America’s Cup: Waiting for the details

Dr. Hamish Ross, a legal advisor for America’s Cup teams who completed a PhD at the University of Auckland on the legal issues surrounding the America’s Cup, speculates on what might be coming for the 37th America’s Cup on November 17, 2021:

In a dozen days’ time, the Protocol for the 37th America’s Cup is due to be revealed, eight months after Royal Yacht Squadron Racing Limited, filed a notice challenge under the Deed of Gift.

What can we expect and what is likely to be left unanswered?

Sources close the Defender indicate that the all-important venue selection is yet to be made and may not be announced until as late as March 2022. This will not be welcome news to the Challenger of Record who will be getting impatient. It has a right to fall back onto the Deed default match terms if relations become strained, which will likely result in a commercial black hole.

Given the selected venue may impact the yacht to be raced, publication of the Class Rule may be similarly delayed, although it was at least agreed last March, that it would be in the AC75 class used in Auckland. There are always refinements to be made. If there is a meaningful push towards costs savings, as has been announced, look for more supplied or common design elements in the same way as the foil systems were supplied for AC36 in Auckland.

Unfortunately, the Deed requirement that the competing yachts must be “constructed in the country” of the respective competing yacht clubs, puts the brakes on what could be achieved. In the past, this requirement has sometimes been interpreted rather liberally focusing on the hull, but many would agree that the Deed probably only requires an assembly of components, which can be sourced from anywhere, to create a yacht.

The “construction in country” term of the Deed has never been fully tested in a court or jury, although the issue was on the table at the end of the 2010 match. Expect sailing restrictions and launch dates to remain to limit the advantages of well-funded competitors.

Commercial rights will likely largely remain as they have been since Valencia 2007. Will there be a profit-sharing mechanism between competitors as in 2007 and 2013, if there is a financial surplus? It would seem a major venue financial windfall would be unlikely in the current economic climate.

Timing of the match, and the preceding challenger series may be difficult to fix without a venue having been decided. Don’t expect to see firm dates yet. The Deed has hemisphere restrictions limiting the times when a match can be held in each hemisphere. There are seasonal weather and oceanographic factors to be considered at any venue.

Additionally, there is the timing of other events to consider. Few would want to take on a head on commercial and media clash with the Olympics or the Football World Cup, which traditionally sucks out a lot of sports fan eyeballs and commercial sponsorship from the sports sponsorship market.

What other events will be held before the start of the challenger series? Expect a warmup regatta or two. There may be a concessionary warm up regatta in Auckland on the table to try to calm local waters. But these regattas all cost money, a loss of valuable time and never raise enough money for them to be self-funding when an effort is said to made to reduce costs.

More chance they will be held in the selected venue than holding a global circuit like Sail GP. A defender will always want an opportunity to check in against the challengers before the match to try and limit any surprises. Expect Sail GP to actively look into holding an event or two in Auckland during the America’s Cup match, if Auckland is not the selected venue!

What will prospective challengers be looking for? When will they see the Class Rule? How long will they have to design, build and test a yacht? How much of a design head start have the Defender and the Challenger of Record given themselves? What will it cost them to compete? Can they hire the design, boatbuilding and sailing talent needed?

This will put the nationality rule into sharp focus– can they get approvals from the Defender as an “emerging nation”? Where will it be held? Don’t expect billionaires to line up for an unattractive venue with security risks. What advertising space on the yacht do they have to sell to their sponsors and what space will be taken by the event and in what product categories? Will Prada or Louis Vuitton return as a sponsor? Above all, is there a chance to win or is it simply too stacked up against us?

Expect entry fees to remain the same or increase. US$3,350,000 plus a bond of US$1m was the cheapest entry last time. Expect the challengers to again towards the costs of the challenger selection series unless a sponsor agrees to funds it as did Prada last time.

Finally, who gets to amend the Protocol and the Class Rules? Can any one competitor block a change? Will there be a tyranny of the majority or simply a Defender and Challenger of Record dictatorship?

Drafting a Protocol involves a delicate balance of many issues both sporting and commercial. Get it wrong and it could be 2007-2010 all over again. Nail it, and it will be back to the big America’s Cup heydays of Fremantle 1986-87 or Valencia 2007.

Photo: The deed pictured above is nine manuscript lines of Latin written in an Anglicana hand. It is on parchment, a fine substrate made from prepared animal skin. The top of the deed is cut straight across, a deed poll, which is opposed to a wavy cut or indenture. The bottom of the document includes three laced-in vellum thongs with three red wax seals. The deed is dated in reference to religious feast dates and regnal years during the feasts of Saints Peter and Paul in the 12th year of the reign of King Henry VI, equivalent to June 29, 1434.]