America’s Cup may travel as $100m bid rejected

After three months of negotiations, Emirates Team New Zealand (ETNZ) says it is commencing discussions with other nations to look into options of hosting AC37 events.

ETNZ (representing the Royal New Zealand Yacht Squadron) says it, New Zealand’s government, and Auckland Council, have concluded their exclusive discussions. They have not been able to reach a conclusion that works for all parties.

Media reports that ETNZ officially rejected the government’s NZ$99m bid to host the next cup in Auckland and the city’s mayor Phil Goff confirmed ETNZ was seeking twice what was being offered.

‘All three parties have worked through these discussions with the best of intentions to see the AC37 hosted in Auckland, and they have not been able to reach agreement by the expiration of the exclusive period,’ says ETNZ’s statement.

“Our priority has always been to keep and defend the America’s Cup successfully. We certainly want to explore holding a regatta in Auckland and along with discussing the venue for AC37 with other nations, would like to work through that opportunity also,” says Grant Dalton, ETNZ’s head.

“By all means, the end of the exclusive negotiation period does not eliminate all possibility of the event or an event being hosted in New Zealand.”

As previously reported in Marine Industry News this follows rumours about a one-off event on the Isle of Wight and ETNZ appointing a commercial agency back in February to assess options.

Identifying price points

Prime minister Jacinda Ardern says the government put its best foot forward in its offer, according to the New Zealand Herald.

“The government, on behalf of taxpayers, went into those negotiations in good faith, in the hope of being able to retain the competition here in New Zealand. We wanted to have that home crowd, and for every cup where we’ve held it, we’ve hosted,” says Ardern.

“We have to make sure that not only we put our best foot forward and make every endeavour to hold and host the race here, we also needed to identify the point where it wouldn’t be value for money for New Zealanders.

“The ball is in their court. We believe we’ve made a decent offer, and now it’s for them to resolve where the cup will be raced.”

Economic development minister Stuart Nash says: “The commercial reality of America’s Cup in 2021 is that this is multi-million dollar commercial proposition as well as a yacht race.

“Not all is lost now but Team NZ are now able to negotiate with other parties. If no one can offer them what we have offered, then they come back here and if something has to go back to cabinet, it will.”

Ardern says there comes a point when the economic benefit no longer stacked up.

“At some point, we have to say we can’t justify investment beyond that for the taxpayer.

“We have to make a call about where that line exists. I could not hand on heart stand here in front of you and say that it would have been good value for money for New Zealanders to go beyond where we have. So I wouldn’t do it.”

Dalton says the opportunity to host the event at home still exists. “If resources enable an event in New Zealand we will remain open to it. But, we must explore other opportunities to ensure we can put up another successful defence. No matter where in the world we are, we will always be Team New Zealand.”

ETNZ to be ‘out of council-owned base’ by March

Auckland Mayor Phil Goff told the NZHerald that the city would be “disappointed” with the rejection and that Team NZ is likely to be out of its council-owned waterfront base by March.

Goff says under an agreement with the council, ETNZ has the right to use the events centre rent-free over the term of two cup defences, but the agreement comes to an end on March 1 if the next defence is not held in Auckland, according to the NZHerald.

“At that point the rent will become commercial and at that point or before I think Team New Zealand will probably be looking at alternative premises,” says Goff.

“Aucklanders did really get behind Team New Zealand in terms of funding – $113m worth of infrastructure that went in – but just as importantly we got behind them in terms of the huge support that Aucklanders gave to the team sailing in this, their home port.”

From March the events centre would return to being a commercial venue for hire. The value of the events centre to ETNZ was about $3-$4m a year.

Goff says the council’s contribution to the $99m joint Government-Auckland Council bid to keep the next cup defence in Auckland was for services in kind, including the continued use of the events centre.

“We made the best offer that we could – $100m between Government and the council, the council contribution largely being in kind, things like the event centre that was a fantastic base for Team NZ, and of course the bases that are already there on Wynyard Point and in terms of management of on-land and on-water requirements for the race.”

