America's Cup: The Blitz of Statements answered with Protocol Release
by Richard Gladwell/Sail-World NZ 23 May 14:31 AEST
Louis Vuitton 37th America's Cup Race 4 - October 14, 2024 © Ian Roman / America's Cup
Various parties associated with the America's Cup overnight (NZT) released statements calling for more transparency in the America's Cup.
Their umbrage was triggered by the view that the America's Cup Defender, Royal NZ Yacht Squadron, through Team New Zealand, had usurped their rights - such as they are in negotiating a Venue Hosting Agreement for the 2027 America's Cup, with the Italian Government and the local and regional authorities. An injection of private money is believed to be part of the Hosting Fee.
The Challengers believe they should be part of that venue negotiation.
The venue hosting arranagement is consistent with what was in place for Barcelona, and proposed for Auckland. The New Zealand Government refused to participate in that arrangement despite the private and Auckland Council contributions being in place.
Today's release of the final draft of the Protocol showed that much of the 80 page document that governed the 2024 America's Cup in Barcelona had been rolled, almost word for word, over into the same document for the 38th America's Cup.
The over-riding change is that the events Preliminary Events, Youth and Womens, Challenger Selection Series and the America's Cup Match are run by a new group America's Cup Partnership (ACP formed from the Challenging teams and the Defender). Previously all events were run by America's Cup Events (ACE) the Event arm of Emirates Team New Zealand.
To date ACE has done the heavy lifting to set up the 38th Match.
Its work and responsibilities roll over to ACP at the end of June 2025. ACP is bound by the decision and actions already taken by ACE. The contentious aspect of ACP is that it will be "responsible for the management of AC38 and future cycles of the America's Cup." However the ACP model of organisation could be rolled over from Cup to Cup and a new organisation formed in terms of the Partners - who become elegible when they enter the Cup.
There is no obligation on the future use of the ACP event management structure, but it does give the incoming Defender a head start.
The Entry Fee €5million per team will form the Seed Capital of the ACP entity. There may be calls for further injections of capital by the Teams. The Defender is the only team not required to pay an Entry Fee.
There is no provision for inpection of the financial records of ACP or whether it will be subject to the overall control of a Board comprising representatives of the teans entered into the event. Once a team fails to continue into the next America's Cup cycle, it is assumed that they would cease to be part of ACP, and don't have any ongoing role in an event in which they are not racing. This needs to be clarified in the Protocol.
There is no mention of distribution of surplus revenues or cost over-run from the Event management of the 38th America's Cup, or who is liable for an over-run. The fate of any assets acquired by ACP are not disclosed. Presumably there would be an end of cycle sale and the proceeds go into a profit distribution.
Many of the financial and transparency questions disappear if all teams have Board representation with the Event Director reporting to the Board as would any CEO. But this structure is not in the Protocol. A key initial task will be the development of Budgets (likely to have been already done by ACE, in which case they are checked and adopted).
The risk with this style of entity is in run-away costs and price gouging - and very careful financial management is required.
At the end of the regatta all on-going properties, video, images etc are vested in America's Cup Properties Inc (ACPI) which is a pre-existing entity, and is under the control of successive Defenders.
There is no mention of the Hosting Agreement and the revenue from Naples, given that the usual undertaking is that ACE deliver a "turn-key" regatta at the venue. ACE have given ACP all the commercial rights that are normally owned by the Defender, as will Challengers that are expected to enter the Cup.
Presumably ACE are to be compensated in some way for the costs of work already done.
There is some mention of Preliminary Regattas, which will only be sailed in AC40s - same as last Cup. Other than the actual Cup regattas, the previous group of AC75s from 2024, will not be races, and are destind to become test boats only.
The carrying over of points from the preliminary events (sailed in AC75s) carry over into the Cup itself - being the latter rounds of the Challenger Selection Series, but not into the Match itself. The Defender will still sail in the Round Robin (now known as the Group phase) of the Louis Vuitton Cup (CSS).
The Protocol does make some attempts at budget control with what appears to be an aspirational "agreed target for an overall campaign cost of € 60 million.". Other than a restriction of sailing days of 50 for and AC75 and 35 for two-boat sailing in the AC40/LEQ12 there is none of the usual caps that you would see in F1 racing, for instace. However the Protocol says these cost reductions will be done in the yet to be provided Technical Specifications and Class Rule which will have requirements to use some one-design parts and restrict numbers of new and legacy parts as has been the case for many past Cups.
A "Sailing day" is a day when the boat is towed out and drops the towline, and is free sailing, regardless of what happens next. The number of days is presumably verified by the shared Reconnaissance Team - who do much the same function as they did for the 2024 America's Cup.
There has been a big change in the crew rules, with proposals for Youth and a Female as part of the six person crew. See full story sail-world.com/news/286355/Americas-Cup-Big-changes-in-crew-line-up
The controversial rule on nationality of crew looks complex, and appears to be awaiting for an addition.
Similarly with Constructed in Country requirements, these are not a roll-over from the previous rule text, but appear to achieve the same objective - with the Hull of the yacht constructed in 2024 or later being required to be constructed in the country of the competitor, and prior to 2024 only the forward sction (2.7mtrs) need to have been laminated in the country of the competitor.
Overall the America's Cup Partnership seems to be a very cumbersome approach, which will provide plenty of scope for argument and work-arounds, and will generate plenty of sitting hours for the Arbitration Panel.
It would have been far simpler to run the event the way it always has been - under the control and responsibilty of the Defender. And leaving the Challengers to worry about their own performance instead of fretting about the size of the Event organiser's bank account.
However the ACP model does allow some long term sponorship deals to be negotiated - beyond the immediate life of the current Match. It also gives a new Defender and Challenger of Record a working organisation to manage the event for which they have just become responsible - allowing future Cups to be conducted on a shorter frequency of just two years between events.
And, of course for America's Cup racing to be conducted every year in AC40s with Open, Womens and Youth crews as well as the previous cycle's AC75s