America’s Cup: Winning back public trust
Published on July 7th, 2020
It is the Deed of Gift that dictates America’s Cup entrants are clubs, and for the team which represents the club, if they prove victorious, the home fans then bask in the bright lights of this historic event as the winning club hosts the next edition.
But as the commitment to compete increased, the shift of power went from the club to the team, which was in full display when 2003 winner Alinghi shopped for a venue as their Swiss club Société Nautique de Genève at 1200-feet would not suffice.
The winning bid of Valencia, Spain was tolerated in 2007 and 2010 out of necessity, but the trend took a turn when 2010 winner Larry Ellison sought alternatives to his base of San Francisco for both the 2013 and 2017 editions.
Considering how the event had grown in scale, with heightened expectations of the host, the responsibilities which came with winning had escalated, but so had the prospect of profit. That is, as long as the event lived up to the projections.
After the City of San Francisco overpaid in 2013 with only three challengers, Ellison found another buyer for 2017 in Bermuda, and now its Auckland’s turn in 2021 to learn if the government investment was worth the risk.
But with financial projections calculated for 6 to 9 challengers, and with reality providing only three teams, the math is already melting, with the coronavirus pandemic tightening the screws further.
Former Team New Zealand director Tina Symmans has a saying: “sick organizations leak like sieves”.
It’s a phrase Symmans, who now chairs the America’s Cup Events (ACE) arm, uttered a lot following Team NZ’s stunning win at the 35th America’s Cup match in Bermuda.
She pointed to the Kiwi syndicate’s ability to keep its breakthrough innovation of using cycle power to fuel the team’s Cup boat under wraps for nearly 18 months as one of its crowning achievements. By the time the game-changing design was revealed to the public, rival teams had no time to replicate it.
It could only have been achieved if the team – and their contractors involved in the build – all bought into the leadership and vision, Symmans said at the time.
Now, Symmans finds herself presiding over an organization that has sprung a series of damaging leaks. Contractors axed. Whistleblower protections invoked. Secret documents finding their way into the hands of journalists.
Amid the flurry of salacious headlines last week, the Ministry of Business, Innovation and Employment (MBIE) announced it was suspending funding for the event while it undertakes a major investigation into “structural and financial matters” surrounding Team NZ’s organization of the America’s Cup.
Regardless of whether the startling accusations that have been leveled at Team NZ and ACE boss Grant Dalton in the past week are proven, the body in charge of organizing the event is, by its chair’s own measure, diseased.
To date, Team NZ’s attempt at a patch-up job has been to launch an aggressive counter-attack against the “informants” who have been painted as disgruntled ex-contractors.
In the confusing web of accusations and counter-accusations (not to mention titillating details of Team NZ falling prey to Hungarian scammers) it is difficult to sort the rumors from the key issues.
The central and most serious allegation is that Team NZ has effectively siphoned off funds meant for the event into its own coffers.
Team NZ strongly deny any accusations that public funds have been misappropriated. Dalton contends this money, reportedly in the realm of $3m, is to reimburse the syndicate for work its staff have done for the event, and has appeared as part of its regular reporting to MBIE for more than a year.
That may well be the case. But the arrangement in the first instance appears to have been one agreed upon between Grant Dalton and Grant Dalton.
Irrespective of whether the MBIE investigation concludes Dalton’s dealings have been above board or not, the serious fall-out that has been happening behind the scenes for months has highlighted issues of poor governance that should have been apparent from the outset.
Having the head of Team NZ also leading the events arm was always going to leave the syndicate open to claims of conflicts of interest and a lack of accountability. It seems staggering in retrospect that the government would invest $136.5 million into the event, without any requirement of independent oversight on the board.
These structural failings have left the event in danger of being sunk. There is not just a government inquiry to play out, but potentially months of legal battles between Team NZ and axed contractors Grant Calder and Tom Mayo, who were responsible for the operational elements of the event’s delivery.
Dalton is adamant the event will go ahead, going so far as to claim that it is the most secure event in the world right now. He is probably right.
For the event to be shifted it would need agreement from all the teams. Given that the syndicates are burning through $2m – $3m a month at the moment, they will not be willing to entertain the idea of a postponement. Nor will the government want to risk their investment any further.
But it won’t be the regatta that was envisioned when Team NZ won the Cup in Bermuda.
The impact of Covid-19 means international visitor numbers will be well short of the original Treasury projections that guided the government’s decision to invest in the event.
Now, more than ever, organizers need buy-in from the New Zealand public. For that to happen, public trust in the event must be restored through the appointment of independent leadership.
36th America’s Cup
In addition to Challenges from Italy, USA, and Great Britain that were accepted during the initial entry period (January 1 to June 30, 2018), eight additional Notices of Challenge were received by the late entry deadline on November 30, 2018. Of those eight submittals, entries from Malta, USA, and the Netherlands were also accepted. Here’s the list:
• Emirates Team New Zealand (NZL)
• Luna Rossa (ITA) – Challenger of Record
• American Magic (USA)
• INEOS Team UK (GBR)
• Malta Altus Challenge (MLT) – WITHDRAW
• Stars + Stripes Team USA (USA)
• DutchSail (NED) – WITHDRAW
Of the three late entries, only Stars+Stripes USA remains committed, however, it is unclear what entry payments have been made, nor is there knowledge of a boat being actively built or sailing team assembled.
Key America’s Cup 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
✔ November 30, 2018: Late entries deadline
✔ March 31, 2019: Boat 1 can be launched (DELAYED)
✔ 2nd half of 2019: 2 x America’s Cup World Series events (CANCELLED)
✔ October 1, 2019: US$1million late entry fee deadline (NOT KNOWN)
✔ February 1, 2020: Boat 2 can be launched (DELAYED)
✔ April 23-26, 2020: First (1/3) America’s Cup World Series event in Cagliari, Sardinia (CANCELLED)
✔ June 4-7, 2020: Second (2/3) America’s Cup World Series event in Portsmouth, England (CANCELLED)
• December 17-20, 2020: Third (3/3) America’s Cup World Series event in Auckland, New Zealand
• January 15-February 22, 2021: The PRADA Cup Challenger Selection Series
• March 6-15, 2021: The America’s Cup Match
Youth America’s Cup Competition
• February 18-23, 2021
• March 1-5, 2021
• March 8-12, 2021
AC75 launch dates:
September 6 – Emirates Team New Zealand (NZL), Boat 1
September 10 – American Magic (USA), Boat 1; actual launch date earlier but not released
October 2 – Luna Rossa (ITA), Boat 1
October 4 – INEOS Team UK (GBR), Boat 1