Gladwell's Line -The America's Cup settlement deal

by Richard Gladwell, Sail-World.com on 11 Oct 2016 The 'News' today that Emirates Team New Zealand has won their case before the America's Cup Arbitration Panel is not new or exclusive. Sail-World reported the same story a month ago.

(For the September 8, 2016 story click here and confirmed a week later - click here)

The Hearing on the amount of compensation to be paid is yet to be held. So far there is nothing out on a Hearing Date for the Remedy phase of the Hearing, if indeed one has been set. Maybe next year? And then another month or so for a Decision?

Clearly, some money will change hands, quite how much is going to be determined. The $5million quoted today in New Zealand is way too light.

We know that the NZ Government invested $NZD37million into Emirates Team NZ in the 34th America's Cup in San Francisco.

After the team had returned to New Zealand, it became clear that there had been no Plan B in regards to the continuance of the team in the event of a loss in San Francisco, and Minister Steven Joyce announced an injection of $5million soon after the team's return home.

That $5million would have come off any Government investment for the 35th America's Cup. It was a funding advance.

Our guess is that the Government was set to invest $25million in Team New Zealand in return for hosting the Qualifiers in Auckland. Whether that included the costs of Hosting, would have been subject to negotiation. Similarly, whether that included a contribution from ATEED (Auckland Council) was also to be determined. And then there might have been a funding line from Major Events NZ, who are pumping $500,000 into the 2016 Youth Worlds to be held in Auckland in December 2016. The point being that the investment cards can be dealt a number of ways. But Team New Zealand would have been left with a substantial and early sponsorship.

The team had made a lot of effort to get itself into a situation where it was in compliance with many of the Government's dictates for future funding. It put in place a Board, with a Government approved Chairman. Grant Dalton and Gary Paykel dropped off the new five-strong Board. There was a lot more disclosure of team budgets and salaries to the NZ Government parties. All that compliance effort and cost was necessary to get the investment in the Team and Qualifiers.

The hosting agreement was in place for the Qualifiers and had been since around the end of February 2015.



Team CEO, Grant Dalton claimed in a video that the deal put to the teams was that they agreed to change the boat to an AC45 and have the Qualifiers in Bermuda, or stay with the AC62 and go to Auckland. That claim seems to have been validated by subsequent events.

The suggestion that the financial compensation to be paid to Emirates Team NZ could be $5million is well short of the actual loss to the team - which is probably three or four times that amount. Let alone the damage that was done to the team brand, in the NZ media in particular. Add in too, the flow-on effect that media ruckus had on other sponsors - who would have looked hard at a sponsorship deal in New Zealand for the Qualifiers even though the Play-offs and Match were always to be held in Bermuda.

The NZ Government would have got back most if not all of its investment from taxes from team and fan expenditure in New Zealand. Take away that Auckland Qualifier component and the investment didn't stack up. Neither did Bermuda as a venue. Any of the North American venue options would likely have seen a repeat of the investment at the levels in the NZ-based team at the levels of the 34th America's Cup.

The requirement that the Arbitration Decision is kept confidential only serves to extend the damage the NZ team's reputation.

They deserve to be publicly exonerated as soon as possible. It might suit the majority of the teams to maintain complete confidentiality but not at the cost of a team who acted in good faith in this sorry saga. The credibility of the NZ team has been called into question, as has that of some senior members of the team and those on the Board - including Sir Stephen Tindall who played a lead role in the negotiation and whose reputation is beyond reproach.

The time has long passed for Golden Gate Yacht Club/ACEA and the teams to come clean over this matter. Hiding behind a smokescreen of majority imposed confidentiality over an act of petulance does nothing to enhance the tattered credibility of the current America's Cup.

What is there left to hide - aside from shame and embarrassment on the part of organisers and some of the teams?

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It is clear from media reports around February 18, 2015 that a significant investment announcement was about to be announced by the NZ Government once the Qualifiers were officially announced.

Documents released under the Official Information Act show that in the last four America's Cups the New Zealand Government made the following contributions to Team New Zealand:

2000 - No direct investment in Team NZ and no additional spending for NZ marketing and promotional activities

2003 - $8.6million direct investment in Team NZ, and and additional $4.5 million spent on event leverage in NZ

2007 - $33.75million direct investment in Team NZ and an additional $3,528m on marketing and promotion in Valencia

2013 - $36million direct investment in Team NZ and and additional $3,932m on marketing and promotion in San Francisco

In February 2009, Auckland hosted a round of the Louis Vuitton Pacific Series using boats supplied by Team NZ and BMW Oracle Racing the NZ Government made a contribution of $3.5million to the event costs in addition to funding provided by Auckland City Council.