Highly-credible offer

“We want the next America’s Cup raced in New Zealand. Tens of thousands of diehard Kiwi fans who turned out to support the historic defence of the cup in March want it raced in New Zealand. It is disappointing we were unable to reach agreement within the exclusive negotiation period,” America’s Cup minister Stuart Nash told the NZHerald.

“At the end of the day the America’s Cup is a global commercial operation. It is an international business as much as a sporting contest.

“The team is now free to look to commercial sponsors, private supporters, or other avenues to bankroll the operation.”

Nash says ETNZ is a ‘world-class’ operation: “I know they will fly the flag for their home nation in the 37th America’s Cup, whether it is held in Auckland, or taken offshore.

“Any subsequent request for government support would have to be considered by cabinet and I cannot confirm whether the crown would consider making another offer.”

“It was a highly credible offer, given the current economic environment and pressure on government accounts. We went into the process in good faith to secure the event.

“The negotiations and the offer are commercial-in-confidence and details cannot be shared at this point. However, I can confirm it involved cash and in-kind support worth around $99 million.”

Nash says the $5m offer from the government to allow ETNZ to retain key staff – on the condition that this country hosted the next defence – had not been taken up by the syndicate.

“Across all government spending we are looking for value for money and are targeting support where it is needed most, to support the economic recovery and deal with the impacts of the global pandemic.

“Team New Zealand has received government assistance following every America’s Cup event since 2003. They continue to carry our best wishes and goodwill.”

The government had contributed a total of $136.5m towards this year’s successful cup defence, including $40m cash to deliver and manage the event.

Devil’s in the details

The NZHerald says ETNZ wants a package worth more than $200m. The three-month exclusive negotiation period with the government has now ended.

“You’ve heard that the government and the council is putting in $100 million, $99 million actually is the number,” says Dalton.

“That’s a lot of money. But the devils [SIC] of the detail, terms and conditions don’t make it that amount of money so as we sit here today, we don’t have a deal.

“Will we have a deal in two days – a day and a half? Probably not, but that doesn’t mean to say it’s going [offshore]. There is money in town, we all know that … but it isn’t coming that easy, the phone’s not ringing off the hook.

“Everybody just needs to calm down a little bit, because although we finished the negotiation period with the government and council on Thursday, we don’t finish the end of it being in New Zealand and in Auckland.

“It just opens it up to the chance of other bids. The last time … honestly I think it was 45 minutes before we were about to sign, to agree to go somewhere else, the deal was done to stay here.

“This is not us taking the cup away yet, but things have changed.”

Government safety-blanket

“Fleeing the nest of government support, the safety-blanket of taxpayer’s money and going fully commercial is bold but most likely highly measured. It wouldn’t be done without a contingency plan. It’s not a gamble,” says Rule69.

The blog speculates that: “Not only is the America’s Cup going overseas but it’s going multi-venue. Cork, Cowes, Valencia, Marseille, Cascais, Doha, probably a Chinese port, Newport…pick a name, pick a nation and get the truest representation of Formula 1 on water and crucially deliver for sponsors. Emirates is still name-checked so you wonder what deal has been mooted there and the door is still wide-open for Auckland to host an event or even the match.”

“Whilst we also remain hopeful that the cup can stay in New Zealand it would be prudent to now explore other options as well, with the primary objective to ensure we keep the America’s Cup trophy in the cabinet here at the club,” says RNZYS commodore, Aaron Young.

“As such we also understand the need to help ensure the viability of Emirates Team New Zealand so we have every opportunity to defend the America’s Cup again, wherever that may be. It would be an unprecedented achievement to win the America’s Cup three times in a row and taking the cup overseas may well offer the best chance for us to do so. At a meeting last night members were presented with this option and I believe generally understood this might need to happen.”

Images courtesy of © ACE | Studio Borlenghi