America’s Cup: Cost of Hosting 101

Published on December 10th, 2017

by Duncan Johnstone, stuff.co.nz
The America’s Cup looms as the only major international event on the New Zealand sporting horizon. Having so recently hosted the Rugby World Cup, the Cricket World Cup and the Masters Games, there’s no chance of them returning soon.

The cycle of big events coming to New Zealand has run its course. And with France setting a new benchmark with a $407m hosting fee to World Rugby to hold the 2023 World Cup – dwarfing New Zealand’s 2011 levy of $108m – Kiwis might never enjoy the privilege again.

But the Auld Mug, sport’s oldest trophy, has indeed returned and needs to be maximised.

“If we do this right and get this separated between the team and America’s Cup Event Ltd, then we can hang on to it,” said Team New Zealand boss Grant Dalton. “It’s not like you are going to have to bid for it in 20 years time. It could be back again in three years time and the facilities are in place. We’d like to build a legacy even beyond the infrastructure.”

On December 14, Auckland Council will make its final decision on where the Cup will be based, with the Wynyard Basin “cluster” expected to win favour at a cost of around $132m.

There will be central government contribution towards covering those infrastructure costs and an event fee which will go towards the operational running of a regatta that will sail for three and half months from December 2020.

It’s that event fee – now an accepted ingredient in the costs of staging any global sporting extravaganza – that is adding heat to a yachting syndicate that is no stranger to money controversies.

Dalton bristles at some of the criticism his team have been copping, frustrated that people have seen the event fee as a handout to the syndicate and that they are perceived as holding the country to ransom over it.

Like many Kiwis, Team New Zealand boss Grant Dalton loves his rugby so he’s quick to draw All Blacks analogies as the controversy over an event fee for the next America’s Cup in Auckland hounds his syndicate.

“To suggest that the team should pay … firstly I have no idea how we could … but that would be like asking the All Blacks to pay for the World Cup when it was in New Zealand. That just doesn’t make any sense,” Dalton says.

“Some people even think it’s going in my pocket, not just the team, it’s got that extreme in a couple of cases.”

A separate company has already been formed to run the regattas, called America’s Cup Events Ltd. It’s a replica of the America’s Cup Events Authority that ran the last two editions and received considerable payments to do so – $30m from San Francisco and $80m by Bermuda.

The event fee will only cover partial costs of the Auckland extravaganza with Team New Zealand under pressure to find significant sponsorship to top it up.

“It’s not a fee to host an event, an appearance fee, a royalty or anything like that. It’s to run the actual event and all the logistics,” Dalton insists.

He slaps down three A3 sheets of paper stacked with lines of print on them smaller than you’ll find in your phonebook. They are the workings of a budget. The devil is in the detail – and there’s plenty of it.

There’s a need for 26 chase boats for race course perimeter control, umpiring, and health and safety. There are 10 cameras planned for every America’s Cup boat and other substantial broadcast costs. Resource consent applications, portaloos, security, insurance, big screens, entertainment, traffic management, fencing, waste collection, a media centre… the list goes on and on.

“You think of anything that happens in an event and it’s in our budget to run this thing.

“It’s a golden opportunity to do this event well and get behind it. But to suggest Team New Zealand is trying to extort money out of the government for itself is just trying to cause trouble for no reason.”

Broadcasting is key with Team New Zealand determined to return the regatta to free-to-air TV and a state of the art presentation for the digital age. It is a significant factor in the event fee makeup.

“One of our underlying beliefs is that all of New Zealand and anywhere else should have easy access to footage. In our heart we want everyone to be able to watch it.”

Dalton won’t be drawn on the actual cost of the final budget at this stage but scoffs at the figure of $116m that has been prominent in some of the misinformation doing the rounds.

“That’s a farcical figure. It’s not even a fraction of that and running the whole event from A to Z would never even cost a fraction of that.”

Team New Zealand won’t be seeking financial support from the government for their actual sailing programme from here after being handed $36m for the 2013 America’s Cup in San Francisco and $5m bridging funds for both the Bermuda and current Auckland campaigns.

In terms of a national investment, subsequent figures showed the major handout out for the San Francisco campaign that fell agonisingly short was repaid in PAYE taxes alone as the New Zealand marine industry got heavily involved in work for several syndicates.

Projections for financial windfalls from the 2021 event are massive. But the the eye-watering numbers in costs and returns often hurt Team New Zealand in what is seen as a rich man’s game. The fickle sporting public rally behind them once racing starts in a manner that might even be the envy of the All Blacks. But between Cup cycles they seem to get trolled. It pains the syndicate.

The hosting issue has even seen the possibility of New Zealand losing the regatta. Italy, where challenger of record Luna Rossa are based, is a viable alternative if Auckland can’t come to the party by August 31 at the latest. But there are no intentions to take up offers from Russia and the United Arab Emirates.

“Those things are real in terms of inquiries, but we keep saying till we are blue in the face that it is not our intention to take it anywhere else,” Dalton emphasises.

He pushes his black cap back and folds his arms. He has to rush to another appointment. It’s a hectic schedule. Four years ago he was consumed by just his team, now the team is consumed by trying to set up the regatta structure as well as trying to keep ahead of their opponents on the water.

“Yep, it’s busy. But it’s in the ‘nice problem to have’ category because the America’s Cup is in New Zealand and that’s why we exist.”

Key dates:
✔ September 28, 2017: 36th America’s Cup Protocol released
✔ November 30, 2017: AC75 Class concepts released to key stakeholders
January 1, 2018: Entries for Challengers open
March 31, 2018: AC75 Class Rule published
June 30, 2018: Entries for Challengers close
August 31, 2018: Location of the America’s Cup Match and The PRADA Cup confirmed
August 31, 2018: Specific race course area confirmed
December 31, 2018: Late entries deadline
March 31, 2019: Boat 1 can be launched
2nd half of 2019: 2 x America’s Cup World Series Preliminary Events
February 1, 2020: Boat 2 can be launched
During 2020: 3 x America’s Cup World Series Preliminary Events
December 10-20, 2020: America’s Cup Christmas Race
January and February 2021: The PRADA Cup Challenger Selection Series
March 2021: The America’s Cup Match

Protocol of the 36th America’s Cup
Key Points of the Protocol
Deed of Gift

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