known.

The New Zealand Minister of Sport Stuart Nash conceded that the chances of Auckland hosting the 37th America's Cup were only slight after the exclusive negotiation period ended on June 17, 2021.

Subsequently, Auckland has been dropped as a stopover for The Ocean Race, with both Auckland and China being swapped out in favour of a long 12,750nm leg through the Southern Ocean.

From comments made to French weekly sailing newsletter, in the weekend, it would appear that the New Zealand Government's COVID strategy was a key reason for the decision dropping the Auckland stopover. And it would seem that the comments of The Ocean Race co-owner Johan Salén would be equally applicable to the America's Cup in New Zealand.

"We had two stages planned in China and New Zealand, two countries where a zero Covid policy is applied," Salen told Tip and Shaft. "And so today we do not have the guarantees to make stopovers in good conditions. As we needed to complete the course now for other cities, teams and sponsors, we decided to remove them and make an epic stage in the South, which will be the perfect opportunity to celebrate 50 years since the first Whitbread."

Numerous major yachting and sports events were cancelled or disrupted in response to the COVID-19 pandemic. While Government actions may have protected the local populous, sponsors, or broadcasters had to suddenly fill a big void in their schedule.

Their reaction is to insert "Diminished Returns" clauses into future sponsorship contracts, which claw back revenue from the team and/or event for the lost exposure or disruption.

The diminished returns situations are not insurable, and are not "Force Majeure" events either - and particularly so in a country like New Zealand which has one of the most extreme COVID responses in the world (and one of the lowest death rates).

The only work around is for the NZ government to give an exemption to the America's Cup teams, officials and media to continue under a flexible quarantine - as was used at the Tokyo Olympics. Such an arrangement would be the equivalent of other sports continuing to play major televised games, on schedule, in stadiums without fans.

Whether that would be politically tolerated in Auckland for an America's Cup, was probably never really tested in the exclusive negotiation period. However it is very relevant in light of the calls for the Cup to be defended in its home waters. No team or organiser is going to pick up the financial tab for government ordered lockdowns.

The jurisdictions in potential Cup venues, other than Auckland, have a much more relaxed approach to COVID, and the options for working with the teams to ensure event continuity.

A venue decision is expected to be made by the end of March 2022.

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